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Booster 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 Booster Kiwisaver Scheme's own website, fund updates, and the product disclosure statement published in March 2020.

Who is Booster?

Facts & History of the KiwiSaver provider

History

Booster, founded in 1998 was set-up by a group of experienced industry experts, Booster (or, back then, Grosvenor Financial Services Group) knew there was a better way to help New Zealanders to save. They wanted to offer something unique to what the international conglomerates were offering.

Booster has been looking after New Zealanders’ money since 1998. And they are proudly Kiwi owned and operated. Booster is an independent financial services company, based in Wellington.

✅   New Zealand Based Provider

Below you will find a link for more information on their history:

 

History

 

Size

Booster Investment Management Limited currently manages 16 KiwiSaver funds. They have total Assets Under Management (AUM) in their KiwiSaver scheme of over  $1.85 Billion and 154,417 Kiwisaver members.

 

Who are the people looking after my money?

The investment team, structure and their alignment with clients

The Investment team

David Beattie - Principal, Booster Financial Services Limited

David has over 35 years’ experience in investment management and portfolio research. He joined Booster in 2000 as our Chief Investment Officer. David’s key areas of focus are strategy, investment stewardship, and Financial Adviser relationships.

“We’ve always had a very strong client-focused culture, with a practical desire to think and collaborate innovatively. We’re not bogged down by bureaucracy.”.

Nic Craven - Senior Manager,  Research

Nic leads our investment research team. His team ensures that client investments are managed with the care and discipline that are needed to deliver consistent results over the longer term. Nic originally joined Booster in 2004, returning to Booster in 2014 after an overseas stint.

“We don’t shy away from a challenge. We have a can-do mindset, which means we always focus our efforts on making a positive difference for our investors.”

Allan Yeo - Managing Director

Allan formed Booster Financial Services in 1998, looking to give New Zealanders a financial services company that was locally owned and true to Kiwi values.

Allan’s overarching ambition for Booster is to be able to make a meaningful difference to how NZers live and work; providing customers with the necessary tools to be able to live within their means, protect and grow their financial resources and live the retirement they deserve.

“I want Booster to become the most trusted financial partner for New Zealanders. We’ll achieve that with innovative products and services, education, and leadership.”

Alison Payne - Chief Operating Officer

As Chief Operating Officer, Alison's key focus is on delivering a great customer experience across all of Booster's platforms. She oversees and coordinates multi-disciplinary teams to deliver on key strategic outcomes. Alison has worked in a range of different industries, including investment banking in the UK and the NZ Electricity Market.

“We care about our clients as individuals. We'll go out of our way to assist and educate, and that's something that drives me to deliver the best experience possible.”

How is the Investment Team Structured?

The Scheme is managed by Booster Investment Management Limited (BIML, the Manager).
The responsible oversight body for approving and ensuring adherence to Booster’s Statement of Investment Policy and Objective (SIPO) is the manager and the managers Investment Committee. The Manager will review the investment strategy for each of the Scheme’s Fund’s, and the SIPO document, at least annually.

In regards to the key personnel involved with the management of the fund, apart from the key executives mentioned above, Rowan Calvert and Aaron Usher are responsible for the portfolio management of the fund, with two years and five months of experience with this fund respectively.

Incentives/Alignment

Booster acknowledges that judgments regarding the performance of fund managers and consultants should be made on a time frame that relates to the time horizon of each investment and not on short term performance. Thus, in the short term, the following indicators should be monitored as indicators of continued prudent and professional management:

  • Adherence to investment policy. 
  • Adherence to investment constraints and mandate parameters. 
  • Legislative compliance. 
  • Consistency of investment style. 
  • Organisational stability and personnel.

The performance of each of the Funds’ asset classes will be compared with the returns on an appropriate benchmark index which may change from time to time.

Furthermore, in making decisions on investment strategy for each Fund, the Manager will have regard to the overall circumstances of the Funds and will comply with the Schemes Trust Deed and rules, disclosure documents, and with all applicable legislation.

