What's in store in 1999-2000

The 1998-99 financial year has just ended. As funds managers begin to write their entries for their investor and holding company annual reports, no doubt there will be some common themes that will warrant at least a passing mention.

The 1998-99 financial year has just ended. As funds managers begin to write their entries for their investor and holding company annual reports, no doubt there will be some common themes that will warrant at least a passing mention.

Vying for prominence will be tax reform, the state of markets, Year 2K millenium bug and the impact of local and international economic developments. The transi-tion to the new Managed Investments Act has been a focal point of activity and is sure to receive attention in state of the fund reports. Meanwhile, wholesale investment trusts will be focussing on just how the pass through of investment income will apply to their operations, and they will need to advise their cli-ents on this issue.

Life insurance companies on the other hand will be reflecting on the new tax ar-rangements that the Ralph Review is yet to finally report on. Included in these changes is the proposal to tax policy holders in ordinary life insurance busi-ness at the going corporate rate, whatever that will be -36 or 30 per cent - down from the rather punitive 39 cents.

With the GST now certain, and new and lower rates of personal income tax also a virtual certainty in the next 12 months, investors will be redefining strategies and reassessing their options. It is likely therefore that the industry will be promoting the virtues of saving those additional dollars that are part of the tax reform dividend package.

A key focus for IFSA in relation to retail investors will be the third and final phase of a campaign to increase awareness of managed investments. The objective of the campaign is to promote awareness of the industry, and to contribute to public education about savings.

This campaign builds on the previous two efforts mounted by the IFA in 1996/97 and 1997/98. These press and magazine advertisements have already sent strong messages to current and potential managed fund investors.

Just how strong the third round of messages should be and in what form they should take was the subject of a consumer research report by Eureka Strategic Research. Eureka used focus group sampling to 'road test' some of the original ads as well as some new prototypes.

The advertisements will continue the 'Strength in Numbers' theme that was so successful in the previous two campaigns (see inset). However, a number of new messages will be evident, including the reinforcement of managed investments providing access to diversification and a call to investors to consider using managed investments as a means of gaining access to the property market.

The focus groups found the advertisement with the headline 'Invest in a second property without renovating, painting or tenants' to be a powerful image. This message was one which 'resonated strongly with many participants who saw prop-erty as the preferred investment, but were concerned about the difficulties as-sociated with managing property'. It was also seen as 'upbeat and unreservedly positive.'

The 'fuel gauge' advertisement, which was run in previous years of the campaign, with the headline 'Next time you top up your shares, make sure you get the best mileage' (see inset) again attracted positive investor sentiment. This adver-tisement appealed to the focus groups because the image of a full tank is a positive one, as is the prospect of better mileage for one's equity investments.

All of the advertisements invite investors to contact IFSA for further informa-tion, and a comprehensive range of educational information sheets are available. These materials proved extremely popular both during and after campaigns.

The third wave managed investment campaign will commence later this year.

Richard Gilbert is deputy chief executive officer at the Investment and Finan-cial Services Association.