Most KiwiSaver providers are set up in a way that allows members to choose from one fund manager. For example, in the case of Milford KiwiSaver Plan, you can choose from various funds, but every fund is managed by Milford Asset Management, the provider of the plan.
KiwiSaver was set up to be a simple investing option. Kiwi's who wanted to diversify not only what their fund managers were invested in, but also diversify among different fund managers, do not have many options.
InvestNow, an online investment platform is looking to change that. They want to create a ‘Build-your-own' KiwiSaver scheme which gives members a lot more control over what they are invested in. InvestNow currently has access to over two dozen managers and 120 funds, which would give members plenty of options. This is similar to the model another KiwiSaver provider, Craigs IP uses. However, InvestNow will be managed fund based, while Craigs offers access to direct investments.
Investing in a ‘Build-your-own' KiwiSaver scheme which gives you more control has its advantages and disadvantages. With more control and choice, comes the opportunity to design a KiwiSaver portfolio that's ideally suited to your investing preferences and financial needs. You also get more opportunity for diversification and potentially could be paying lower fees.
However, if you get it wrong (or think you have got it wrong) during periods of market volatility - there is a higher chance of you panicking and selling out of funds at the inappropriate time. Having confidence in any investment decision you have made is very important.
A word of warning. Anyone wanting to use such a ‘Build-your-own' KiwiSaver scheme will need to ensure they not only do comprehensive research on the various funds they will be invested in, but also regularly monitor these funds. Members will, therefore, need both expertise in fund manager research and a time commitment to the research and monitoring of the funds. Such a scheme would thus cater best to Kiwis who have a well-rounded knowledge of the investment markets or have access to financial advice.
I'd love to hear back from you. Would you consider investing your money using a ‘Build-your-own' KiwiSaver scheme or would you prefer keeps things simple and invest with one manager and let them take care of everything?