KiwiSaver

Kiwi Wealth has developed its own index fund, which it says will allow its KiwiSaver scheme to have more flexibility to generate better returns, improve tax efficiency and address responsible investment concerns.

All of the Kiwi Wealth KiwiSaver Scheme’s funds are now using a new fund designed, built and directed by the in-house investment management division for implementing their global share index allocations.

The solution is an enhanced index fund which implements Kiwi Wealth’s responsible investing policy, which removes indirect investment exposure in controversial weapons, tobacco and whaling industries and embeds responsible investment at the security selection level.

Initially Kiwi Wealth will also implement in full the New Zealand Super Fund’s current exclusion list and will exclude additional companies with poor track records in environmental, social and governance (ESG) indicators.

Kiwi Wealth can add or drop sectors and companies within the index, driven by what members want. Because it is based in New Zealand, it has better tax efficiency.

Simon O’Grady, chief investment officer, said the enhanced index was tailored to meet the changing views of New Zealanders on responsible investing.

“This new fund gives us the best of both worlds. It retains the benefits of a typical index tracker – such as low cost, good liquidity, and broad diversification of investments – with the added benefits of being more tax efficient and providing greater flexibility and control over these investments. 

“Our new fund has been built from the ground up by our investment management team and is tailored for the New Zealand market, with an expectation that the enhanced tracker will outperform passive index funds used by other KiwiSaver providers,” he said.

“In addition, we incorporate responsible investing throughout our process. Responsible investing involves identifying companies that are being irresponsible in the environmental, social and governance areas, and excluding them because poor behaviour in these areas tends to correlate with poor returns.

“It reflects Kiwis’ growing sophistication and financial awareness when it comes to investing – they recognise that there’s a duty to match investors’ ethical and social concerns with good investment returns.”

Kiwi Wealth said, while its new fund cost more than its previous Vanguard ETF, members would have net benefits of more than 50bps.

Meanwhile,  Mercer said its managers had almost completely divested from companies manufacturing tobacco products.

 

Growth KiwiSaver funds performed strongly again in the June quarter, Morningstar’s latest research shows.

The research house has released its latest KiwiSaver survey.

“We continue to have an equity-friendly market environment with local and global equity markets posting solid returns this quarter. Fixed income assets also had reasonable performance,” Morningstar director of manager research ratings, Asia Pacific, Chris Douglas said.

“As a result, KiwiSaver funds with a bias to growth assets, posted the strongest returns, but there was a closer dispersion of returns across the risk profiles than previous quarters.”

The local share market performed slightly better in the second quarter of the year than in the first, he said. The S&P/NZ 50 Index was up 5.8% in total returns over the quarter and 10.6% over the year.

Global equities were the best-performing asset class.

Morningstar said top performing funds in the quarter compared to their peer group included Milford KiwiSaver Conservative Fund 1.73% (Multisector Conservative), AMP KiwiSaver Nikko AM Conservative 2.14% (Multisector Moderate), Westpac KiwiSaver-Balanced Fund 2.59% (Multisector Balanced), Westpac KiwiSaver-Growth Fund 3.06% (Multisector Growth), and Generate KiwiSaver Focused Growth Fund 3.72% (Multisector Aggressive).

Over five years, Milford’s Active Growth fund was the best performer.

KiwiSaver assets on the Morningstar database hit $40.5 billion at June 30. ANZ continues to have the biggest market share.

Performance fees have helped to lift the fee revenue claimed by fund managers Milford and Fisher Funds.

Companies Office figures show Milford reported fee revenue of $46.5 million for the year to March.

That is up 21% on the previous year.

Of that, $35.1m was management fees and $11.4m performance fees.

Milford has near $4 billion in retail funds, with more than $800m in its KiwiSaver funds. 

For the same period, Fisher had fee revenue of $69.1m, up 3%.

That was made up of $60.8m in management fees and $3.3m in performance fees, which was a drop compared to the year before.

Carmel and Hugh Fisher, founders of Fisher Funds, were named on this year’s NBR Rich List, with wealth of $55 million.

Fisher Funds is now the country’s fifth-largest fund manager, with more than 255,000 clients and $7 billion under management.

Fisher stepped down from her role as managing director last year.

KiwiSaver firm Booster has made a direct investment of capital into a wine company.

The investment in Awatere River Wine Company is the first injection of KiwiSaver funds into the wine industry.

Awatere River Wine Company founder and winemaker Louis Vavasour said it was a vote of confidence in the buoyant New Zealand wine industry.

The Vavasour family retains principle ownership of Awatere River Wine Company with the Booster Tahi Limited Partnership (Booster’s investment vehicle for its KiwiSaver funds) taking a significant minority stake. The Booster Tahi Limited Partnership will own 100% of Waimea Estates with Vavasour the chief executive of the overarching venture.

The Booster Tahi Limited Partnership was established to help Kiwis grow their businesses and manage their wealth. 

The Booster investment also includes the purchase of additional vineyards in Marlborough and Nelson which will contribute to future company growth and return for investors.