Managed Investment Funds Frequently Asked Questions

A Managed Fund combines your money with other investor's money in the same fund. The money is then expertly invested by a professional fund manager in different assets.

There are a range of Managed Funds designed to achieve different objectives. Some funds invest in higher risk assets and target quick growth - they can rise dramatically but can easily drop just as quickly. These type funds are generally for money that you don't consider vital to your future plans. Other funds look for solid long term growth from a range of deposits, bonds, and shares - this generally is a better place to invest money intended for your retirement.

Each time you invest in a managed fund you will be issued with 'units'. These units represent your share in the fund(s). As the price of these units increases, so does the value of your investment, depending on the value of the underlying investments. However, nothing is guaranteed and sometimes they can also reduce in value. Remember, past performance is not a reliable guide for future performance. 

RaboPlus offers over 30 managed funds covering the main asset classes (or a combination):

• Cash (e.g. a RaboPlus savings account) 

• Bonds (e.g. a loan to the government or a large company) 

• Property (e.g. residential or commercial property)

• Equities (e.g. shares in companies)

Each time you invest in a managed fund you will be issued with 'units'. These units represent your share in the fund(s). As the price of these units increases, so does the value of your investment, depending on the value of the underlying investments. However, nothing is guaranteed and sometimes they can also reduce in value. Remember, past performance is not a reliable guide for future performance. 

• Check out our range of managed funds

If you are interested in investing but do not have the time, resources or energy to research and track all the different investments out there then managed funds could be right for you. The key benefits of investing in managed funds are:

• Diversification: Managed funds enable you to invest in a diversified portfolio of investments beyond what most investors could achieve themselves. From as little as $250, these investments may be spread across single or multiple asset classes, reducing the volatility of the overall investment and the impact of a fall in the value of any one asset.

• Professional Money Management: Pooling funds with other investors allows a fund manager to spread the investment mix, which helps lower investor risk. Additionally, the pooling of investors funds allows the fund manager to invest beyond the financial capability of the individual investor. The fund managers will constantly research and monitor investment markets to find the best opportunities.

• Performance: Managed funds offer the potential to earn returns above the market benchmark of each respective asset class. With a team of professional investment managers constantly looking for the best opportunities, a fund can offer you the potential to earn returns superior to what an individual investment manager might be able to achieve on their own.

• Liquidity: You can get access to your money whenever you like.

• Convenience: It takes time to manage a diversified portfolio of investments. You need to research the market, implement transactions and consult with stockbrokers, accountants, tax specialists etc. A fund manager can undertake all the necessary management tasks on your behalf.

• Economies of Scale: As managed funds pool investors' money they typically have the buying power of millions of dollars. This allows them to take advantage of investment opportunities that are not generally available to individual investors.
  

We believe you are the best person to determine which of our managed funds is right for you. But we do provide you with lots of literature in plain English and some helpful investment wizards to help you reach your decision. If it is your first time investing, you should also consider the following:

1. Define your investment time horizon - how long do you want to invest for?
2. What are your financial goals - what are you investing for?
3. Understand you risk tolerance and the risks associated with each of the managed funds.
4. Combine your goals, time horizon and risk tolerance and find a managed fund that matches these objectives.

First you have to become a customer of RaboPlus. Once you open a RaboPlus Master Savings Account, you can then also open a RaboPlus Managed Fund Account online, or as part of the initial application. Once you have your RaboPlus Managed Fund Account, you can purchase Managed Funds online via the internet. 

If you are already a RaboPlus customer you can create a Managed Fund account by logging in to your RaboPlus account, selecting "Managed Funds", then "Open New Account".

We've come up with an easy way for you to define your investment profile. Using our investor tool, simply work out your risk profile, to see a portfolio allocation designed with your goals in mind.

• Start investing from $250
• Low 0.75% entry fee
• No exit fee (Note, the buy price is greater than the sell price on some funds)
• Access top rated Managed Funds 24/7
• Local and global Managed Funds
• Morningstar ratings

Already a customer?

Step 1: Purchase funds

• Log-in to your account.

• Click on "Managed Funds", then "Purchase".

• Click on "Buy" next to the fund you wish to purchase.

Please note: Before you can purchase managed funds your money needs to be cleared and in one of your RaboPlus call accounts; it will take 2-3 business days to clear once we receive it.

The first time you purchase funds you may be prompted to open a managed fund account (if you did not request to do so when you opened your On-Call Account).

Step 2: Processing

At 12:30pm on every business day RaboPlus sends all orders to the fund manager for processing. Therefore, if you purchase funds after 12:30pm your order will not be sent until the following business day. Depending on the fund, it generally takes between one to eight days to receive the information back from the fund managers. However, most funds are processed within two to four business days. The Cash Advantage Fund is normally processed by the same evening.

New to RaboPlus?

If you're not yet a customer, you'll need to apply online and open a Master Savings Account. When your account is set up, login in and follow the steps above.

The unit price does not include any fees or commission. The unit price for the Cash Advantage Fund has been continuously rising since its inception due to the accrual of interest. Therefore, due to no entry or exit fees being charged, the increase in the unit price is a direct reflection of the interest earned by the investors in the fund.

