Armstrong Jones has formed an alliance with British firm, Edinburgh Fund Managers, to launch a range of UK-based funds in New Zealand.
Head of Armstrong Jones, Paul Fyfe, says the funds offer significant tax benefits for New Zealanders as they are not subject to capital gains tax.
“This is a rare opportunity for New Zealanders. They have the chance to invest in a a globally diverse range of first-class funds – and enjoy a tax advantage,” Fyfe says.
Earlier this year, AMP launched a similar range of UK-based funds with Henderson Investors that also offered the tax advantage. However, Armstrong Jones spokesperson Mandy Vernon says tax efficiency is not the only benefit of the Edinburgh funds.
“We’re not pushing the tax benefits on their own. The Edinburgh funds offer a unique range of sub-funds that complement Armstrong Jones products,” Vernon says.
“Also tax law can change at any time and the Government is currently carrying out a review of the tax regime that does include this issue.”
She says the past performance of the Edinburgh funds has been astounding with five of the funds offered here posting five year cumulative returns in excess of 100 per cent.
“While we don’t want to focus too much on past performance it does indicate that the company is well managed,” Vernon says.
The Edinburgh funds are structured under a single company, the Open-Ended Investment Company (OEIC), operating like a unit trust except investors buy shares in the company not units in a trust.
There are an unlimited number of OEIC shares available with New Zealanders able to invest in any of the 11 Edinburgh funds on sale with a minimum lump sum of $4000 or as little as $200 per month.
Armstrong Jones initially intended to offer 12 of the 16 Edinburgh funds in New Zealand but had to withdraw the Edinburgh Safety First Fund (ESFF) following legal advice.
Vernon says the ESFF is a “protected price fund” that uses put and call options to stop the price falling below a certain level.
“Edinburgh advised us that it couldn¹t guarantee the same level of protection for overseas investors, so we had to withdraw the fund,” Vernon says.
The Edinburgh funds include regional funds (Europe, Latin America, North America, the Pacific and Tokyo), sector funds (financial and technology) and other markets such as emerging and global equity.
Armstrong Jones will distribute the Edinburgh products through “selected financial advisers”.
