Investors Unit Trust goes to public

Press, 3 August 1985, Page 22

Investors Unit Trust goes to public

A form of investment more popular overseas than in New Zealand — the unit trust — is now available for the first time to the general public by way of prospectus. An offer of units in Investors Unit Trust, an existing equity share-based unit trust, was announced in Christchurch yesterday. “We expect a high degree of interest in this type of investment, especially among smaller investors,” the chairman of the company which manages the trust, Mr J. B. Hindin, said. Mr Hindin is a well-known Christchurch investment consultant and superannuation fund manager. Unit trusts work by pooling investors’ funds and reinvesting them in a wide range of shares and other Stock Exchange securities. A management company looks after the portfolio, distributing returns on a per-unit basis. “Although buying shares is very attractive to many investors, the cost and time spent in running a diversified portfolio can be a problem. Unit trusts aim to overcome this problem.”

Mr Hindin believes the major benefits are convenience and security. “The investor has access to a diversified

portfolio, but without the hassle of managing it. “Unit trusts mean diversification without tears — even a smaller investment can be spread over a whole portfolio, which provides greater security. Further security is added by the expertise of those managing the trust’s portfolio.” They can also provide a healthy return for investors, making them an attractive and viable investment option. Although this is its first public offering of units -(apart from the initial issue), Investors Unit Trust is in its twenty-fifth year. The trust was formed in 1960 by a group of prominent businessmen from throughout New Zealand, including Mr Hindin. The first chairman of the board of directors was the late Sir Sidney Holland, a former Prime Minister.

Today the trust’s portfolio is valued at more than $25 million. “Over the 25 years, the trust’s managers have built up a great depth of experience in selecting investments, which is reflected by the return,” said the Mr Hindin. The return has been 28.85 per cent per annum after tax compounded over the last five years.

A management company (Security Management, Ltd) handles the day-to-day administration of the portfolio. Investment decisions are made by an advisory board, chaired

by Mr Hindin and made up of Auckland, Wellington, and Christchurch businessmen. “Primarily, we felt the timing was right to offer this investment option to the public. As the range of options has grown, investors have had to become more sophisticated. It is becoming ever more complex to make investment decisions — it can be very timeconsuming, especially if managing a wide range of investments. “At the same time recent history has shown that sharemarket investment has been a rewarding investment. Unit trusts give people the opportunity to participate in a wide range of sharemarket investment, with the minimum of inconvenience.” Mr Hindin said Investors Unit Trust was seen as a medium to long-term investment, which aimed for steady growth. “However, a unit trust is also very flexible. Units can be sold and bought on a daily basis. They are readily marketable, to suit the investor’s needs.”

Investors apply for units on an application form enclosed with the prospectus. The price of the units (currently $3.29 buy, $3.46 sell) is determined by a formula which involves the current value of the portfolio and the number of units outstanding.