The Manager will manage all aspects of risk in relation to the Funds assets, including:

    • Ensuring the assets are adequately diversified. 
    • Ensuring the assets have an appropriate level of liquidity. 
    • Ensuring there are sufficient assets to meet redemptions as they fall due. 
    • Ensuring that any provider to whom investment decisions are delegated exercises their duties with prudence and professionalism.

 

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.

Booster's Supervisor & Custodian 

The Supervisor and Custodian of the Scheme are the Public Trust (PT). The PT is responsible for the supervision of the Scheme and the performance of Booster's duties as manager of the Scheme. The PT is independent of Booster and is regulated by the Financial Markets Authority.

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.

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.

Below is a link for more information on the Public Trust (PT):

 

The Public Trust 

 

Booster’s Governance Process

Investment Committee

The Manager recognises that the development of investment objectives and the implementation of appropriate investment strategies is one of its key responsibilities to investors. Due to the specialised nature of investment markets, the Manager utilises its Investment Committee to oversee the investment process, including performance monitoring.

The role and powers of the Investment Committee are set out in the Investment Committee Charter. In general, the Committee’s role is to review all aspects of investment recommendations, decisions, and processes and to approve the SIPO.

External Experts

The Manager engages experts to assist in running the Portfolio and its investment functions. These may include:

    • External Investment Consultants– assist in the formulation of investment objectives and investment strategies. Assist in the selection, appointment, retention, monitoring, and termination of external fund managers. Assist with performance monitoring of the Portfolios against benchmarks, objectives, and peers.
    • External fund managers– manage investments under the mandated agreement or by offer documents and within the constraints set by the Manager. 
    • Custodian and Custodial Administration Service Providers– provide for the safekeeping of assets, settlement of investment transactions, calculation of returns, maintenance of records of unit holdings and transactions, monitoring of compliance by the external fund managers with their agreements, reporting to the Manager and other related services as specified under the agreement.
    • Administrator – maintains relevant cash accounts and advises details of net cash flows into and out of the investment options to enable decisions regarding external fund manager applications/redemptions to occur.

 

How do they decide where to invest?

The investment processes followed by the manager

Booster's Investment Belief


In determining the appropriate investment strategy and investments for the Funds assets, the Manager applies the following investment principles:

Effective diversification is a core investment risk management strategy: Spreading investor’s investments across a number of different types of relatively uncorrelated securities within asset classes (and across less correlated asset classes within multi-sector options) is fundamental to smoothing returns and reducing volatility. The Manager, therefore, defines minimum diversification standards in the mandates for each of the specific asset class options offered and requires comprehensive asset class correlation analysis to be included in the annual strategic asset allocation reviews. 

Risk and return are positively correlated: Over the long term, higher risk will generally be rewarded with higher returns, all other things being equal. Conversely, those investments with higher expected return usually involve more risk. All investments involve some form of risk. The Manager has defined and addressed the key risks relevant for the Funds by stipulating either minimum investment requirements or specific constraints within the mandates.

Time horizon is important when investing: At any one point in time, investment principles that apply generally in the long term may not necessarily appear to hold in the short term. Individual investors need to consider their time horizon to ensure it matches that of their chosen investment option. 

High-quality research and experienced investment management are essential: Developing sound investment portfolios involves in-depth research and analysis of available investments and selecting those according to a consistently applied and disciplined decision-making framework. 

Markets operate in cycles: These cycles can vary in length and intensity. With experience and analysis, favouring certain asset classes and investments during different cyclical phases can potentially enhance returns and reduce risk.

Environmental, social and corporate governance (ESG’s): More consistent long-term return outcomes are likely to be achieved if investments are undertaken in companies and funds that recognise the environmental and social impact of their commercial activities and operate with sound governance frameworks.

Liquidity: Liquidity is the essence of soundly operating financial markets. A statement regarding the Manager's liquidity policy is provided in Section 8. Constraints and/or minimum requirements are stated in the mandates for the Funds which specifically addresses the management of liquidity on behalf of investors.  Below is the link for obtaining further information and viewing section 8.

