Maximise your slice of the Pie
When I first started Pie Funds in 2007, I received plenty of jokes and some genuine confusion, “What do you mean, you don’t sell mince and cheese!”. But 17 years on, “Pie” has grown to over $2 billion* in funds under management from everyday Kiwis just like you, and the name “Pie Funds” carries much greater awareness, not just because of our name!
The history of the name
Behind every good name is a story; here’s the story of how Pie Funds got its name.
Back in 2007, well before the iPhone became mainstream, when I was dreaming of being an investment manager, I thought a good name for my business would be ANZAC Funds. A strong name that showed we were focused on Australian and New Zealand investments. But when I heard about the new tax regime, called PIE, or Portfolio Investment Entity, I thought that would be a clever and catchy name with the added bonus of anyone googling “pie fund” seeing my business pop up at the top of the results. I couldn’t believe my luck when I checked the Companies Office!
I registered the name right there and then on the 9th of July 2007.
Fast forward to today, and we’ve made our “Pie Funds” investors around $700m* in wealth, so thank you to all our loyal supporters. So why am I writing about the name now? Following the trust tax rate increase on 1 April 2024, investors, advisers and accountants are becoming increasingly interested in PIEs.
What is a PIE (Portfolio Investment Entity)?
A PIE is a pooled investment vehicle such as a managed fund, that meets specific criteria set by the Inland Revenue. PIEs generally offer exposure to various asset classes, such as cash, fixed income, or shares, with some holding a mix of these assets. PIEs can provide diversification through the assets they hold, providing benefits that help to manage risk whilst also enhancing returns, and through effective portfolio implementation and rebalancing. KiwiSaver Funds are usually PIEs for this reason.
An important feature of PIE funds is their intended tax advantage vs individual and trust tax rates. Investment income in PIE funds is taxed at a maximum rate of 28%, compared to the top personal tax rate of 39% for individuals earning over $180,000 per year. Starting 1 April 2024, trusts earning net income above $10,000 annually will also be taxed at 39%, an increase from the previous 33% rate, and significantly higher than the PIE funds maximum rate of 28%.
Strategic and efficient portfolio construction
By strategically assessing your portfolio and reallocating some investment assets into funds with a PIE structure, you may benefit from the capped top tax rate of 28%. This, combined with the diversification benefits which most PIE funds typically provide, can be a compelling strategy navigating today’s investment landscape. Of course, the tax efficient nature of an investment isn’t the only consideration when constructing your portfolio.
Achieve Your Financial Goals with Pie Funds
We’d love to talk further with you about your financial goals and objectives. Pie Funds offers a diverse range of products to suit every investor’s needs. Our product suite covers Australasian equities, global equities, property & infrastructure and fixed income (cash and bonds) and also KiwiSaver.
Get in touch today to discuss your portfolio and how we can become your trusted PIE fund manager.
* As at 31 May 2024. Pie Funds Management Limited is the issuer of interests in the Pie Funds Management Scheme and the Pie KiwiSaver Scheme (‘the Schemes’). Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Schemes, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For more information about how we can help you, or to see our product disclosure statement, please visit www.piefunds.co.nz.