Fund benefits from Long-term Investment Philosophy

Niche Superannuation Fund benefits from Long-term Investment Philosophy

Niche superannuation scheme Mutual Superannuation Fund (MSF) has continued a 40-plus year track record of success with an annual pre-tax return this year of more than 7% for investors despite the very difficult ongoing market conditions.

The small property-based fund, established 42 years ago, has an investment policy based on buying industrial and commercial properties on a debt-free basis and holding those properties for the long-term.

Fund chairman Richard Yates said that philosophy had led to a 7.05% pre-tax return this year and an average 9.2% pre-tax return over the past seven years, including through the worst of the Global Financial Crisis.

“We’ve stuck to our founding principles, stayed debt free, managed our assets and our lease holders well and that formula has brought in good, solid returns for our investors over an extended period of time,” said Mr Yates.

“As a mutual fund we concentrate on keeping our costs low so that the bulk of the annual returns are shared among our investors’ funds.”

The Fund’s Executive Director, Maureen Heine said the Fund had switched to discussing pre-tax profits for the first time in its 42-year history as it was now a Portfolio Investment Entity (PIE) with all investors being taxed at their prescribed investment rates (PIRs).

MSF recorded a profit of $797,993 for the year ended June 30, 2011 compared with just $170,848 in the previous financial year while three properties had been sold.

Maureen Heine said the need to manage withdrawals from the fund was behind the sales of the properties as the compounding effects of the ongoing collapse of finance companies, the Christchurch earthquakes and the ongoing leaky homes saga had seen members decide they needed access to their funds.

“Withdrawals from the fund exceeded contributions but the feedback we received showed this was clearly driven by the financial needs of fund members rather than any dissatisfaction with the fund,” said Maureen Heine.

“We have recently launched a new promotional campaign and have been encouraged by the response. It’s also clear from that response that people continue to look for solid performing funds, based on sound principles and backed by good governance, in which to place their funds”.

“We’re seeing investors return to commercial and industrial properties in the $1-1.5 million range and the market shows a premium for well located, well leased properties. We keep our focus on maintaining a high quality tenant base and have 100% occupancy. Our cash flows also remain strong and that also benefits from our no debt policy.”

Looking ahead Mr Yates said the most recent result should give current investors further confidence for the future and would also give our new investors confidence in their investment decision.

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