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ASB KiwiSaver Scheme Details

There's a lot more to selecting a KiwiSaver fund than just checking past returns and fees. If your hard-earned money is invested in KiwiSaver, you need to ask the important questions to understand where and how that money is invested.

What questions are important to Investors?

Note: The following information is taken from ASB Kiwisaver Scheme's own website, fund updates, and the product disclosure statement published on 26 June 2020.

Who is ASB ?

Facts & History of the KiwiSaver provider

History

In 1847, at 7pm on Saturday 5 June the Auckland Savings Bank, New Zealand's first savings bank, opened on Queen Street.

ASB pledged to serve the community, to grow, and to help Kiwis grow. Since then, we have been committed to bringing New Zealanders the best banking products and services possible.

Over the years, they have continued to rethink the way people bank and how they interact with their money, and used these insights to develop innovative solutions that meet their customer’s needs.

For more information on their History, please click on the link below :

 

History

 

Size

The ASB Kiwisaver scheme has a total Assets Under Management (AUM) of over $10.5 billion and a total number of over 530,000 KiwiSaver members.

Awards

ASB has received multiple awards for example in 2020:

  • Awarded Gold at the New Zealand Direct Marketing Awards for Strategic Vision: Recognising strategic vision that has positively contributed to the creation of the best possible environment for response-driven marketing to be successful.
  • Awarded Silver at the New Zealand Direct Marketing Awards for CRM & Data Management: Acknowledging exceptional solutions for managing customer and/or prospect data and information, including methods of collection, storage, cleansing, authentication and integration.
  • Awarded Silver at the New Zealand Direct Marketing Awards for Customer & Market Insight: Excellent use of data-mining, statistical analysis or research techniques to gain significant customer insights that drive business value.

For more information, please visit the link below:

 

ASB Awards 

Who are the people looking after my money?

The investment team, structure and their alignment with clients

The Investment team

Vittoria Shortt - ASB Chief Executive

Vittoria Shortt is the Chief Executive of ASB Bank Ltd. Her appointment to Chief Executive in February 2018 follows a substantial career with ASB’s parent company, The Commonwealth Bank of Australia (CBA).

Most recently Vittoria was the Group Executive, Marketing and Strategy at CBA. Appointed to this role in 2015, she was responsible for Corporate Strategy, Mergers and Acquisitions, Advanced Analytics, Customer Advocacy and Marketing for CBA.

Having joined the Commonwealth Bank in 2002, she gained experience in leadership roles across the retail banking businesses of CBA and Bankwest, including customer-facing, operations and strategy roles such as the Commonwealth Bank’s Chief Marketing Officer and Chief Executive Retail Bankwest.

Vittoria is a member of Chief Executive Women Australia and holds a Bachelor of Management Studies majoring in Accounting and Finance from Waikato University in New Zealand. She is also a Chartered Accountant with the Institute of Chartered Accountants, New Zealand.

Gavin Walker - ASB Chairman

Gavin is currently chairman of four companies, namely:

ASB: Leading New Zealand registered bank.

CommSec: Australia's largest online broker, offering a number of products and services including online trading, cash management, margin lending, and international share trading.

Kirin International Advisory Board: Responsible for providing strategic advice to Kirin Holdings on its global beverage businesses.

Non- Executive Director Lion: Leading Australasian beer and beverage company.

Gavin holds a Bachelor of Commerce and Administration majoring in Economics from Victoria University of Wellington.

Adam Boyd - Executive General Manager, Private Banking, Wealth and Insurance at ASB Bank

Experienced Executive General Manager with a demonstrated history of working in the banking and wealth management industry.

Skilled in Wealth Management, Business Relationship Management, Banking, Treasury, Global Markets, and Retail Banking. Strong finance professional with a Bachelor of Commerce (BCom) focused on Economics and Finance from the University of Auckland.

How is the Investment Team Structured?

The ASB Investment Funds (the Scheme) is registered under the Financial Markets Conduct Act 2013 as a managed investment scheme.

ASB Group Investments Limited (they or their) is the manager of the Scheme and owned by ASB Bank Limited (ASB). The ASB investment committee has been established to be responsible for making investment decisions for the Scheme (the Investment Committee).

Below is a link to the Statement of Investment Policy and Objectives (SIPO) in full:

 

SIPO ( Page 1)

 

The Schemes Objective & Investment Strategy

The Scheme is designed to help investors' achieve their investment goals. Contributions made to each investor’s account and the returns of the investor’s chosen Funds will largely determine the
amount that an investor receives when they withdraw their investment.

