Information about SAVING and
INVESTING in New Zealand.......

Contact Us

Stuart Scott
SavingWorks (NZ) Ltd
5 Rupi Court, Mt. Wellington, Auckland 1072
Phone: (09) 527 8449
Mob: 0274 901 884

Shares or Funds?


 Tax and Costs

Under current tax rules it is more cost effective to invest directly in New Zealand  or international shares. If you invest through a New Zealand based share fund the fund is likely to charge the investor an annual fee of between 1.25% and 1.75% of the funds under management. This charge happens regardless of whether th fund increases in value for you or not.

The first thing to understand about amanged funds is that their primary aim is to make money for their owner. Making money for people who invest in them is often not their main concern.

 NZ based share funds also do not pass onto the investor any imputation tax credits they earn from the companies in their portfolio.  So if at all possible it is best to invest directly into shares.


<h4>Practical Limits</h4> However there are practical limits to investing directly in shares.  Modern portfolio theory suggests that a share holding of 10 to 15 carefully selected companies will give an investor an adequately diversified portfolio.  When you take into account minimum brokerage charges and the dollar size of a reasonable small holding of a company's shares you are looking at about $10,000 per holding. Or say, $100,000 to $150,000 for a small portfolio.


<h4>New Zealand Fund Selection</h4>The reality is that not many people can allocate  this sort of money to shares, as well as keep the other elements of a properly constructed diversified portfolio. 


The result is that to get the proper portfolio diversification for your money you are left having to use investment trusts (funds) which pool money into shares. 


There are a number of overseas based funds that can be used plus (in my opinion) only three  based in NZ that are well enough run or cost effective enough to be considered.


CLICK HERE  to learn about these three New Zealand based  funds.