Commentator – Rebekah Swan – ESG Investment Specialist, NZ / Client Advocate / Head of Product

Q1:  What is your view on spreads – should retail funds have buy/sell spreads and why/why not?

There is a real cost of buying and selling securities for a fund. If there is no buy/sell spread then it means that other unitholders are paying for the incoming or outgoing unitholder. A fairer approach for unitholders is to have a clear and transparent buy/sell cost. This way the cost of buying or selling the security is charged within the fund and then offset against the actual cost of buying the securities, so they net off against each other.

Q2:  Do you see any future changes re spreads on your funds i.e. adding or removing them?  Is there any pressure, competitive or regulatory, that is likely to influence the future of spreads on your funds?

This is a continuous issue, with transparency and unitholder equity being the key objective. In some cases where funds don’t disclose spreads, unitholders are still paying which is not as transparent and is misleading. We will always be guided by what is the most transparent and fair approach, as well as what is required by regulation.