The investment strategy for each Fund is designed to achieve or exceed its investment objective and performance target. The investment strategy for each Fund is made up of asset allocation, currency hedging and decisions about how each asset class is managed

Below is a link to their code of conduct that displays their values in full:

 

SIPO ( Page 2)

How do I know my money is safe?

Governance & Compliance processes

All KiwiSaver Scheme Providers must ensure they meet regulatory standards and act with customer interests in mind.

KiwiSaver Scheme Managers must exercise care, diligence, and skill in the investment of scheme assets, and act in accordance with the stated investment policy and objectives. The FMA monitors that KiwiSaver Schemes are compliant with their obligations. Additionally, KiwiSaver Scheme Trustees also have a responsibility as front-line supervisors for monitoring the management and administration of these schemes.

ASB’s Supervisor & Custodian

Each fund is a trust under a trust deed between the supervisor (Public Trust) and us (Trust Deed). The assets of the funds are held by a custodian appointed by the supervisor. The custodian is Newburg Nominees ltd.

Public Trust of New Zealand was a government-appointed corporation sole providing trustee services to those unwilling to use private services or required by the courts or legislation to use the Public Trustee. From 2001 Public Trust ceased to be a corporation, adopting a structure similar to a company as a Crown entity, and was renamed Public Trust. It administers 50,000 estates, trusts, funds and agencies. They supervise seven KiwiSaver Providers with approximately $13.5 billion assets under management.

A supervisor is a licensed entity independent of a KiwiSaver scheme provider that supervises the provider’s management of the scheme. KiwiSaver schemes are trusts, and (except for restricted KiwiSaver schemes) the terms of the trust deed states that the supervisor (or another custodian) must hold all contributions and investments in trust for the investors.

A custodian plays a key role in protecting your investments. They hold your money and investments (i.e. keep custody of them) on your behalf. So they are the legal holder of your assets while you are the beneficial and ultimate owner.


Below you will find a link to The Public Trust:

 

Public Trust

 

Risk Management Policy

The Banking Group is committed to the management of risk to achieve sustainability of service, employment and profits, and therefore takes on controlled amounts of risk when considered appropriate. The Risk Management Framework identifies, assesses, manages, and reports risk and risk-adjusted returns using a regulatory capital framework.

This is targeted at ensuring that the Banking Group has sufficient capital to enable a strong credit rating relative to the overall market and its peers. The primary risks are those of credit, market, liquidity/funding, operational and compliance, strategic, and reputational risk. The Banking Group's risk and control functions are the responsibility of the Chief Risk Officer, who reports to the Chief Executive Officer.

The Banking Group’s Risk Management Strategy is set by the Board through the BARC. All non-executive Directors are members of the BARC .

Formal executive committees are in place governing all primary risk types. The Chief Risk Officer is responsible for the implementation of Risk Management Strategy and all executives have responsibility for the day-to-day management of risk across the Banking Group. The Banking Group has management structures and information systems to manage individual risks.

Risk initiation and monitoring tasks are separated where feasible, and all material information systems are subjected to regular internal audits. The Banking Group’s external auditor also reviews parts of the Banking Group’s Risk Management Framework that impact on significant aspects of financial systems, but only to the extent necessary to form their review opinion on the Banking Group’s half-year financial statements or audit opinion on the Banking Group’s annual financial statements.

For more information please visit the link below:

 

Risk Management Policy (Page 87)

How do they decide where to invest?

The investment processes followed by the manager

Investment Beliefs


It is important that ASB’s customers can understand their investment strategies and policies, including how ASB takes into account environmental, social and governance considerations.

Asset allocation and currency decisions are the most important investment decisions ASB makes. They drive the majority of the investment outcome, investment decision making time and resources are focused on making the best possible asset allocation and currency hedging
decisions.

The management of each asset class is formally reviewed at least once every two years.

The review includes considering:

  • The current investment approach to the asset class
  • Whether the asset class should be managed using an active or index-tracking investment management style.
  • Which market index should be used
  • Underlying investment managers by looking at investment processes and systems, reputation, investment management style, and the managers’ performance record.

Below is a link to the Statement of Investment Policy and Objectives (SIPO) in full:

 

SIPO ( Page 1)

 

Monitoring

They regularly monitor the performance of the investment strategies, policies and the underlying investment managers appointed to carry these out.

This monitoring looks at whether:

  • The relevant investment objective is achieved
  • The strategy remains effective and appropriate, and
  • The underlying investment managers are competent and achieving the agreed objectives

ASB’s Asset Allocation

Asset allocation has a significant influence on investment returns. Each Fund is invested in line with a target asset allocation.

