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Are higher yielding NZ investments being legislated out?

Are higher yielding NZ investments being legislated out of existence?

The recent announcement by UDC that it would return $922million of investor funds is bad news for Kiwi investors as yet another high performing interest rate investment option disappears from the market.

Luke Jackson, CEO of Southern Cross Partners – a Financial Markets Authority licensed peer-to-peer lender – says he is worried that there won’t be many options left for Kiwi investors, particularly those who rely on investment interest to live, other than low interest term deposits with the banks.

“UDC’s decision to wind up its debenture programme shrinks this pool even further, particularly for secure debentures like that of the ANZ owned UDC. This comes at a time when we know that New Zealand’s retirement savings are woefully behind Australia.

“With only four or five debenture options remaining, I’d have to say that New Zealanders are getting poorer; our options to increase wealth are shrinking and this could end up driving people into riskier investments they don't understand.”

Jackson said Government and media justifiably took a dim view of finance companies after the global financial crisis, but wiping them out completely is not a cause for celebration.

“What’s left? There are peer-to-peer first mortgage investments like Southern Cross Partners (where the borrower’s debt is secured by a registered mortgage), rental property investment, stocks, a handful of debentures and term deposits.

“While each of these investment options have different risks and regulatory requirements, only the first mortgage investment, the shrinking pool of debenture funds and potentially rental property can yield high performing interest rates. That’s not a lot of choice when you consider that there’s a lot of people out there relying on interest earnings to fund their retirement.”

Jackson considers UDC’s 8,000 debenture holders will find that when it comes to re-investing their $922 million, their options for high performing funds will be limited.

“It’s not a question of how attractive an investment is, or how secure that investment may be, when an investor has no choice but to seek out high performing investments because he or she is living off the interest – it just pushes people towards riskier investments or unproven schemes.

“When you put people between a rock and a hard place, they have no choice but to take a chance and roll the dice,” he said.

Southern Cross Partners is a P2P lender which matches borrowers and investors together and then facilitates property loans supported by a registered mortgage over the borrower’s property.

Under the Southern Cross Partners model, investors invest funds in all or a portion of a loan that is initially funded and fully managed by Southern Cross Partners . If no investors put their hands up to invest in a loan, Southern Cross Partners will retain that loan itself.

The process is completely transparent, and all the details are available.

For more information about P2P investing (including the risks) visit or contact your investment advisor



Southern Cross Partners specialises in short term property finance and first mortgage investments and prides itself as an alternative financial solution. The Group includes the following companies, that are covered by the terms and conditions contain within in this site:

• Southern Cross Partners Limited
• Loan Investment Trustees Limited

Southern Cross Partners provides its investors with a competitive rate of return. A professional team of people source suitable loan investments for investors, supported by registered mortgages over property.

All aspects of the loan and investment are managed on an investor’s behalf by Southern Cross Partners Ltd from inception to maturity.

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