Why you should think about investing in a managed fund

by Harbour Asset Management / 23 November, 2017
Sponsored Content

Ainsley McLaren.

Investment funds may sound intimidating but can be safer than a single investment. Harbour Asset Management’s Ainsley McLaren and Christian Hawkesby explain how.

Is minimising risk important to you? Many Kiwis think “investment property safe, shares risky”. Yet a diversified mix of shares and other investments could be a whole lot safer than owning a single investment property, says Harbour Asset Management’s Ainsley McLaren. At the same time, the returns from a managed fund can provide a better income stream than term deposits.

All your investment property eggs in one basket

Kiwis could do themselves a lot of financial favours by diversifying some of their wealth away from property, which, as the saying goes, isn’t always “as safe as houses”.

Property investment is often seen as the Kiwi way, says McLaren, yet it can be risky if the tide turns and property prices fall just when you need to sell, the bank calls in the mortgage or the tenants trash the place.

Managed funds, on the other hand, spread your money widely across property, bonds and shares in a number of countries. When one market or economy’s cycle turns, the other investments in the fund should balance it out through time, says McLaren.

Risks are also reduced by the fact that fund managers are licensed, regulated and monitored by the Financial Markets Authority.

Your KiwiSaver is a managed fund

KiwiSaver is a form of managed-fund investing, though some Kiwis don’t realise it. The main difference between KiwiSaver, which we’ve become comfortable with as a nation, and other managed funds is that KiwiSaver attracts member tax credits and other perks from the government in return for the money being locked away until you buy your first home or retire.

Kiwis have access to a vast array of managed funds, which can be conservative, balanced or growth-orientated, as well as coming in a great range of other diverse forms.

A property takes much more work on your part than a managed fund, where someone else is doing the hard work, choosing the investments and minimising risk.

A better standard of living

The other investment that Kiwis often swear by is the term deposit. Yet since the global financial crisis, returns on term deposits have fallen from more than 8% to about 3%. Harbour’s income-focused managed fund is designed to deliver a fixed quarterly distribution that amounts to 5% on an annual basis. This helps provide certainty for investors such as retirees seeking stable income.

Money when you need it

Another advantage of managed funds is that your money is available whenever you want to withdraw it. There is no need to wait for retirement, the real estate agent to sell your property, or a term deposit to finish. What’s more, Harbour’s managed funds don’t have break fees, and are PIE funds, which means you may pay less tax if you are on the top tax rate. Fund values, however, can rise or fall over time.

A variety of uses

The flexibility of managed funds makes them suitable for medium-term goals such as parents and grandparents investing for their children’s education, or saving for a home deposit, says Harbour Asset Management’s Christian Hawkesby.

Today, new investment platforms such as InvestNow make it possible for anyone to invest as little as $50 regularly in Harbour Asset Management’s funds.

Latest

The enduring sandwich: What's not to like about bread and fillings?
94342 2018-09-23 00:00:00Z Food

The enduring sandwich: What's not to like about br…

by Margo White

Despite an apparent backlash against bread – against carbohydrates and gluten – the sandwich endures.

Read more
Humanity is on 'the highway to digital dictatorship', says Yuval Noah Harari
96527 2018-09-22 00:00:00Z Social issues

Humanity is on 'the highway to digital dictatorshi…

by Andrew Anthony

The author of worldwide bestsellers Sapiens and Homo Deus says our free will is at stake. We talk to Yuval Noah Harari about his new book.

Read more
Why there's no 'clash of civilisations' between Islam and the West
96558 2018-09-22 00:00:00Z Social issues

Why there's no 'clash of civilisations' between Is…

by Yuval Noah Harari

There is just one civilisation in the world, writes Yuval Noah Harari, and the West and Islam are joint participants in it.

Read more
The Kiwi cicada expert who's just 11 years old
94985 2018-09-22 00:00:00Z Science

The Kiwi cicada expert who's just 11 years old

by Ken Downie

Hamilton entomologist Olly Hills isn’t in high school yet, but he’s already a world expert – and he wrote a book.

Read more
Thackeray's Vanity Fair gets a clever update for the millenial age
96633 2018-09-22 00:00:00Z Television

Thackeray's Vanity Fair gets a clever update for t…

by Russell Brown

A new TV version of William Makepeace Thackeray’s 19th-century satirical novel taps into today's celebrity-Instagram culture.

Read more
The debate over the Serena Williams controversy was a dialogue of the deaf
96659 2018-09-22 00:00:00Z Sport

The debate over the Serena Williams controversy wa…

by Paul Thomas

Serena Williams’ US Open outburst was unbecoming but the umpire made a mess of his response.

Read more
The classical blokes saluting unsung women composers
96670 2018-09-21 14:16:06Z Music

The classical blokes saluting unsung women compose…

by The Listener

The suffrage celebrations get a soundtrack from all-male ensemble NZTrio.

Read more
Labour MPs stand behind Jacinda Ardern's action on Meka Whaitiri
96630 2018-09-21 07:31:30Z Politics

Labour MPs stand behind Jacinda Ardern's action on…

by Gia Garrick

The public will have to wait to see a report into an assault claim against MP Meka Whaitiri, who was yesterday stripped of her ministerial portfolios.

Read more