UK Authorised Unit Trusts & OEICS (Open Ended Investment Companies)

Unlike many NZ based unit trusts UK authorised unit trusts do not pay tax on capital gains. Unlike Australian based unit trusts, realised capital gains are not required to be distributed as taxable income to the investor.

Capital gains/losses are reflected fully in unit price appreciation/depreciation.

This makes these UK investments much more tax effective than nearly all NZ domiciled unit trusts, super schemes and insurance bonds OR Australian domiciled unit trusts. The only NZ domiciled unit trusts which have similarly effective tax advantages are 'passive' funds (sometimes called 'index funds).

Additionally, UK funds which are GROWTH oriented, eg. share funds, tend to have relatively low distributions. Most income derived by the fund tends to be held within the fund and reflected in unit price appreciation. In the absence of a NZ capital gains tax, low income means low tax.

As always, investment decisions should not be made solely on the basis of taxation. Tax laws are reviewed and can change relatively frequently.