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Kiwi Wealth KiwiSaver Scheme 

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 Kiwi Wealth Kiwisaver Scheme's own website, fund updates, and the product disclosure statement published in August 2020.

Who is Kiwi Wealth KiwiSaver?

Facts & History of the KiwiSaver provider

History

Established in 2000, Kiwi Wealth has a strong track record of growth and innovation. From their original inception as Gareth Morgan Investments, through to the portfolio of offerings Kiwi Wealth has today, they have achieved many important milestones along the way.

✅   New Zealand Based Provider

Size

The Kiwi Wealth KiwiSaver Scheme manages six funds and has total KiwiSaver Assets Under Management (AUM) of over $NZ 4.4 billion and 216,616 KiwiSaver clients.

Who are the people looking after my money?

The investment team, structure and their alignment with clients

The Investment Team

Simon O’Grady - Chief Investment Officer

Simon leads the Investment Management Team and is responsible for the processes and functions of the investment management. 

As an experienced senior executive, Simon has had hands-on experience with all management styles and asset classes. He also has a great track record for building and managing successful investment management in both New Zealand and Australia. 

A CFA charter holder, Simon is also a fellow of the Financial Services Institute Australasia (F.FIN) and a current director of the CFA society of NZ. He is an Authorised Financial Adviser (AFA) and holds a Diploma in Bank Finance from Massey University.

Susan Easton -Head of Portfolio Management

Susan has overall responsibility for Kiwi Invest’s portfolio implementation. This includes the portfolio management and implementation of Kiwi Invest’s frameworks and processes including oversight of our investment risk management. She also has oversight of the Future State Strategic Change Programme for Kiwi Invest.

Susan has over 25 years of investment experience across global markets, including equities, bonds and currency. She began her investment career at O’Connor Grieve covering NZ equities, before moving to portfolio management roles at ANZ Asset Management.

Susan has been with Kiwi Wealth since 2006 and has a BA and Post Graduate Diploma in Accounting from Victoria University of Wellington.

Nathan Field -Portfolio Manager

Nathan is the Portfolio Manager for the satellite global shares portfolio. He is responsible for portfolio construction, risk management and security selection.

His main role is stock-picking – in other words identifying, analysing and monitoring the most suitable investments in global share markets.

With 15 years’ experience in the investment industry, Nathan’s career has taken him from New Zealand, to Sydney and London. His extensive experience includes roles as a Senior Equity Analyst and Director at ABN Amro, and Asian Markets Adviser for Macquarie Bank, where he marketed investment ideas to hedge funds.

Nathan has a BA (Hons) in economics and a Post-Graduate Diploma in development studies from Massey University.

Frank Braden - Senior Equity Analyst

As Global Equity Analyst, Frank is responsible for identifying and analysing investment ideas in the global share markets, working closely with Nathan Field across the Satellite global shares portfolio.

Frank brings a truly global perspective to his role, with experience selecting stocks in financial markets around the world, including time spent as an Equity Analyst at Standard & Poor’s (S&P) Capital IQ, both in New York and London.

With nearly 20 years in investment industries across the United States, the United Kingdom and New Zealand, Frank’s experience includes investment consulting at Marquette Associates, and developing equity investment strategies as an Equity Strategist at Macquarie Group.

Frank has a degree in economics and an MBA from the University of Chicago. He is also a CFA charter holder and a member of the CFA Society of New Zealand.

How is the Investment Team Structured?

Kiwi Wealth employs the use of Investment Managers to manage their KiwiSaver Scheme. Kiwi Wealth is the manager for the Balanced fund. 

Kiwi Wealth Limited is the manager of the Scheme (Manager) and is responsible for offering and issuing interests in the Scheme and the management of investments and administration of the Scheme. The Manager has delegated its investment management functions to Kiwi Wealth Investments Limited Partnership (Investment Manager). The Manager is a wholly owned subsidiary of the Investment Manager. Kiwi Wealth is responsible for deciding what the fund invests in, in accordance with the Statement of Investment Policies and Objectives (SIPO).  The SIPO specifies the policy, objectives, investment philosophy, investment style, guidelines and limits that the Investment Manager and the Manager shall follow in relation to the investment of the assets of each investment fund of the Scheme.

Incentives/Alignments

Kiwi Wealth’s global scale and expertise means they have the investment capabilities to keep pace with the changing investing environment and deliver results for their members. Here is their alignment and responsibilities:

  • The design and governance of your scheme
  • Investment manager search and selection
  • Creating innovative retirement solutions and post-retirement products
  • Enhancing your portfolio through our broad range of multi-manager sector funds
  • Ongoing member communication and education
  • Effective implementation of your scheme
  • Accessing thought leadership in retirement investment issues

For more information, click the link below: 

www

SIPO

 

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.

Kiwi Wealth's  Custodian 

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. 

