KiwiSaver

Huljich Wealth Management has re-launched two of its non-KiwiSaver funds which were closed down in January and transferred to equivalent funds.

A new prospectus for the Huljich Balanced Fund and the Huljich Australasian Fund was lodged with the Companies Office on March 31 and became public last week.

Both the funds were initially launched in October 2007 just before the global financial crisis hit, but they haven’t been marketed to the public since early 2008.

The funds, which invest in the same assets as the KiwiSaver funds, have instead kept going in the background with private investors.

Huljich Wealth Management (HWM) says there was a question about the old funds qualifying for PIE status because they had been closed to the public and did not meet some of the eligibility criteria.

“Our tax advisers said it was a grey area and together we decided we couldn’t take the risk of building up these funds with investors’ money and then having a PIE tax problem down the line.

“It has cost us some extra money to close the funds and start new ones but we wanted to be 100% sure the funds were PIE compliant and eligible for those tax advantages for our investors.”

The new prospectus also has mention of the Securities Commission investigation into HWM on page 18.

Peter Huljich stepped down as managing director and chief investment officer of Huljich Wealth Management last month after topping up the performance of his funds. He has since been replaced by chairman Don Brash.

The new prospectus states: “Following certain media comments about the Huljich KiwiSaver Scheme the manager (and the trustee of that scheme) have been asked to respond to inquiries from the Government Actuary and the Securities Commission relating to the compensation made by Peter Huljich (the manager’s former managing director) to the KiwiSaver funds.

“The manager believes that such inquiries can be adequately addressed without effect on the managed funds, however at the date of this prospectus the matters have not yet been resolved.”

 

Milford Asset Management will go it alone as a KiwiSaver provider, with its new scheme due to launch on April 1.

Milford, which to date has marketed a KiwiSaver product via the Aonsaver platform, will offer members two investment options in the revamped scheme – its Aggressive Fund and a new balanced fund.

Currently, Milford only offers its Aggressive Fund to KiwiSaver investors on Aonsaver, sourcing about $16 million in funds under management through the platform.

In total, Milford manages just over $570 million.

A spokesperson for AonSaver, confirmed the Milford KiwiSaver scheme would no longer be offered through its administrative system. However, the Milford Aggressive Fund would remain as an investment option on both the Aonsaver retail and employer schemes, the spokesperson said.

“Milford said the dual branding [of its KiwiSaver scheme] with Aonsaver was a little bit confusing for investors,” the Aonsaver spokesperson said.

Milford’s new KiwiSaver scheme will be administered by Trustee Executors.

However, at least two new potential KiwiSaver managers were rumoured to be in talks with Aonsaver to include schemes on the firm’s platform.

The Auckland-based boutique manager Milford has been in an expansive mood of late after scoring a $50 million New Zealand equities mandate from the New Zealand Superannuation Fund in January.

Earlier this month Milford bought almost 17% of listed investment company Salvus Strategic Investments from exiting major shareholder, Anthony Hubbard, majority owner of South Canterbury Finance.

Milford was expected to be officially registered as a KiwiSaver provider with the Government Actuary within days, the first new scheme to do so since 2008. It is understood that KiwiBank, which formerly distributed the Mercer scheme, was also close to finalising its new KiwiSaver offering.

 

The Securities Commission has taken a veiled swipe at Huljich Wealth Management in its guidelines for distribution and disclosure released yesterday.

The market regulator wagged its finger over the signing up of KiwiSaver members through door-to-door sales, something that got Huljich in trouble last year, and also stressed the need for disclosure statements to indicate the actual performance of the fund, saying it “regards transactions with related parties on other than arms length terms as questionable behaviour.”

Peter Huljich was forced to step down as managing director and chief investment officer of Huljich Wealth Management after topping up the performance of his funds, which prompted an investigation by the Securities Commission.

The commission’s guidelines also noted company directors “bear the ultimate responsibility for the documents they sign or approve and must ensure that any reliance on third parties is reasonable and justifiable.” Huljich directors Don Brash, who took over as managing director after Peter Huljich stood aside, and John Banks were criticised for failing to question the top-ups to the KiwiSaver funds.

“The commission has become aware of a number of circumstances where KiwiSaver membership has been solicited in an unusual or confusing manger,” chairman Jane Diplock said in a statement. “This type of behaviour is completely unacceptable and damaging to investor confidence.”

The guidelines also called for industry to set a standard to measure investment performance, and will recommend legislation if this is not achieved.

The Investment Savings and Insurance Association supports the guidelines, with chief executive Vance Arkinstall saying the ISI is already working on setting a standard for measurement and disclosure of funds’ performance, and will discuss the outcome with the regulator.

Arkinstall reinforced the commission’s criticism of funds trying to hold on to members looking to swap providers, saying “such action is creating delays which are contrary to the intention, flexibility and choice provided by the KiwiSaver Act.”

 

Default KiwiSaver provider Mercer is says there needs to be an improvement in disclosure requirements with KiwiSaver.

Head of Mercer New Zealand Martin Lewington says the requirement thresholds default schemes have should be across the industry.

He believes what happened with Huljich Wealth Management and its KiwiSaver funds was inevitable and that it has bought the urgency and timeliness of KiwiSaver issues forward.

“The Capital Markets Development Taskforce drew attention to the problem of disclosure and Huljich brought that forward.

“No-one anticipated for KiwiSaver to be so popular and as a result more rigorous and comprehensive requirements are needed across all providers.”

Mercer yesterday released its latest KiwiSaver sentiment survey.

It says that of those New Zealanders who have not joined KiwiSaver, one in four anticipates they will do so in the next 12 months compared to one in seven in 2007. For those still unlikely to join a scheme, lack of affordability was the most common reason.

 Other key findings of the study include:

• Kiwis are reasonably satisfied with KiwiSaver providers; nearly half (49%) said they were either satisfied or very satisfied with their current provider.
• Respondents indicated a strong loyalty to current schemes; very few (5%) anticipated a change in their KiwiSaver provider in 12 months time.
• The main concern Kiwis have about KiwiSaver is the lack of guarantee and specific concern about the future viability of the scheme. Other concerns centered on a lack of understanding of the scheme, poor returns and a preference for greater control over personal finances.
• Kiwis predict they will need between $2,000-$3,000 per month (including NZ Super and after tax) in retirement.
• The introduction of a 2% contribution level has proven popular; 29% indicated they either plan to make or already make contributions at the 2% level (the proportion of these as a result of default selection is not known), while 46% plan to do so at the 4% level.
• Just over half (55%) actively chose their own provider, while two in five (42%) either let the Inland Revenue Department or their employer make the decision on their behalf.
• Kiwis demonstrated a reasonable level of knowledge of the KiwiSaver scheme, however respondents showed uncertainty around government fee subsidies and some believed that respondents could belong to more than one KiwiSaver fund.