Investment trends

Press, 12 May 1987, Page 28

Investment trends

A serious investor could well be described as someone who wants a realistic return on the investment; has a high degree of confidence in the organisation that the , money is entrusted to; and wants more options on the best methods of utilising the hard-earned extra cash.

Overseas trends suggest that serious investors are looking towards some kind of managed funds such as unit trusts. Unit trusts in the United Kindom, and mutual funds in the United States, are increasingly being perceived as valid alternatives to bank or other forms of deposits. It may need a major

world-wide shakeout before this trend is seriously challenged. The New Zealand unit trust industry differs from some industries in the United Kingdom and United States. In New Zealand, all available trusts are open-ended funds. In other words, the funds can continue to take in new money. Although some United Kingdom. and United States schemes are openended, they also operate a number of closed-ended funds.

In many cases closedended funds are operated by similar managements as the open-ended trusts, but additions or withdrawals to the pool of

each fund are not possible, except of course, in the case of dividend payments.

One disadvantage of the closed-ended schemes is that the investors are not able to redeem units other than by selling them in the market, at which point brokerage and stamp duty are involved. Disregarding the merits of various,schemes, it is clear that investments such as unit trusts, that require professional management, are becoming increasingly popular internationally. In New Zealand, there are now trusts that should be investigated by the potential serious investor.