PIE FAQs - Milford Asset

Milford PIE FAQs

 

How do I log in to view my investor account online?

Please view our Milford Investor Login User Manual (PIE) to assist with registering or logging in to view your account. 

What is a PIE Fund?

PIE stands for Portfolio Investment Entity. All of Milford’s Unit Trust PIE Funds and KiwiSaver Funds are PIE registered entities. This provides potential tax benefits for you, enabling your investment to be taxed at your own Prescribed Investor Rate (PIR).

Eligible entities that elect to become a PIE will generally pay tax on investment income based on the ‘PIR’ of their investors, rather than at the entity’s tax rate.

What are the benefits of PIE Funds?

  • No capital gains tax on New Zealand and most Australian listed shares.

  • PIE Funds have a lower tax rate on income (28% for the highest income earners versus 33% for direct holdings).

  • PIE Funds reduce your tax administration as your tax liability is accounted for within the Fund.

  • PIE Funds have access to a broad range of investment tools that can reduce risk and enhance returns such as currency hedging, derivatives and short selling.

  • PIE Fund managers have access to a broad range of information when making investment decisions including access to company CEOs and senior management.

  • PIE Funds are actively managed and can take advantage of market volatility whereas direct holdings for tax reasons tend to take a buy and hold strategy.

What is a Unit Trust?

Unit Trusts are investment vehicles that enable you to pool your money with other investors so that you can invest across a wider range of assets.

Investors buy and sell units which represent a unit share in the Unit Trust Fund. The value of the units fluctuates according to the changing value of the assets in which the Unit Trust Fund has invested.

Milford Unit Trust PIE Funds offer investors many advantages, including the ability to have their investments managed by a team of professionals who make investment decisions based on extensive research and analysis.

Unit Trust Funds have an independent Supervisor who holds the ownership of the assets within the Fund. Trustees Executors Limited is the independent supervisor for Milford Unit Trust PIE Funds and also oversees the Manager’s administration. Milford does not handle investor money.

How secure are my funds?

All Milford Unit Trust PIE Fund investors and KiwiSaver members have their Fund assets held by an independent custodian controlled by an independent licensed Supervisor to ensure security.

Trustees Executors Limited is the appointed Supervisor for the Milford PIE Unit Trusts and KiwiSaver Plan.

All the assets of the Milford Unit Trusts and KiwiSaver Plan Funds are held by the Supervisor’s nominated custodian, NAB Custodians Limited. (a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044937).

Trustees Executors Limited has been granted a full licence by the Financial Markets Authority under the Securities Trustees and Financial Markets Supervisors Act 2011 to act as Supervisor. Trustees Executors Limited is also governed by the Trustee Act 1956. Further information on the Supervisor’s licence is publicly available on the Financial Markets Authority website www.fma.govt.nz

Both the Supervisor and the Custodian are independent of Milford.

Milford does not handle client monies at any time.

The individual investments in the Milford Unit Trust PIE Funds and KiwiSaver Plan are independently priced by Trustees Executors Limited using independent sources (for example, Reuters or Bloomberg) and are reconciled daily.

Both Trustees Executors Limited and Milford are audited by PricewaterhouseCoopers, one of the big four accounting firms globally.

What is the fee structure of the Funds?

To view the fee structure of the Funds please see PIE Fund Fees 

How will investments in Milford Funds affect my tax position?

All of our Funds are registered as Portfolio Investment Entities (‘PIEs’). Under PIE legislation, investors benefit from:

  • No tax on gains in New Zealand shares and certain Australian shares
  • Investors are taxed at their PIR with a maximum applicable PIR of 28%.

PIEs that invest in New Zealand companies and Australian resident companies that are listed on the ASX All Ordinaries Index (generally the largest 500 companies) are not taxed on any gains in the value of their shares, however any dividends received in respect of the shares are taxed.

Investments in companies outside New Zealand (unless they are listed on the Australian ASX All Ordinaries Index) are taxed under the modified Foreign Investment Fund regime (FIF regime) and are taxed as if they have earned 5% total income. The income is calculated by multiplying the daily market value of the total portfolio of assets subject to the FIF regime by 5% and dividing by 365 days. Dividends from companies subject to the FIF regime are not taxed.

Under the PIE regime, instead of all Fund income and expenses passed through to investors being taxed at the Fund’s tax rate of 33%, they are taxed at the investors PIR, to a maximum of 28%. Investors on a marginal tax rate of 33% benefit from a 5% reduction.

The PIE regime provides tax advantages for unit trust investors over those who invest directly in shares. The reason is twofold:

  • PIEs have statutory protections against taxation on gains. Generally speaking direct investors are not taxed on capital gains either if they can show that they are not investing to make capital gains. However, there are complex and uncertain rules about whether an investor is deemed to be holding shares for gain or for some other income.
  • Direct investors who receive dividends are taxed at their marginal tax rates with no maximum. For investors on a 33% tax rate, that means they will be taxed at the full 33% tax rate on dividends received, whereas in a PIE they will only be taxed at 28%.
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