KiwiSaver

Mike Pero Mortgages has ended its KiwiSaver distribution deal with Huljich Wealth Management, though the company has been tight lipped on the reasons for the move.

“All I can say is there are commercial reasons for us not distributing that product and that’s as far as I’d like to go on that,” said Shaun Riley, the Mike Pero Mortgages chief executive.

“At this time I don’t want to expand on this at all.”

Speculation for the move has centred on new regulations under the Financial Advisers Act and the admission from Huljich’s former managing director, Peter Huljich, that he used his own money to prop up Huljich funds – thus distorting their returns.

Under the Act, distribution of KiwiSaver through mortgage brokers may become uneconomic as only Authorised Financial Advisers can advise on KiwiSaver products, while mortgage brokers don’t require AFA authorisation.

However, this argument was dismissed by one of the Mike Pero brokers Good Returns spoke to.

The broker – who like several others spoke on the condition of anonymity – said they were studying for Level 5 authorisation and that to qualify to give KiwiSaver advice would be “no more cost than what we’re doing now.”

Other brokers were keen to stress that no official explanation had been forthcoming, but several believe allegations against Huljich regarding fund transations was behind the decision.

One said Mike Pero was a good brand and he believed the company would “hate to see that damaged” by association.

The Huljich KiwiSaver scheme was distributed through the Mike Pero Saver brand which was closed on January 16, with membership reverting to the Huljich brand.

First NZ Capital Investment Management (FNZC) has decided to exit the KiwiSaver market and transfer its business to Fisher Funds.

After securing approval from the government actuary FNZC is to transfer all scheme members into the Fisher Funds KiwiSaver Growth Fund.

“Fisher Funds offers what we consider to be a well resourced and experienced investment management team that will continue to manage your investment according to materially corresponding investment initiatives,” said FNZC director Malcolm Davie.

In a letter to members outlining the move Davie said FNZC believed the transfer would provide a “favourable outcome” for members.

“Fisher Funds is one of the ten largest NZ retail fund managers, managing more than $850 million for more than 35,000 investors, and a number of its products have been independently rated by Morningstar – giving you comfort that their controls and investment processes are of a high standard and have been externally examined.”

Davie said that if the transfer receives government approval members will be automatically transferred into to the Fisher Funds Growth scheme in late November and once complete, the FNZC scheme will be wound up.

Members were also informed they were free to transfer to any other KiwiSaver scheme and in the event the government failed to approve the move members who had not transferred to another fund would be placed in the Inland Revenue Department default scheme.

 

The September quarter saw KiwiSaver funds rebound, with all types of funds producing positive returns as fears of a double-dip recession eased, according to the latest Mercer KiwiSaver survey.

KiwiSaver returns received a boost as global share markets, which took a battering in the June quarter, bounced back.

KiwiSaver growth funds – which have the greatest weighting towards shares – performed best with a median return of 5.8% for the quarter ending September 30, a significant turnaround from the previous quarter’s negative median return of -6.1%.

“Global share markets have bounced back over the past quarter, as fears of the European debt crisis reduced. All asset classes produced positive returns, including property and commodities, which is great for KiwiSaver funds,” said Mercer New Zealand head Martin Lewington.

However, Lewington cautioned that the economic outlook remained uncertain with weak consumer spending and high unemployment in the US.

“The bumpy ride for KiwiSaver investors may not be over yet, but long term investors should not be overly concerned with short term movements. As the contrast between the June and September quarter shows, it is possible to regain monies notionally lost and over the long term the result should be quite positive.”

According to the survey the best performing fund for the September quarter was the Fisher Funds Growth Fund, which returned 10.5% and 31.2% for the year to September 30.

Over the three years KiwiSaver has been running the survey found funds with the highest weighting towards bonds and cash had been the best performers, reflecting the volatile share market conditions over recent years.

Default schemes were the strongest performers over the three year period, recording a median return of 4.6% per annum compared to -3.1% per annum for growth funds.

The Real Property KiwiSaver Scheme (RPKS) was closed down in May and the funds of members are now to be distributed to other providers.

RPKS director Lindsay Hay says a bulk cheque from the funds has been given to Prince Partners to distribute.

He says about 90% of RPKS members have chosen a new KiwiSaver provider with a lot changing over to Fisher Funds and a few to Gareth Morgan.

The RPKS was set up for investors who were not confident about investing in assets like shares, however the scheme never really got off the ground without a property to its name.

Hay says a few properties were looked at, but several million dollars were needed to get somewhere and the fund wound up with just under $1 million and only 70 people signed up.

“If we had $5 million or $6 million we’d have been away but it wasn’t forthcoming and we were up against the big boys which wasn’t easy.”

He says the timing of starting the scheme up was a shame with the recession keeping people’s hands in their pockets.

“We had great support and a lot of people are disappointed, but we pulled the pin because we didn’t have enough money to get traction and as a result we were going to struggle.”

In March last year RPKS’ annual financial statement showed it had just $405,998 funds under management.