Boutiques seize the opportunity to offer tax-effective investments

28 January 2015

Centuria Life has partnered with independent investment house, Mason Stevens, to create another bespoke product in its recently launched TaxAstute series – in this case, a credit bond.

The Tax Astute series offers investment professionals a vehicle that combines the highly tax effective structure of a traditional insurance bond, with an underlying asset mix of their own choosing. It is very attractive to clients looking for tax effective investment options outside superannuation, while enabling investment firms to pursue their own investment philosophy by offering products that reflect their own expertise.

Late last year, another independent investment firm, Implemented Portfolios, partnered with Centuria to develop a TaxAstute series bond with underlying ETF assets.

Mason Stevens’ TaxAstute Credit Bonds tap into the firm’s expertise and reputation with credit-based assets, including as a low-cost option for risk management.

The underlying asset of the new bond is the Mason Stevens Credit Fund, an actively managed fixed income fund investing in Investment Grade Australian and international interest rate securities and cash, including government bonds, corporate debt, and structured debt securities. The Fund’s 12 month return to 31 December 2014 was 12.22%.

When combined with the tax benefits of the TaxAstute structure, it is a compelling proposition for clients seeking a low risk, tax effective investment with strong certainty of returns.

Neil Rogan, General Manager of Centuria’s Investment Bond Division, said the Mason Stevens partnership exemplifies its desired TaxAstute model. “We see partnerships with like-minded independent investment professionals such as Mason Stevens as the way of the future. This enables advisers to match the investors risk profile to appropriate product structure across accumulation and retirement phases.”

According to Tom Bignill, CEO of Mason Stevens, “In the past 12 months we’ve witnessed increasing client demand for fixed income investments and with it increasing demand for ways to access this asset class. Partnering with Centuria gives us greater flexibility in what we offer while still enabling us to build the kind of portfolio our clients want. The bond is a high performing 10-year investment that can be used in to help clients achieve their specific goals and adds a further dimension of value to our offering.”

“Centuria’s TaxAstute partnerships represent an intelligent, tailored response to market sentiment and demand. Advisers want a product that will deliver the outcomes that clients are looking for. By joining forces with fund managers we have added our own particular tax and bond expertise to build and take to market products that meets this demand,” concluded Neil Rogan.

TaxAstute bonds are designed for those planning to fund aged care, estate planning, investing to fund education expenses for children or grandchildren – or anyone investing for the medium to long term.

Growth and earnings in the bonds are taxed at a maximum of 30%, paid by Centuria on behalf of investors directly from earnings. Investors pay no personal income tax on the investment during its term and, if they hold it for more than ten years, pay no tax on withdrawals.