Media headlines about KiwiSaver funds’ exposure to ammunition investments have provided a boost to some financial advisers.
In August, there was a public outcry when it was revealed that a number of funds had underlying investments in companies that made armaments.
While that prompted a spark of interest in the details of KiwiSaver investments, some advisers seized the opportunity to spread the word about their services, too.
Roger Spiller, at Money Matters, said the media coverage, and the development of a web-based tool that offered the ability to see what KiwiSaver funds invested in, had “dramatically increased” awareness and interest in the scheme in general.
“In my over 30 years of promoting ethical investment I have never experienced so much media interest and so many requests for interviews. It seems that there has been a fundamental shift with many investors now wanting tangible proof that their money is not directly or indirectly funding unethical activities,” he said.
“Furthermore many are wanting their money to go beyond avoidance and to have their money invested in businesses than are leaders rather than laggards in applying ESG.”
Bill Raynel, of Investment Solutions Northland, who offers KiwiSaver to clients via New Zealand Funds Management, posted on his firm’s Facebook page, recommending that people in default schemes read about the investments in armaments, and said “if you don’t support their approach, contact us now…”
The post captured widespread attention.
“I posted it on Facebook and Twitter and it went viral,” Raynel said. “The outcome has seen all KiwiSaver Scheme managers clean up their act in this regard, which is a good thing.”
Peter Lee at C2C Partners, said KiwiSaver could be a big driver in the development of New Zealand’s responsible investment landscape.
“For many Kiwis, it’s been their first exposure to managed funds, so now they have to make a choice – and Sorted et al are all telling them to take more interest in their retirement savings. With 2.4m people in KiwiSaver, you don’t need a big percentage interested in responsible investment to have an impact.”
But he said there was still less preference for responsible investment among his wider investment client base.
“Of those interested in [it[, most have been what I’d call ‘light green’ investors – they want to do something but are pragmatic enough to recognise the need for trade-offs, especially given the options in NZ are limited,” he said.
“One factor for some is cost: given my non-RI solutions mostly use Consilium’s low-cost asset class portfolios, the gap in management fees between funds in my ‘standard’ portfolios and pure RI-based funds is close to 1%. I’ve had the interesting experience of an otherwise RI-inclined couple choose the non-screened option for this very reason. I’m looking to develop a hybrid approach which will alleviate the problem, but it isn’t easy to come up with a low-cost portfolio that’s RI-compliant.”