For example, if you purchase $1,000 worth of units for $2.50 each you only receive 400 units. However, it is your $1,000 that is invested into the fund that begins to earn interest for you. Let us say that the unit price then increases to $2.70 over the next year. The unit price increase of 20 cents is the interest you have earned on your $1,000 investment and your 400 units are now worth $1,080 (before tax). So, the number of units you hold has no effect on your return.

No two investors are the same. Some swear by risk, others want security above everything; many have a view somewhere in between. You must decide which profile best suits you and your investment objectives.

To determine your investor profile, decide how much risk you are prepared to take with your investments. You need to identify your investment objectives, assess your comfort with the various levels of risk and reward, and clarify your long term investment goals. To help you do this, complete the investor test: What type of investor am I?

The minimum amount per order is $250.

The Portfolio Investment Entity ("PIE") regime is a new regime for taxation of PIE managed funds. The PIE's income is attributed to its investors, based on their shares of the PIE, and is taxed at each investor's prescribed investor rate ("PIR"). The PIE regime creates tax advantages for many PIE investors, mainly because the maximum PIR is 30%. The PIE regime therefore provides tasty tax benefits to investors who are on a 38% or 33% tax rate and invest in a PIE, such as our Cash Advantage Fund.

Each Managed Fund comes with additional information, e.g. Fact sheets, an Investment Statement, or the most recent half-yearly report. We advise you to read these documents carefully before placing an order, giving full consideration to your Risk Profile and investment objectives.

When you provide us with a purchase order, you must confirm whether you have made yourself aware of the Investment Statement. These can be found under the "Literature" tab on the "Find a Fund" screen".

All PIE Managed Funds are taxed at 30%, regardless of the marginal tax rate of the investors in the fund. Since October 1 2007, managed funds that are PIEs, now have their income flow through the PIE with the investors in the PIE having their share of the taxable investment income taxed at their own prescribed investor rate ("PIR").

An overview of all investment costs-per-product can be found under the "Fees" tab on the "Find a Fund" screen". More detailed information about the fees and conditions can be found in the investment statement for each fund, found under the "Literature" tab on the above screen.

Tax rate, although there is a key difference - the top rate for PIR is 30%. The PIR is the rate at which an investor's taxable income in a PIE will be taxed. RaboPlus is obliged to use the default PIR for individuals unless you elect one of the lower rates of 12.5% or  21%. As a Trust, company or incorporated society your PIR will be 0% as you file a tax return. Trusts however may elect a PIR of 21% or 30%.

If in one of the last two financial years your taxable income was $14,000 or less and when combined with the income from your PIE investments your total income was $48,000 or less, then all of your PIE income will be taxed at 12.5%.

Or if in one of the last two financial years your taxable income was between $14,000 and $48,000 and when combined with the income from your PIE investments your total income was $70,000 or less then your PIE tax income will be taxed at 21%.

If in both of the last two financial years Your taxable income was more than $48,000 or, when combined with the income from your PIE investments your total income was more than $70,000 your PIE tax income will be taxed at 30%. 

This is a considerable advantage for investors in the 33% and 38% tax bracket as they are paying only 30% tax on their PIE income.

You can elect your correct PIR rate via our online banking site.

For further assistance in calculating your PIR there is guidance on the IRD's website: www.ird.govt.nz

You can change your PIR rate at any time by logging in to your account and clicking "Tax", then "Change tax details".

In the 2007 Budget the Government announced a reduction of the company tax rate from 33% to 30%. The Government also announced that the top tax rate for PIEs and the tax rate for most unit trusts and superannuation funds will reduce from 33% to 30%. The benefit for individuals will mean a lower tax rate on their investment and retirement savings and a more consistent tax treatment for different types of managed funds. These changes all come into effect from 1 April 2008.

At 12:30pm on every business day RaboPlus sends all orders to their respective Fund Managers for processing. Therefore, if you purchase funds after 12.30pm your order will not be sent until the following business day. Most Funds take two full working days to process. This is from the time your order is sent to the Fund Manager, to it then settling and showing in your Managed Funds account online. Your account will be updated with your unit holdings, with the purchase amount being deducted from your RaboPlus savings account at the same time.

* These are standard processing times provided by our Fund Managers. Actual processing times may vary from this.

We suggest that you place your order at least 15 minutes before 12:30pm if you wish your order to be sent on the same day. With orders there are no guarantees regarding the Fund Price for which your order will be executed. Please note that it may differ from the fund price currently indicated.

You can check if your purchase has been executed in the "Summary" section of your Managed Fund Account by clicking "Settled Order Statements". Please note that the transactions will only display here the day after they have been processed into the account.

You can change your RWT rate at any time by logging in to your account and clicking "Tax", then "Change tax details".

Yes, provided your order has not yet been executed. You must first cancel the existing order and then place a new order.

Yes, provided your order has not yet been executed. The deadline is 12:30pm on the day we process your request to the fund managers.

To do this click "Managed Funds", "Pending Orders", then "Cancel" while you are logged in to your account.

In normal circumstances, managed fund orders are carried out according to the time frames specified in this FAQ under the question "When are purchases (Buys) Completed?". Public holidays will cause small delays and there can potentially be other delays, for example when the fund manager is auditing or processing tax details for a fund. Such delays are rare would not normally be longer than a few business days.

RaboPlus offers answers to tax questions in the FAQs above and below, however if you are unsure about anything you should consult your own tax adviser in relation to your managed funds.