2/10/2021 11:00:00 PM

Conservative by name, not by returns

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Pie Funds CEO and Founder Mike Taylor sets the scene for interest rates and explores investment options offering a better return than term deposits.

Recent data shows interest rates have steadily declined for the last 30 years. But looking back further, the picture is quite different. 

The UK has data back to 1694, when the Bank of England was founded by King William III, showing interest rates have actually been stable, between 2% and 5%, most of the time. The exception was high inflation in the 1970s and early 1980s when rates were as high as 17%. This decade however, it appears we are entering a new phase not previously seen in history, when the cost of borrowing is fast approaching zero and in many countries is negative.

In Europe, interest rates have been negative for some time, and it’s not uncommon to take out a residential mortgage at a rate close to zero. In Switzerland, you must pay the bank to have money on call. So while rates can always go lower, there is little scope for them to fall much further. 

Turning to home again. In the last two decades the average 1-year term deposit rate in New Zealand has ranged from nearly 9% in 2007 to the current low of under 1% for most New Zealand major banks. 

Today, however, it’s a different story. For investors looking to achieve a respectable return on their cash, the days of a 5% term deposit are well behind us.

Depending on your risk appetite and investment horizon, Pie’s Conservative Fund offers a potential term deposit alternative.

The Fund’s objective is to preserve capital with some growth and outperform the market index by investing about 80% in cash and fixed income, and 20% in equities (shares) and other financial products. 

View Conservative Fund

Features of Pie’s Conservative Fund include:

An experienced investment team
Pie’s CEO and Founder Mike Taylor is the portfolio manager of the Conservative Fund. You’ll benefit from Mike and his team’s investing and active management experience.

Still a lower-risk, low volatility option
The Conservative Fund has diversity across cash, New Zealand and international fixed interest, and international equities (shares). Read more about the target investment mix here.

Regularly quarterly distributions
For investors seeking a regular source of income, the Pie Conservative Fund pays quarterly distributions. Investors can be paid these directly, or have them reinvested back into their fund (known as the compound effect). We can also tailor withdrawals to suit investors’ needs to set a specific withdrawal amount or frequency from the fund i.e. monthly withdrawals of $500 to supplement government superannuation payments.

Ongoing liquidity without break costs
Get access to your money within 5 business days with no break costs or associated fees. Accessing money on term deposits may take far longer and can incur break costs too. 

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Pie Funds Management Limited is the manager of the funds in the Pie Funds Management Scheme.  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 Pie Funds Management Scheme investment funds, 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 information about how we can help you, our?duties?and complaint process?and how disputes can be resolved, or to see our product disclosure statement, please visit?www.piefunds.co.nz.  Information is current as at 11 February 2021.