The target asset allocation is reviewed every three months, and measured against a long term benchmark. They call this benchmark the reference portfolio, which they set every three years. The reference portfolio for each Fund is the lowest cost, lowest risk allocation of assets that is expected to achieve or exceed the investment objective and performance target.

The reference portfolio is the benchmark that they use to measure the success of our quarterly asset allocation process. The target asset allocation is the allocation of assets that they believe will produce a better investment outcome than the reference portfolio over a one to three-year period. They review this quarterly.

Managing Asset Classes

They manage asset classes in the same way across the multi-sector and single sector funds. This means that the investment management style, market index and underlying investment manager for each asset class is the same. They use either an active investment management style or an index tracking investment management style.

An active investment management style means that investments are made with the goal of outperforming chosen
market indices.

An index tracking investment management style aims to deliver returns that closely track those of a market index (or a combination of market indices). Index tracking isn’t expected to exactly match the returns of the index because of transaction costs and cash flow and timing issues.

Funds that are managed by index-tracking generally have lower fees than those managed by an active investment management style. This is important because fees reduce returns.

Does ASB Invest responsibly?

Social and Ethical Considerations

Socially responsible investing (SRI) or Environmental, Social and Governance investing (ESG), also known as sustainable, socially conscious, “green” or ethical investing, is any investment strategy which seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by society.

Basically, SRI investing is investing in companies that have a positive impact on society, based on a number of factors.

Responsible Investment Policy

Everyone's definition of responsible investing is different. Some people want to avoid doing harm. Others want to avoid industries that don’t align with their values. And some want to use their funds to actively make the world a better place. At the same time, everyone wants a strong return on their investment.

At ASB, they believe being responsible means two things. First, they invest your money to achieve the best possible financial outcome for you. That could be achieving a strong return, preserving your capital, or a balance of the two. Second, they need to choose investments that are legal and that align to the ethical and environmental values of our community.

To achieve these two priorities, they will use these principles:

  • Transparency
  • Integration
  • Exclusion
  • Engagement
  • Alternate products

But responsible investing is about more than just keeping away from certain sectors. It’s also about looking to the future and making rigorous decisions on the basis of a range of environmental (E), social (S) and corporate governance (G) factors.

Below is a link to t ASB's Responsible Investment Approach in full:

Responsible Investment Policy

 

Ethical Exclusions

Responsible investing means bringing together both financial and values-based considerations when making investment decisions.

In saying that, they exclude some investments, regardless of their financial performance, based on the ASB exclusion framework. Some of the considerations they take into account when deciding to exclude an investment are:

  • If international conventions oppose or New Zealand laws prohibit investment in an industry, such as manufacturers of cluster bombs, land mines, or nuclear weapons.
  • If its activities are opposed to our own purpose and values.
  • If our peers in New Zealand have excluded an investment or its industry.
  • If the majority of our customers that we survey have a strong desire not to invest in it or its industry.

Below you can find a link to ASB's Exclusions List:

 

Exclusions list



How do ASB compare to others?

Best Performing KiwiSaver Funds

FUND TYPE
FUND NAME
5YR AVERAGE
Conservative
Milford
Conservative
6.3%
Moderate
Aon Russell
Lifepoints
7.3%
Balanced
Milford
Balanced
9.1%
Growth
Milford Active
Growth
10.7%
Aggressive
Booster
GearedGrowth
12.4%

*Past performance is not necessarily indicative of future performance.

*All returns are after fees and before tax, updated 30th September 2020.

*Source: MorningStar Fund Report September 2020

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Look at more than just fees and past performance

We have looked at the best performing KiwiSaver funds based on their 5-year returns, however, looking at past performance of a fund is just one aspect when choosing a KiwiSaver fund. Other questions you should be asking include:

  • How and where is my money invested? 

  • What is the level of volatility (risk) of this fund? Does it align with my volatility tolerance and capacity?

  • How do the fees compare to other funds with a similar rate of return?

  • What are the providers processes when selecting investments and making changes in the funds?

Our research team at National Capital looks at over 100+ funds and can recommend the right KiwiSaver investment for you. 

Why get advice from National Capital?

  • Detailed Research: We research various factors of KiwiSaver funds – from asset allocation all the way to ethical investing.

  • Answers: How do I know my money is safe? What risks are being taken?

  • Monitoring: We’re constantly monitoring the KiwiSaver landscape.

  • Expertise: Our team specialise in Investment and KiwiSaver research.

  • No cost to you: We get paid by the KiwiSaver providers

  • Gift of Time: We do the hard work, so you can focus on life.

Our KiwiSaver recommendations look at the big picture and not just the scorecard. So, what are you waiting for?

List of ASB KiwiSaver Funds