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NZXFM has also agreed to acquire the rights to the NZX Australian MidCap Index Fund (MOZY).
The deal is part of a broader initiative to encourage more New Zealanders to invest in the sharemarket and share in the success of listed companies. MIDZ and MOZY join the NZSX 10 Fund (TENZ) to create a family of exchange traded funds under the ‘Smartshares' brand, being launched today.
As part of this Smartshares family, NZXFM also intends to launch a fund tracking the NZSX 50 Portfolio Index, called FONZ, later in the year.
“We want to provide an easier, smarter and lower risk way for all New Zealanders to invest in the sharemarket,” said Mark Weldon, NZXFM Director and NZX CEO. “Smartshares offer the opportunity for New Zealanders to invest in a diverse range of companies with a single trade, paying lower fees, and with all the other benefits of owning shares.”
Weldon said that while exchange traded funds, more commonly known as ETFs, were an excellent first investment for people new to the sharemarket, they could just as easily form a solid core to any investor's existing portfolio because they spread an investment across a whole index with just one trade.
The popularity of ETFs has been growing rapidly worldwide, with the amount of money invested in ETFs increasing by 80 per cent a year over the last seven years. In the USA , there are over 130 ETFs in existence accounting for over US$178 billion of funds under management.
NZXFM Director and NZX Markets Development Manager Geoff Brown, said Smartshares' management fees were comparatively very low at under 0.75 per cent.
“The cost-effective nature of Smartshares, together with a binding ruling from the IRD meaning the funds do not pay tax on gains from the sale of shares, make these products a great investment for New Zealanders who want a simple and inexpensive way to invest in a range of companies at once,” he said.
ETFs give returns that closely match those of an index because they hold shares in proportion to the shares in the index. They are bought and sold on an exchange in the same way as normal shares.
MIDZ has changed its name from the NZ MidCap Index Fund to the NZSX MidCap Index Fund from today.
A new website will support the Smartshares products (www.smartshares.nzx.com) and a nationwide advertising campaign begins tomorrow.
There will be a media briefing and presentation at 10.30am today at the Auckland Art Gallery auditorium.
The official Smartshares launch will be held this evening at the Auckland Art Gallery from 6 to 7.30pm; followed by a Wellington launch tomorrow at the City Gallery from 6 to 7.30pm.
ENDS
Quick facts about ETFs and Smartshares
About exchange traded funds (ETFs)
ETFs are funds that trade like normal shares. They usually ‘track' an index through holding shares in proportion to the shares in the index. With ETFs, investors can buy a single share that spreads their money across a range of companies and gives returns that closely match those of the index.
Smartshares offer New Zealand investors an easy way into the sharemarket:
MIDZ tracks the NZSX MidCap Index, NZX's benchmark for the medium-sized company sector. It has been trading on the NZSX Market since 1997 and holds around $38 million in funds under management. Since the inception of MIDZ, the NZSX MidCap Index has posted an annualised gross return of 10.32 per cent a year (to 30 June 2004 ), excluding dividend distributions. NZXFM has today renamed MIDZ the NZSX MidCap Index Fund instead of the NZ MidCap Index Fund.
TENZ tracks the NZSX 10 Index and has been trading on the NZSX Market since 1996. Over the 12 months to 30 June 2004 TENZ had a gross return of 16.99%.
MOZY will track the S&P/ASX MidCap 50 Index in Australia , allowing New Zealanders to invest in medium-sized Australian companies through a fund listed on the NZSX Market.
FONZ, the NZSX 50 Portfolio Index Fund, will track the NZSX 50 Portfolio Index, New Zealand 's benchmark for sharemarket performance.
Benefits of Smartshares
- Diversification – Buy all the shares in an index with one trade.
- Performance – Returns closely match those of the index.
- Flexibility – Smartshares trade on the NZSX Market just like shares, but offer the broad exposure of a fund.
- Low fees – Management fees are lower because Smartshares track an index, eliminating the need for active buying and selling decisions.
- Less tax – Smartshares do not pay tax on share price gains.
About NZX Funds Management Limited (NZXFM)
NZX Funds Management Limited is a wholly owned subsidiary of New Zealand Exchange Limited (NZX) and is the manager of Smartshares funds. NZX does not guarantee the performance of Smartshares funds. Units in MOZY have been accepted for quotation by NZX and will be quoted upon completion of allotment procedures. However the Special Division which regulates NZX takes no responsibility for this offer. A copy of the MOZY Investment Statement can be obtained by contacting NZX Funds Management Limited at www.smartshares.nzx.com or by phoning 0800 80 87 80.
