Westpac latest cab off the cash PIE rank
Westpac has joined AMP/Rabobank in the cash PIE (portfolio investment entity) market with the launch of a new product run by its funds management subsidiary BT.
Friday, March 28th 2008, 5:34AM
by David Chaplin
Middleton said the Cash Plus fund is targeted at the 39% and 33% tax bracket investors who can take advantage of the PIE maximum tax rate of 30%, which becomes effective on April 1.
"The major benefit of a PIE fund is that income earned from the fund is taxed at an individual's Prescribed Investor Rate. Specifically, from 1 April 2008, investors who are on a 39% or a 33 % marginal tax rate will be taxed at 30% on their income from a PIE and will therefore enjoy a 9% or 3% gross tax saving respectively," he said in a statement.
Middleton said while investors can buy into the Cash Plus fund directly the bank encourages them to seek advice before investing in the product.
"Our advisers will carry out a needs analysis to see if the fund is right for investors," he said. "It's positioned at an investment time-frame of 180 days plus, which is longer than most term deposit investments."
Cash Plus has a minimum initial investment of $5,000 with further ongoing investments of at least $1,000 at any time. Westpac has also set the minimum withdrawal rate at $1,000 with no restriction on when the money can be taken out.
BT will invest the Cash Plus money in a range of New Zealand bank deposits and mortgage-backed securities - all with a credit rating of A1 or higher.
"It's just a little riskier than a cash account," Middleton said.
He said the Cash Plus product does not offer a headline interest rate with returns determined by the performance of the fund. According to the Cash Plus investment statement, the current management fee has been set at 0.5% of the gross value of the fund with a further .02% trustee fee.
AMP launched the first cash PIE, the Cash Advantage Fund, late last year, which invests directly into a Rabobank deposit. The Cash Advantage Fund is currently offering a return of 8.25%.
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