Choosing the right KiwiSaver provider to manage your life savings is a very important decision. But with the vast range of options available, choosing the right provider and fund can seem overwhelming. Doing the right research can be tricky. However, with some guidance from National capital and our approach to the research process it can become a lot easier. Here’s how we do it!
The Importance of Research
When referring to “researching” providers, unfortunately a few of us think it’s about just looking up past returns and annual fees. Merely comparing these basic features is not enough. If that’s all it took then National Capital probably wouldn’t exist! The criteria to identify the best funds go much further in detail. This process holds high importance as our client’s interests are the top priority, so it only makes sense that we provide the best options available. Research for the best providers is a continuous task at National Capital as the change in this current world is rapid, meaning constant research into providers is vital for us to continue delivering the best options possible.
A supporting reason for the importance of this research is to keep providers true to their reputation. Diving deep into the inner works means that they aren't able to hide anything that does not work in your best interests.
Our Approach to Research
National Capital is the number one company in New Zealand when it comes to the number of KiwiSaver providers we work with and the number of funds that we research. We currently work with 14 different providers and they have more than 200 KiwiSaver funds among them. That covers close to 60% of the KiwiSaver funds out there.
To begin with, we look at a large group of funds from the providers. From there, all of those funds are filtered down to a shortlist by removing duplicate funds (there are sometimes the exact same funds that are used by different providers!) and funds that don’t have a fixed asset allocation. We then sort them by historical returns and latest fees. This gives us a shortlist of funds that have both good past returns and fees which are equal to or below the median. Then the real digging begins.
Our team looks into the asset allocation of the funds, who the people are managing your money, and most importantly what are the investment policies and processes they have, based on which they decide where to invest your money. We’re digging deeper into documents like their SIPO (statement of investment policy and objectives), talking with the providers, and asking them questions if our research raises any flags. To put it simply, we do a lot of work in the background to ensure that we can confidently recommend funds to our clients which we believe will perform well in the future.
Take one of the providers we cover like Milford Asset to illustrate. Yes, Milfords funds had been the top performing funds in the markets, but we needed to know why. Knowing why would let us know what the probability of Milford continuing to do well in the future was.
Our research showed us that Milford were ‘real’ active managers. They have people on the ground speaking to the companies that they have invested in or planning to invest in. For example, when Covid first hit they were talking to doctors and scientists in China, really trying to understand how serious it was, and how it was going to affect the Chinese and world economy. Based on their research, they positioned their funds cautiously including holding higher levels of cash and reducing exposure to local and international share markets, including low relative exposure to sectors such as oil, banking, travel and tourism. This allowed Milford to better ride the Covid storm than some of their top competitors. That type of information cannot be derived from the return and fee figures that google spits out. Their ability to read the economic environment and protect your potential investment from avoidable loss is one of the reasons why we advise clients in certain situations, to invest with Milford.
Why do we go through all of this?
The short answer is, for you. Doing all of this deep research into providers and their funds can allow us to find a high-performing fund that best aligns with your needs and situation. Not only that, but we look beyond just past returns and performance to get a feel for how the funds operate and the probability that they will keep up that level of performance in the future. By doing this, you’re not wasting any time getting lost deep into the provider's pages of information and are able to fully utilize our in-depth research.
With our mission being to help 1 million kiwis to become financially secure, your KiwiSaver’s success becomes a common goal for the both of us. Therefore, it is imperative we do our due diligence when researching and deciding what funds to present to you so that we can achieve this. If you want to find out more about how we research KiwiSaver Providers then have a look into our KiwiSaver Investment Selection Process.
To see how else we are helping kiwis along with their journey to financial security, pop on over to National Capital or take our HealthCheck to find a KiwiSaver fund to suit you, that you know has the backing from us and our research.
