Booster is a new fund investing in agricultural and horticultural property. How do the investment fund fees compare to Provincia industrial property fund?
First an overview of the Booster investment fund…
Booster investment fund
Booster’s new Private Land and Property Fund provides investors with an opportunity to obtain an investment exposure primarily in a specialised portfolio of directly held, unlisted, agricultural and horticultural land and other property investments in New Zealand.
It aims to generate an average annual long-term return of about 8% (before tax and after all fees, charges and costs) from a combination of income distributions and capital growth, and pay an annual distribution to investors.
The Fund obtains its property exposure by buying units in a separate wholesale property fund that is also operated and managed by Booster – the Private Land and Property Portfolio established under the Booster Investment Scheme.
In essence, Booster’s new retail fund sells ‘units’ to investor and invests the money into Booster’s other wholesale property fund, which is the entity that actually owns the properties. In other words, the Booster retail fund invests in the Booster wholesale fund.
The return to Booster investors comes from income distributions made by the fund, and from any change in the fund’s unit price. The unit price changes as net income is earned (prior to being distributed), and as property is revalued.
Booster chairman Paul Foley says, “The Private Land and Property Fund offers an alternative to term deposits. Having a wider range of opportunities is good for investors.”
“We have seen the challenges low interest rates create for savers,” Foley said.
“The Private Land and Property Fund is the company’s response. It connects savers with income-generating land investments and the lower volatility of unlisted property.”
Provincia investment fund
Provincia is a conservative wholesale investment fund that invests in industrial property in prime industrial areas.
Then fund specialises in adding value to properties it buys to enhance the returns it provides to investors.
Shareholders own shares in Provincia which in turn directly owns the properties. There are no layers upon layers separating investors from the underlying assets. It is as close as possible to direct ownership without actually having your name on the title.
The return to Provincia investors comes from income distributions made by the fund, and from any change in the fund’s share price. The share price increases as property is revalued.
Provincia aims to generate an average annual long-term return of about 6% (before tax and after all fees, charges and costs) just from income distributions, and further unspecified returns from capital growth.
Returns from capital growth in 2018 were 33% which, on top of the 6% return from income distributions, resulted in a total return to investors of 39%.
Provincia pays quarterly dividends of 6% of the current share price, with the objective that these will increase over time. Indeed, foundation investors are now receiving 8% return on their investment.
This is calculated as 6% of $1.33 (current share price), which equals 8 cents per share per annum (paid quarterly), and 8% return on their original investment of $1.00 per share.
Investment fund fees
Management fee: 1.0%
In fund costs: 0.1%
Property operating expenses (estimate): 3.61%
Total (estimate): 4.71%
Booster investment fund fees are expressed as a percentage of the net asset value of the fund per year.
Management fee: 1.36%
Administrators fee: 0.36%
Manager’s performance fee*: 0.91% (if annual returns are 13.5% or more)
Total (estimate): 2.64%
* If total shareholder returns are 8.5% or less, there is no performance fee.
Provincia investment fund fees have been converted into a percentage of net asset value of the fund per year to ensure the comparison with Booster is an apples-with-apples one.
Booster’s investment fund fees are are 78% higher than Provincia.
Provincia offers lower fees, higher returns and lower risk.
Find out more about Provincia…
If you’re looking for somewhere safe to park your funds and earn a decent return plus capital gains, find out more about investing in Provincia at our investor information evening on Thursday next week…
WHEN: Thursday 26 September 2019 at 6:15 PM for a 6:30 PM start. Allow one hour.
WHERE: Newland Burling offices, 268 Manukau Rd, Epsom
RSVP: Simply email email@example.com to register for the evening.
- Visit our Provincia property fund page
- Phone +64 9 522-4936 » (click to call)
- Freephone 0800 522-222 » (click to call)
- Email firstname.lastname@example.org
- Or complete the online form below…
This content is provided for general information only and should not be relied upon or used as a basis for making any investment or financial decision. To the extent that any information or recommendations in this content constitute financial advice, they do not take into account any person’s particular financial situation or goals. As individual circumstances differ, we strongly recommend you seek independent legal and/or financial advice prior to acting in relation to any of the matters discussed herein. Neither Newland Burling & Co Ltd nor Provincia Property Fund Management Ltd nor any person involved in this content accepts any liability for any loss or damage whatsoever may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this content.