Manager's Role

The Manager also takes into account the following empirically supported investment philosophies in determining the most appropriate investment strategy for each Fund:

  • Efficient Communication: In most developed countries, investment markets are relatively efficient in communicating, processing and reflecting available information regarding security prices. 

  • Investment outcomes driven by strategic decisions: Investment outcome differences across individual investors are largely driven by strategic decisions, both across asset classes and within sub-asset classes.

  • Index funds perform consistently above average of actively managed funds: Over the medium to long-term, index funds perform consistently above the average of actively-managed funds, with most active investment managers unable to consistently outperform well-diversified market indices, particularly after fees.

  • Modern portfolio theory disciplines: These provide good portfolio structure under normal market conditions, but they tend to break down under unstable or chaotic markets. Investment decision-making frameworks should therefore recognise this constraint and incorporate sufficient elements of dynamic asset allocation and explicit downside risk management strategies. 

  • Direct Securities vs Managed Funds: Where possible and appropriate, taking into account liquidity and diversification factors, portfolios of directly-held securities can be a more cost-effective way of implementing a core/satellite investment approach.

Benefits of Direct Securities.

  1. Replicate core market index benchmarks used to monitor performance and long term strategic asset allocation.
  2. Greater control over the overall portfolio return outcomes.
  3. The element of control over taxable outcomes.

Managed funds on the other hand are limited to implement the core strategy to only those investment vehicles suited to New Zealand-based longer-term investors. Therefore, part of the due diligence undertaken in selecting the managers of these vehicles will be focused on ensuring they have an appropriately documented approach to optimising tax outcomes resulting from their underlying investment philosophy and process.

Booster's Investment objectives

Here the investment objectives and return objectives the Manager has set for the Fund are outlined below, obtained from their SIPO document:

Investment Objective 

  • To provide a relatively consistent, but modest, investment performance, with a low overall level of return volatility to reflect the temporary holding nature of the Fund.

Return objective

    • Aims to achieve a rate of return (net of fees but before tax) of at least 1.5% per annum above inflation (as measured by Statistics New Zealand's Consumer Price Index) over rolling three year periods. Additionally, the Default Saver Fund is expected to outperform the relevant Morningstar survey median of Default Funds over rolling seven-year periods. Also, the fund is expected to deliver a gross value-added return (after fees) at least 0.5% above the gross benchmark portfolio return (after fees) over a rolling three years period.

 

Does Booster 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.

Booster’s Responsible Investment Policy

Booster considers environmental, social and governance risks when they assess investments across all of our core KiwiSaver and Investment funds. Booster integrates ESG (Environmental, Social, Governance) factors into their investment selection.

They make the most of the in-depth analysis provided by several global ESG data providers to apply their approach as broadly as possible while taking care in how Booster apply their conclusions. Instead of using aggregate investment scores as which are often used by investment managers as overall ESG scores can be inconsistent between providers and are often not transparent on a standalone basis they use a shortlist of factors which are most applicable to clients’ share investments and which fairly represent relevant ESG issues.

Ethical Exclusions

Booster recognises that some clients prefer more explicit, broad-ranging sector exclusions, and to support the personal values of this group of investors, Booster offers a range of dedicated socially responsible investment funds.

In addition to following their ESG integration process, these funds also exclude investments indirectly held by companies and managed fund investments that generate more than an incidental proportion of revenue from the following activities:

  • Tobacco production

Corporate Governance & Proxy Voting

Investors in equity markets quite literally own the companies in which they purchase shares. One of the rights of an owner is the right to determine how the company is run by voting for the board of directors and on various resolutions at the Annual General Meeting (AGM). This is a privilege of ownership and one that Booster takes seriously on your behalf for all shares held in the Managed Investment and Income Focus Accounts.  

Often, it is not practical to attend the AGM of a company in person. Using proxy votes, Booster can instruct the chairman of the meeting on how to vote the shares in their absence. By using proxies, Booster can cast votes on investors’ behalf with the ultimate goal of having better-run companies, which should lead to stronger returns.

Below is a link for more information on Booster’s Corporate Governance Policy. 

 

Corporate Governance Policy

 

How do Booster 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?