‘Greater Selectivity’

Press, Volume CVI, Issue 31090, 20 June 1966, Page 1

‘Greater Selectivity’

(N.Z. Press Assn.—Copyright) WELLINGTON, June 19. Life insurance offices, among the biggest buyers of New Zealand shares, would become more selective in their purchases after the Budget decision making them liable for tax on dividends, the manager for the New Zealand and Australian Mutual Provident Society (Mr S. J. R. Chatten) said today. Mr Chatten had been asked to comment on the statement bv the Minister of Finance (Mr Lake) that the existing

exemption from tax of company dividends received by life offices would be phased out over the three years ending in March, 1969, and that arrangements • were being worked out, in consultation with the life offices, to provide for investment of more life insurance funds in Government securities and in fanning. Life offices would have to look again at their investment policy and decide what, in the changed circumstances was best in the interests of their policyholders, Mr Chatten said. To take one extreme, it would be absurd to think that they would unload the equities they already held. There had been a steady increase in the equity of portfolios of life offices for many years, and this form of Investment would not be discontinued.

However, with the exemption from dividend tax removed, equities would lose a margin of advantage in relation to other forms of investment, and life offices would have to look more closely for prospects of income growth in the equities they did buy. Mr Chatten said life offices did not buy equities for capital gain in the usual sense. They bought them to hold, but looked for growth in income from them. During the last year there had been some reduction in equities purchased by the life offices as a result of increased pressure for funds in other sectors. "We have already been trying to invest more in Government loans and more in farming in the national interest and this trend, will no doubt continue for some time,” he said. *