KEY POINTS:
Brad Cooper, chief executive of Westpac New Zealand.
What is it called and what sort of savings product is it?
The Westpac Cash Plus Trust.
What is the company behind it?
This new cash fund has been launched by Westpac Bank, and is managed by its subsidiary firm BT Funds Management. It is a fund structured under the new portfolio investment entity (PIE) tax rules.
Who is the target market?
The trust is aimed at investors on the 33 or 39 per cent tax rates who want a low-risk, tax-efficient cash fund.
What return does it offer?
Westpac won't put numbers around likely returns but says, "There is no promised or guaran- teed return on this product. The investment strategy is designed to give investors a pre-tax return comparable with wholesale term deposit rates after fees".
When was it launched?
A fortnight ago.
What other products is it like or is it competing with?
Rabobank has a cash PIE, managed by AMP Capital Investors, and a number of fund managers, such as ING, have cash PIEs as well.
Is it long term, short term or medium term?
This is a short-term investment as money can be pulled out any time.
What is the fund's unique selling point?
The fund is in a PIE structure. Investors who are on the 39 or 33 per cent marginal tax rate will be taxed at 30 per cent on their income from a PIE. They will therefore enjoy a 9 or 3 per cent gross tax saving respectively.
How strong a stomach do you need for it?
Mild. The trust is low risk, investing in Kiwi bank deposits and short-term securities with a credit rating of A1 or higher.
What's the hitch?
Perhaps the biggest hitch is that there is some uncertainty about whether fixed-interest and cash funds were meant to be able to benefit from the new PIE rules. There is some talk that the rules maybe changed in the future.
