START HEALTHCHECK

kiwisaver, investing, news

KiwiSaver Providers Investing in Local Tech Startups a Good Idea?

  • Fabook Messenger Sharing Link

The Kiwi Wealth KiwiSaver Scheme has joined a small group of KiwiSaver providers who have allocated funds to private equity. It joins KiwiSaver providers such as Booster, Milford Asset Management, Simplicity, and CareSaver who include unlisted NZ entities in their investment portfolios.

Kiwi Invest has become a cornerstone investor in Movac’s new technology fund by investing $54m in Movac Fund 5 – a $250m fund that backs New Zealand tech start-ups and growth companies. If you are a member of Kiwi Wealth’s KiwiSaver Scheme, you will now be supporting a range of New Zealand founded tech start-up companies. 

Kiwi Wealth retail and product general manager says this is the start of the KiwiSaver fund's progression into a more diversified portfolio. By allocating a small section of Kiwi Wealth’s KiwiSaver fund into Movac Fund 5, KiwiSaver members can invest locally and have the chance to access better return outcomes.

KiwiSaver industry opinions

Clive Fernandes, director of National Capital said the move had both positives and negatives. "I believe the venture capital market can allow for greater returns if the start-ups succeed, it also allows KiwiSaver members to help local businesses. On the other hand, investing in local tech start-ups entails higher risk due to the high rates of start-up failure."

Booster principal, David Beattie via a comment on the industry website GoodReturns was of the opinion that lack of liquidity was not a significant issue for KiwiSaver when allocating only 1%-5% into Private Equity assets. "In our experience, the three main 'challenges' are: 1) daily pricing of the investments so that equity is maintained between daily money inflows and outflows; 2) daily income accruals for PIE attribution and PIR tax purposes; 3) high fees (typically 2% +20% performance fee). For a lot of private equity investments, these three issues are often deal breakers."

 

  • Fabook Messenger Sharing Link
Do you know what your KiwiSaver fund invests in?
START HEALTHCHECK

You may also like

7 common myths about KiwiSaver

Millions of kiwis are members of KiwiSaver, but there are still some misconceptions about what it is and how it operates. Here..

KiwiSaver’s saving suspension: a good idea?

To prepare for retirement, we save and invest a small portion of our income to our KiwiSaver account regularly. While it makes..

New KiwiSaver Scheme offers more options to diversify investments

A new KiwiSaver scheme introduced by the fast-growing investment platform, InvestNow provides more opportunity for investors to..

KiwiSaver providers to rehome billions of dollars as Vanguard moves to retail

Vanguard investment funds are passively managed, index-sampling funds which do not require active management from bankers or..

What is a negative interest rate and how will it affect your KiwiSaver fund?

You may have heard some discussions earlier this year about the possibility of New Zealand’s OCR (Official Cash Rate) to drop..

How choosing the right fund helps you pay less tax in KiwiSaver

The amount of tax you have to pay plays a big part in what your KiwiSaver balance will look like in retirement and it’s always..

Subscribe