New trust designed for sophisticated investors

Press, 24 May 1988, Page 33

New trust designed for sophisticated investors

Tower Trust is in the process of introducing three new unit trusts. The prospectus for the first, The Tower Multi-Sector Fund, is now available. This trust is aimed at the more sophisticated investor who is willing to invest in the aggressive financial markets.

Fund managers will have to use a great deal of discretion, according to Mr Peter Baynes, the managing director of Towner Trust Services. “They will have to go out and make money and this could involve taking a few chances,” Mr Baynes says.

“They will move in different markets, and buy and sell quickly.” There will, however, be some restrictions to reduce the risk. There will

be limits on various classes of assets and a manager will not be able to commit more than 60 per cent of the fund to the equity market. One advantage of this fund is its potential to bring higher returns. The fund is allowed to borrow up to 50 per cent of its gross asset value. In New Zealand, the fund manager employs the services of Funds Performance to manage the investments. Funds Performance is the treasury division of the Government Life Insurance Corportion. It manages the corporation’s financial market assets in New Zealand and is worth more than one billion dollars.

Overseas, the investments will be managed by

Morgan Grenfell International Funds Management, a company in the international merchant banking group, Morgan Grenfell. The company has a record of consistently good ratings in the various indices of professional investment performance used internationally. The two other new trusts are in an advanced stage of preparation. They are intended for those who want a more secure investment with reasonable returns. Tower Mortgage Income Trust will invest in a selection of well secured mortgages and will be aimed at a high income return. This trust will be launched next month. Tower Nest Egg Trust

will be a mixed fund with components similar to the Tower Multi-Sector Fund, but it will be more conservatively managed for long-term savers wanting capital protection.

The new trusts will complement the three trusts introduced by Tower Trust services last year.

Tower Trust investors are provided with limited free switching facilities from one trust to another, this applies to all trusts except the new mortgage trust which has a different fee structure.

Two free switches are allowed each year. Additional switches can be made, but a charge is made.