A PIE fund (Portfolio Investment Entity) is a type of managed investment fund in New Zealand that receives special tax treatment under the Income Tax Act 2007. PIE funds are regulated by the Inland Revenue Department (IRD) and supervised by the Financial Markets Authority (FMA).
The key advantage of a PIE fund is that your investment income is taxed at your Prescribed Investor Rate (PIR), which is capped at a maximum of 28%. For New Zealanders earning over $70,000 per year (whose marginal tax rate is 33% or 39%), this represents a significant tax saving compared to earning investment income directly.
PIE funds pool money from multiple investors and invest it according to the fund’s stated strategy. Here’s how they operate:
Because the fund handles your tax obligations, PIE income generally doesn’t need to be included in your personal tax return. This simplifies your financial administration considerably.
The tax benefits of PIE funds are the primary reason they’ve become one of New Zealand’s most popular investment structures. Here’s a comparison:
| Your Income Bracket | Marginal Tax Rate | PIR (PIE Rate) | Tax Saving |
|---|---|---|---|
| $0 – $14,000 | 10.5% | 10.5% | None |
| $14,001 – $48,000 | 17.5% | 17.5% | None |
| $48,001 – $70,000 | 30% | 28% | 2% |
| $70,001 – $180,000 | 33% | 28% | 5% |
| $180,001+ | 39% | 28% | 11% |
New Zealand has several categories of PIE funds, each suited to different investment goals:
Funds listed on the NZX (New Zealand Exchange) that can be bought and sold like shares. Examples include exchange-traded funds (ETFs) from providers like Smartshares and Kernel.
The most common type. These funds calculate and pay tax at each investor’s individual PIR. Most KiwiSaver funds and managed investment schemes operate as multi-rate PIEs.
Funds that aren’t traded on a stock exchange. These often include wholesale investment funds available to qualifying investors, property funds, and specialist funds like Blossum’s property secured PIE fund.
A specialist category where the fund lends money secured against New Zealand property. Returns come from the interest charged on these property secured loans. Blossum Fund operates in this space, offering 8% p.a. returns with monthly distributions and a maximum 75% loan-to-value ratio (LVR) on all lending.
Many New Zealand investors compare PIE funds with bank term deposits. Here’s how they stack up:
| Feature | PIE Fund (e.g. Blossum) | Bank Term Deposit |
|---|---|---|
| Tax Rate | Max 28% (PIR) | Your marginal rate (up to 39%) |
| Returns (typical) | 5% – 10% p.a. | 4% – 6% p.a. |
| Income Frequency | Monthly or quarterly | At maturity or annually |
| Liquidity | Varies by fund | Locked until maturity |
| Government Guarantee | No | No (NZ has no deposit guarantee scheme for term deposits over $100k) |
| Tax Return Required | Generally no | Yes — must declare interest income |
For investors in the 33% or 39% tax brackets, the PIE tax advantage alone can add 0.5% – 1.5% to your effective after-tax return compared to a term deposit offering the same gross rate.
Blossum Fund is a New Zealand-based, property secured PIE investment fund designed for wholesale investors. Here’s what makes it distinctive:
Blossum’s property secured PIE fund offers 8% p.a. with monthly distributions. Talk to our team today.
Most PIE funds (such as KiwiSaver and retail managed funds) are open to all New Zealand residents. However, some PIE funds — including Blossum — are structured as wholesale investment products.
To invest in a wholesale PIE fund, you typically need to meet one of these criteria under the Financial Markets Conduct Act 2013:
Learn more about wholesale investor eligibility and how to get certified.
When evaluating PIE funds in New Zealand, consider these factors:
A PIE fund (Portfolio Investment Entity) is a type of New Zealand investment fund that receives special tax treatment. Investment income in a PIE is taxed at your Prescribed Investor Rate (PIR), which is capped at 28% — lower than the top personal tax rate of 39%. PIE funds are regulated by the IRD and FMA.
The maximum Prescribed Investor Rate (PIR) for a PIE fund in New Zealand is 28%. This applies regardless of your marginal income tax rate. Investors in the 33% or 39% tax brackets benefit most from this cap.
Yes, but at a preferential rate. PIE fund returns are taxed at your PIR (0%, 10.5%, 17.5%, or 28%), not your marginal income tax rate. The fund pays the tax on your behalf, so you generally don’t need to include PIE income in your tax return.
A property secured PIE fund lends investor capital against New Zealand property, secured by first ranking mortgages. Returns come from the interest on these loans. Blossum Fund is a property secured PIE offering 8% p.a. with a max 75% LVR.
It depends on the fund. Retail PIE funds (like KiwiSaver) have low minimums. Wholesale PIE funds like Blossum typically require a minimum investment and the investor must qualify as a wholesale investor under the Financial Markets Conduct Act 2013.
Risk varies by fund type. A property secured PIE fund like Blossum has tangible asset backing with max 75% LVR, providing a margin of safety. Share-based PIE funds carry market risk. Always assess the specific fund’s risk profile.
Some PIE funds accept international investors. Blossum Fund offers an international investor pathway. Non-residents may have a PIR of 0% if they qualify under double tax agreements. See our international investor page for details.
For high-income earners (33%+ tax rate), PIE funds often deliver better after-tax returns due to the 28% PIR cap. Term deposits are simpler but taxed at your full marginal rate. PIE funds like Blossum also offer higher gross returns (8% vs typical 4-6% for term deposits).
Property-secured. 8% p.a. Monthly distributions. Tax-efficient PIE structure.
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