First finance company PIE fund
UDC is the first finance company to roll out new products under the Portfolio Investment Entity tax rules. It's two offerings are a term fund and a cash one.
Sunday, 27 April 2008
UDC head of finance and investments, Bruce Andeerson, says once the company got its head around the new tax rules, making the funds was not too difficult.
He guesses that UDC could be the first finance company to offer a PIE fund as others are "distracted by other issues."
The term fund, known as the Maximiser, offers 12-month terms, however investments can only be made on the first of each month.
Its opening rate is 9%, which equates to an equivalent of 10.68% for people on 39% tax rates.
Anderson says the funds appeal to various audiences, however he thinks that they suit advisers, rather than being sold directly to investors.
He says they require a little more explaining than a traditional term deposit or finance company debenture.
"Ideally they will be sold on a face-to-face conversation."
He says the fund competes with finance companies and term deposits as well as the cash PIEs being promoted by banks at present.
His view is that the Maximiser fund has an advantage in that its return is known and is set at a fixed rate for 12 months. Cash PIEs, he says, don't offer certainty of returns and their rates will fluctuate.
UDC has a cash PIE too which is offering a rate of 8.25%. Both funds invest in UDC debentures. While the PIE funds don't have a Standard and Poor's rating UDC does.
What is it called and what sort of savings product is it?
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Who is the target market?
What return does it offer?
When was it launched?
What other products is it like or is it competing with?
Is it long term, short term or medium term?
What is the unique selling point of the product?
How strong a stomach do you need for it?
What's the hitch?
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