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  1. #1
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    Default NZ Managed Fund recommendations

    If you had a pick a few NZ funds to manage your money who would be in the list? Looking at NZ and AU equity focus.

  2. #2
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    Quote Originally Posted by steve9 View Post
    If you had a pick a few NZ funds to manage your money who would be in the list? Looking at NZ and AU equity focus.
    Check out piefunds.co.nz

  3. #3
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    "Match racing: NZ PIE funds vs US ETFs
    Tweet
    Some commentators point to the low fee structures of US ETFs and question why an investor or adviser would even consider NZ managed fund solutions. The purpose of this article is to provide a “real life” comparison of a PIE fund against US equity ETFs with similar exposure. Is one structure better?"
    https://www.goodreturns.co.nz/articl....html#comments

  4. #4
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    Quote Originally Posted by kiora View Post
    "Match racing: NZ PIE funds vs US ETFs
    Tweet
    Some commentators point to the low fee structures of US ETFs and question why an investor or adviser would even consider NZ managed fund solutions. The purpose of this article is to provide a “real life” comparison of a PIE fund against US equity ETFs with similar exposure. Is one structure better?"
    https://www.goodreturns.co.nz/articl....html#comments
    That's a really interesting article.

    I found it quite strange and more than a little frightening that the effect of various countries' RWT rates have on the returns of investment funds is essentially ignored by the New Zealand financial services industry.

    If you want a water fund, why not pick the one domiciled in Ireland?

  5. #5
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    Quote Originally Posted by GTM 3442 View Post
    That's a really interesting article.

    I found it quite strange and more than a little frightening that the effect of various countries' RWT rates have on the returns of investment funds is essentially ignored by the New Zealand financial services industry.

    If you want a water fund, why not pick the one domiciled in Ireland?
    It's worth noting that top tax rate is about to jump from 33 to 39% - giving a massive advantage to PIEs.

  6. #6
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    Is this going to make investing decisions easier or?

    Fees higher?

    More gobbly gook?

    More difficult to make investment decisions?

    Higher fees?

    https://www.goodreturns.co.nz/articl...for+8+Jan+2021

  7. #7
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    All part of the slow creep toward shutting individual investors out of everything except KiwiSaver, mortgaged property, and term deposits.

    For their own good, of course.

  8. #8
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    Quote Originally Posted by GTM 3442 View Post
    That's a really interesting article.

    I found it quite strange and more than a little frightening that the effect of various countries' RWT rates have on the returns of investment funds is essentially ignored by the New Zealand financial services industry.

    If you want a water fund, why not pick the one domiciled in Ireland?
    The comment in that article had summed RWT quite well and look in the comment section for : "On 14 June 2017 at 9:38 am Anthony Edmonds said:"

    My response below:

    There's also no mention of the $50K FIF threshold. If a small time investor started with $10K and somehow over 5 or so years it grew to just under $50K, all those gains would be tax free. The minute a person makes contribution to a Kiwi Saver Fund, PIE fund, or some investment scheme where the fund has to pay RWT for their clients every year (even on years where they go negative), they are going to be in a worse position than to simply invest on their own, buy purchasing the same asset / ETF.

    Lots of posts I see on my FB about the FMA spewing all sorts of "get sorted on financial advice" when that article makes no mention on taxation from different perspectives. This is no different few years ago when I called upon local NZ financial advisors who could not give me a clear indication on taxation and instead, would gladly refer my case to a 'tax specialist' so they can take their cut.
    Last edited by SBQ; 15-01-2021 at 01:57 PM. Reason: spelling mistakes

  9. #9
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    Quote Originally Posted by SBQ View Post
    The comment in that article had summed RWT quite well and look in the comment section for : "On 14 June 2017 at 9:38 am Anthony Edmonds said:"

    My response below:

    There's also no mention of the $50K FIF threshold. If a small time investor started with $10K and somehow over 5 or so years it grew to just under $50K, all those gains would be tax free. The minute a person makes contribution to a Kiwi Saver Fund, PIE fund, or some investment scheme where the fund has to pay RWT for their clients every year (even on years where they go negative), they are going to be in a worse position than to simply invest on their own, buy purchasing the same asset / ETF.

    Lots of posts I see on my FB about the FMA spewing all sorts of "get sorted on financial advice" when that article makes no mention on taxation from different perspectives. This is no different few years ago when I called upon local NZ financial advisors who could not give me a clear indication on taxation and instead, would gladly refer my case to a 'tax specialist' so they can take their cut.
    I'm sorry, was it not clear that I was referring to non-NZ taxes, i.e. the tax which the fund paid in its country of domicile?
    Last edited by GTM 3442; 16-01-2021 at 09:07 AM.

  10. #10
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    Quote Originally Posted by GTM 3442 View Post
    I'm sorry, was it not clear that I was referring to non-NZ taxes, i.e. the tax which the fund paid in its country of domicile?
    From a NZ perspective (which is all that should matter), the NZ investor is not concerned on what taxes are paid by NON-NZ tax residents abroad. However the difference in tax treatment between the US/Can and NZ is way far apart. I've expressed in other posts in this forum that the same person living in US/Can will have a much larger portfolio balance the NZ equivalent person stuck in Kiwi Saver, and this is all due to differences in taxation.

    I'm not overshadowing your original quote. While i'm not a tax specialist in US/Canada/NZ, it is safe to assume the investment criteria is different between all places. Typically N. American investors want capital gains and not dividends while In NZ, there's an overwhelming emphasis for dividend income regardless of the growth factor of the listed company on the NZX. Keep in mind, dividends are paid from after taxed profits and lowers the BV/share, which translates to a lower share price. I'm not sure if a lot of NZ investors realise this and the emphasis of dividends in NZ is something i've never understood well from a fully tax efficient perspective. This is not to say you can't buy listed N. American companies that pay good dividends - the finance classes at uni have taught me that you choose the appropriate 'asset class' if you want dividends - ie well matured businesses like Walmart that have minimal growth. But this is not what i've seen with The Warehouse Group in NZ 20 years ago during their expansion phase while maintaining emphasis paying a dividend. Anyways this is off track but it does prove that tax treatment and expectations by investors differ between here and there.

    Does the managed fund or specifically the Vanguard ETF pay taxes in the US? The answer is no. Does the NZ managed fund that buys the same ETF for their NZ clients pay taxes in NZ? Again the answer is no. It all relates back to taxing at RWT. However the issue of FIF is a sore spot for me because under FIF the NZ managed fund has to pay FIF taxes (or their client pays for it) regardless of the total amount invested under $50K and FIF still applies to years where the fund has a paper loss in a bad year.

    I read some savy NZ resident investors looking to incorporate a fund holding in the US, or they look to setup a US based foreign trust. I'm not sure if how this would be beneficial from a tax perspective. Owning shares of a corporate company in the US still attracts FIF and the tax filing would be complex. Also foreign trusts or trusts setup in the US don't get the tax perks that individual US persons do (ie. $11M estate tax exemption) for when the person dies. For the NRA (Non-resident Alien), they could be stung with an IRS tax bill of up to 40% of total portfolio balance.

    https://medium.com/datadriveninvesto...x-a30c0fee12a5

    Perhaps this is one key reason for using a NZ based managed fund to hold US investments (to get away of the US estate taxes on NRA).

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