Savings Product Review: TOWER MortgagePlus

By NZPA

Wednesday 1st February 2006

What's it called and what sort of a savings product is it?
TOWER MortgagePlus is a managed fund that invests in mortgages and a bit of cash.

Who is the company behind it?
The fund is promoted by TOWER Managed Funds, part of the NZX-listed financial services firm.

Who is the target market?
MortgagePlus is for people looking for a low risk investment that will provide a competitive return and regular income.

What return does it offer?
This fund has been around for a long time and has produced a gross return of 7.73% annually since 1990. In the 12 months for December 31 its returns were 7.29% and over the past three years it has been 6.38% annually.

When was it launched?
June 1990.

What other products are they like or do they compete with?
A fund like this has lots of competition including other fixed interest managed funds, finance company debentures and bank deposits.

Is it long term, short term or medium term?
The minimum timeframe for MortgagePlus is one year.

What is the unique selling point?
This fund differentiates itself by offering a guaranteed gross minimum return, with the rate declared at the start of each quarter. That way you know in advance the minimum return you will get. Currently it is offering 7.80% for the quarter ending March 31.

How strong a stomach do you need for it? (in other words, what's the risk profile?)
This is a pretty low risk sort of fixed interest fund.

What's the hitch?
Main hitch is a 1% fee if money is withdrawn in the first three months. The guaranteed minimum return is for the quarter, not the life of the investment. Like most managed funds there can be a notice period between withdrawal requests and payments. Currently there is no notice period.

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