Frequently Asked Questions

• How did Liontamer come about?
• Why did we choose the name Liontamer?
• What is capital protection?
• Who provides the capital protection?
• Why is there a need for capital protection?
• Where do capital protected funds fit in portfolios?
• How are the trusts structured?
• How are Liontamer's investments taxed?

How did Liontamer come about?

Liontamer came about from the seed of an idea planted in October 2002. The firm’s founders, Laetitia Peterson and Janine Starks both have long experience in investment markets and they saw a clear gap in the capital protected market in New Zealand. They saw an opportunity to move the local industry forward to be able to offer New Zealand investors access to these products, which have been available in other countries for over a decade.

The first product was put together for launch in May 2003 and New Zealand's first capital protected investment specialist was in business.

You can read some information about each member of the Liontamer team describing our background experience and explaining why we chose to establish and be involved in Liontamer in About Us.

Why did we choose the name Liontamer?

So why did we choose 'Liontamer'? In short, it comes down to two factors. First, it says exactly what we do, but in a slightly unusual way. The 'Lion' symbolises the world financial markets, often volatile and aggressive. And we are 'taming' the markets by providing investors with capital protection. That way, we are able to take some of the fear out of investing.

Second, we chose the name because it was different and we are different. We are providing investments which are new and innovative. We hope our name provides both a talking point and a reminder that there are always new ways of doing things.

What is capital protection?

Capital protected investments are an area that more and more investors are now asking questions about. If it’s a completely new term to you, fear not, the basic concept goes like this:

1. You invest your money for a fixed period of time, usually 3-6 years (there have been much longer-term plans around too). Most people feel comfortable with something around the 5 year mark.

2. Instead of receiving a rate of interest, the returns are generated from areas which offer more exciting potential. For example, the returns could be linked to the sharemarkets, or a variety of other assets, depending on the manager’s selection.

3. The value of your initial investment is protected at maturity, even if the assets go down in value. So long as you stay invested for the full term, you won’t suffer the losses.

With investing, it’s all about weighing up the potential upside, against the possible downside (risks and returns). The bonus with capital protected investments is they provide you with a win-win on both counts. We aim to generate some very good returns and at the same time, structure our funds to try and protect you from any losses.

Click here to view a video called ‘How do you actually capital protect a fund?’

Who provides the capital protection?

When you invest with Liontamer, capital protection will always be provided by a large global financial institution with a high credit rating (an indicator of financial strength). For example, with Liontamer's funds to date, protection has been provided by Barclays Bank, Deutsche Bank, KBC Bank, Morgan Stanley and UBS, all strong financial institutions. The trusts invested in ‘notes’ or 'financial assets' issued by these global investment banks in the same way as you deposit funds with a bank or building society in New Zealand. As with any investment, the financial strength of the institution is very important and that’s why we selected these leading financial institutions.

Why is there a need for capital protection?

When you invest in a Liontamer fund the capital is protected from falls in the market, effectively providing an insurance policy wrap for your savings. Liontamer creates that insurance by investing in financial assets that are either fully or partially capital protected at maturity by an investment bank with a strong credit rating. This protection from the volatility of certain asset classes gives investors peace of mind.

There are two main reasons why capital protected products are so appealing, and these can be categorised as theoretical (based on investment figures) and psychological (based on the belief that investors take a different view of capital and return risk). You can read about these reasons and the need for capital protection generally, in detail, in Investment Philosophy.

Click here to view a video called ‘What does “Capital Protection” mean?’

Where do capital protected funds fit in portfolios?

Capital protected products enable conservative investors to take more risk with the aim of increasing returns and provide a key mechanism for increasing exposure to financial markets while keeping capital risks at bay.

The psychological aspects of capital protection are based on the belief that investors often see two types of risk when they are investing.

a) risk to their original capital
b) risk to their returns i.e. that their gains could be volatile and quickly eroded.

Very few managers break ‘risk’ down into these two categories. However, if people are asked about their attitudes, the majority have a far more conservative view of volatility on the downside, than they do of volatility on the upside. This is known as 'loss-aversion' where investors are happier to place their returns at risk, than they are to place their original capital at risk. Capital protected investments allow you to separate out these two aspects. You can invest into riskier underlying assets, while protecting your capital from erosion. No other product so easily allows a restructuring of risk and return to suit the needs of investors.

How are the trusts structured?

Liontamer is an Australian investment management company. When you invest with Liontamer, you are buying units in an Australian unit trust. Some of our investments will only be available for a limited window of 6 to 10 weeks, and each new investment we launch is in a new trust. We call this an 'umbrella' structure and it makes it very quick and easy to bring new investments to the market.

Click here to view a video called 'Why does Liontamer put my money into unit trusts'?

How are Liontamer's investments taxed?

On 1 April 2007 the government introduced new rules surrounding the taxation of offshore investments. The rules add an additional layer of complexity as to how investors with offshore holdings provision for tax and we strongly recommend that all investors seek professional tax advice relevant to their personal circumstances. Your financial adviser, broker or accountant will be able to assist you with information about the current tax regime.

There is detailed information about the way our investments are taxed in the Investment Statement for each fund and we recommend that you read the latest Investment Statement. That information (and this brief summary) do not constitute tax advice to individual investors and are indicative of the likely tax treatment only.