Frequently Asked Questions

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Futures & Hedges:   Future fund managers invest in futures and options in diverse markets such base currency markets or commodity markets such as oil, gold, silver, coffee etc.  A futures trader is basically speculating on the future price of a financial instrument.  The use of managed futures funds will reduce the long term risk, or variation of a portfolio. Managed futures fund returns tend to be unrelated to all the other asset classes. They are more volatile that is, the returns may fluctuate more than share/equity markets. In 1987 the US share market lost 25% of its capital value (this was recovered within 20 months) while the average managed commodity futures fund returned 60.97% in the same environment.
'Hedges ' are basically the process that is used (short or long term) and 'futures ' are the financial instrument used.  Futures contracts are 'forward contracts ' traded on exchanges.
  Also refer to Futures & Hedges. 

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Imputation Credits:  New Zealand fund managers are taxed on capital gains and dividends at 33%. The tax on dividends paid out or re-invested is called 'imputation credit '. Imputation credits can only be off-set against other tax, such as PAYE or resident withholding tax. If you do not have any other income then the imputation credits cannot be used, but can be carried forward to the next tax year.  Also refer to Taxation 
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Tax Returns: Completion of an IR5 return should suffice unless an investor has received income from overseas, or has deductible expenses against investment income or the investor has more than $2,500 tax to pay after taking into account all tax deducted at source which require that person to complete an IR3 return.

For discretionary family trusts an IR6 return needs to be completed.
IR 3 returns should be lodged by the IRD by 7 June, IR 3 by 7 July.
Click here for more information on tax
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Portfolio Reporting: We report on your investments six-monthly and once a year do a full review (charges vary, refer LYFORDS Services ). The annual review includes an asset allocation re-balanced if required. Brokerage is not taken by LYFORDS for any re-balancing, or changes to your portfolio.

You will get an easily understandable report showing you your overall portfolio, how its grown, percentage returns and a full transaction report.  All your investments are pulled together in one report.
An annual income summary for tax returns is produced in April/May each year.

It is generally agreed that the correct asset allocation can contribute to 90% of the overall returns of a well-diversified investment portfolio. 
Click here to arrange an appointment to review your existing portfolio.
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Withdrawal by Manager Re-Purchase method  This is the preferred method, as it doesn't result in any tax liability. If your income is less than $38,000 then there is an advantage to using the 'redemption method '.
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Withdrawal by Redemption method:  This is suitable for investors with income less than $38,000 and will not be affected if they declare their income at a higher rate, re eligibility for community services card, income assessment.

The fund manager will issue a fully imputed dividend equivalent to the capital gain that has been made. The imputed dividend will have been taxed at 33% and if the investor's income is below $38,000 they can use the imputation credit to offset Resident Withholding Tax (RWT) and PAYE tax.
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Security:  The trustee of Unit Trust fund ensures security. The trustee invests on behalf of the investors acting on the advice of the fund manager and in accordance with the Trust Deed. The trustee holds the assets of the fund on behalf of the investors so that neither the manager nor any creditors of the manager has any call on the assets of the fund.
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Liquidity:  Investors money is readily available, with redemption periods varying from "on-call" in the case of cash trusts to a couple of years in the case of some property trusts. The majority of share market funds have redemption periods of between seven and ten working days.
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Emerging Markets: namely India, Latin America, China, Eastern Europe, Africa and Russia remain high-risk markets (possible political instability) and they suit 'aggressive' investors. With 2-3 billion middle class capitalists in these markets, the demand for commodity products and investments has potential for high growth. Investment analysts believe we are at the start of the next commodity cycle.
While there is a high correlation of countries within each region, that is their economies tend to go up and down together, this is not the case between regions, for example, Latin America and Eastern Europe. Low correlation between regions is of vital strategic note when looking to maximise the return within a portfolio of Emerging market equities.

While there is good potential in emerging managed funds for growth, we recommend you only invest in this area if your funds are for the medium to long term. Emerging markets should make up less than 10% of your overall portfolio for an 'aggressive' risk profile investor, due to the high risk and volatility of these investments.
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What is a 'Bull Market '.  What is a 'Bear' market?   A bull market is when a share market is rising strongly.  A bear market is when share prices are dropping quickly or continue to drop for several weeks.  "The bull goes up the stairs and the bear jumps out the window". 
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How do I invest through your web page?    On some pages we have a link to an Adobe Acrobat file of the investment statement and application form.  Click on the icon, print it off, complete the application form and mail it to us, refer to contact details.  Under the New Zealand securities act the fund managers require an original signature on the application and proof of identity of the investor.  A copy of your passport with photograph is ideal.  If you are a New Zealand citizen, have a New Zealand bank account, and are investing in the same name, then a personal cheque will suffice as proof of identity.

To send funds with your investment statement.  If you have a New Zealand account simply attach your cheque (made out to the fund manager or trustee indicated on the application)  with the application and mail this to us.  We will put our stamp on the application and you will get a discounted entry fee.  You can direct credit funds directly into the fund managers bank accounts.  Contact us and we can give you the details. 
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OEIC (Open Ended Investment Company):    These are pooled investments similar to a unit trust/managed fund based in the UK and therefore exempt capital gains tax from a New Zealander 's perspective.  You are buying shares rather than units.  Refer also to OEIC Funds 
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Income Protection Insurance - Tax deductible premiums:     Loss of earnings income protection insurance premiums are tax deductible.  Note if a claim is made and the insurance is paid then the income is taxable. Refer also to Income Protection
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