Understanding PIE Funds
PIE stands for ‘portfolio investment entity’. A PIE Fund is a type of collective investment vehicle that may provide individual and trustee investors with incentives to invest.
PIE Funds have special tax rules, which enable investors to pay tax on the investment income from the Fund at a rate (called the Prescribed Investor Rate (PIR)) that, for most investors, is lower than their personal income tax rate.
In addition, a PIE Fund won’t be taxed on any capital gains from disposal of its underlying assets.
Betashares NZ Funds are structured as multi-rate PIEs.
A multi-rate PIE (commonly referred to as an ‘MRP’) is a type of PIE Fund that enables investors to nominate the prescribed investor rate (PIR) at which the fund will calculate tax on the investor’s investment income from the Fund. The PIR can be 0%, 10.5%, 17.5%, or 28%.
Tax is deducted upon an investor’s redemption from a Fund (either full or partial) and also annually on 31 March.
A Prescribed Investor Rate (PIR) is the rate used to calculate how much tax an investor pays on their income from a PIE Fund. The PIR is based on an investor’s taxable income from the previous two tax years. There are four possible rates for New Zealand resident individual investors – 0%, 10.5%, 17.5%, and 28%. Investors in Betashares NZ funds must provide the correct PIR at the time of account opening.
Investors should review their PIR on an annual basis and if needed, advise the respective platform (or Link Market Services for direct investors) of any changes. An updated PIR will be used from the date provided, or for the next calculation period.
How to invest in Betashares NZ Funds
Clients of financial advice providers and brokers will be able to invest in Betashares NZ Funds via an approved platform. The full list of New Zealand investment platforms that offer our Funds will be available on our website here.
Investors seeking to invest a minimum of $500,000 (or otherwise agreed by Betashares) can also apply directly for units in the Funds. Please contact our Client Services team for more information on how to do this.
Betashares NZ Funds charge annual fees and costs. The fees and costs vary between different Funds. Betashares does not charge performance fees in any of its funds. For full details please refer to the Product Disclosure Statement (PDS).
If an investor has invested through a platform, they can contact the platform to change their details or for other assistance. Direct investors can update their details by contacting Link Market Services by email at firstname.lastname@example.org
Investors and their advisers can also contact Betashares directly for assistance.
At any one time, there is a difference between the price an investor will pay to buy units in a Fund, and the price they will receive for redeeming (selling) units in a Fund. This difference is known as the buy/sell spread, and is related to the investment transaction costs incurred by the fund manager in processing an application to buy or sell. The buy/sell spread seeks to ensure that the transaction costs associated with applications and redemptions are borne by the transacting investors and not by other investors in the Fund.
Refer to the fund page to view the buy/sell spreads for Betashares NZ Funds.
Distributions and Tax
An investor’s PIR is based on their taxable income from the last two tax years. To determine their PIR, or for any other tax questions, investors should consult their professional tax adviser. More information about PIRs is also available on the Inland Revenue website.
When launched, the Betashares Australian Investment Grade Corporate Bond Fund (NZD Hedged) will pay monthly distributions. No distributions are anticipated to be paid in other Betashares NZ funds.
When launched, a distribution reinvestment plan will be available for the Betashares Australian Investment Grade Corporate Bond Fund (NZD Hedged). Distributions and DRP are not currently available for other Betashares NZ Funds.
Tax statements are issued on an annual basis, providing investors with information about their holding in a Fund, the income received from their investment in the income year, and the relevant tax calculated by the Fund.
If an investor is invested through an approved platform, tax statements will be made available through the platform. Direct investors in a Fund will receive a tax statement from Link Market Services.
Betashares NZ funds are classified as “exit MPR”. Tax is deducted upon an investor’s redemption from a Fund (either full or partial) and also annually on 31 March.