Kiwi Wealth’s custodian is JB Were (NZ) Nominees Limited. JB Were (NZ) Nominees Limited has been creating value for its clients for more than 175 years and is one of New Zealand’s leading wealth managers.

Kiwi Wealth's Supervisor

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.

Kiwi Wealth’s Supervisor is Public Trust. 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.

Governance Process & Investment Monitoring

The Manager has overall responsibility for ensuring a SIPO is in place and complied with. The Kiwi Wealth Investment Governance Committee (IGC) monitors compliance with the SIPO supported by the underlying investment managers. The IGC meets quarterly and provides the minutes and a quarterly summary report to the General Partner’s Board detailing any significant issues that the Investment Manager would expect to know about. Issues are also provided to the Supervisor.  

The IGC’s guiding principles are: 

  • A fiduciary duty to the investor/client; 
  • Prudent risk management; 
  • Clear separation of management (doing the work) and governance (setting the investment objectives, boundaries, policies and limits and reviewing performance and compliance); and 
  • The setting of clear measurable accountabilities and defined investment risk and return objectives.

The IGC reviews the Scheme’s strategies and their ability to deliver investment objectives and to perform in periods of stress. Reports that show metrics, such as tracking error and absolute risk, are provided to the IGC. 

The IGC has at least four members appointed by the Board of the General Partner and may include independents. In addition, attendees would normally include the Chief Investment Officer (CIO) and senior representatives from the following teams: 

  • Investment Management Team (IMT); 
  • Operations; 
  • Product; and 
  • Risk and Compliance

The IGC meets quarterly and can approve requests out of cycle if required. 

Follow the link below to Page 4 of the SIPO document, which details the Governance process and Monitoring process:

www

SIPO

 

Corporate Governance and Proxy Voting

Kiwi Wealth Investments Limited Partnership (KWILP) will exercise proxy votes at their discretion for securities held in portfolios managed by KWILP, with the aims of enhancing long term shareholder value, supporting strong voting rights for shareholders and promoting responsible corporate behaviour.  KWILP believes that responsible corporate behaviour generally contributes to long term shareholder value.

KWILP may engage the services of proxy voting advisor(s) as required when formulating proxy voting and engagement strategies, deciding how to exercise specific voting rights, and in the actual execution of such voting rights.  KWILP may permit delegated investment managers to exercise proxy votes on securities they manage according to their own proxy voting policy.  KWILP may decide not to exercise voting rights at its discretion.

How do they decide where to invest?

The investment processes followed by the manager

Investment Beliefs 

The philosophy of the Manager and Investment Manager is that the role of the Manager of the scheme is to protect the scheme’s purchasing power and the members’ capital. Further they aim to enhance members’ wealth through active asset allocation, in financial instruments including shares and fixed interest assets. 

The Manager believes that opportunities to add value arise because of the following reasons: 

  • Risk premiums are time varying, which is evident in predictable changes in: fundamental valuation; value mean reversion; momentum (trends); and clustering of risk.
  • Markets can be segmented by various barriers to free capital flow. This creates relative value and security selection opportunities.

Price discovery for individual securities is somewhat predictable. For example, the micro themes that drive security valuations develop over time, with individual investments showing relative momentum and mean reversion.

More about Kiwi Wealth’s Investment Beliefs can be found on page 7 of the SIPO:

www

SIPO

 

The Investment Manager is focussed on managing total risk. It defines investment risk as the possibility of a permanent loss of economic capital – the purchasing power of money. It believes that investors experience this risk in two ways: the probability of loss, as well as the variance of returns. It manages both of these risk dimensions by:

  • Using a risk-budgeting approach and diversifying across multiple sources of risk and return.
  • Managing total fund risk rather than focusing solely on benchmark centric tracking error. 
  • Favouring liquid and transparent investments so that the underlying sources of risk and return are clear and investments are able to be exited at reasonable prices, in times of stress.

Investment Process 

The Investment Manager’s style is active, global investment with a dynamic total fund approach to investing. 

The Investment Manager is principally an active investment manager of global investments. As an active investment manager, it has the discretion to change the asset allocation (the mix of asset classes between shares, fixed interest, cash and other financial instruments) and to actively choose individual securities and investments, as opposed to managing tightly against a predefined asset allocation. 

The Investment Manager seeks to create risk efficient funds that utilise a wide practical set of investment activities subject to ethical, liquidity, transparency and cost efficiency tests.

The Investment Manager follows an integrated bottom up (security level) as well as top down (macro) approach with four main areas of emphasis:

  •  Capturing market returns (risk premia) effectively.
  • Adding value by active security selection.
  • Risk management to preserve capital.
  • Cost efficiency of implementation. 

The investment goal is to deliver higher returns, with lower risk, than common market index funds over the long term - after all costs, fees, and taxes.

Security Selection

The asset allocation applicable to each investment in the Scheme, is the responsibility of the Investment Managers (IM). The following are considered when making decisions related to the asset allocation: 

  • Liquidity 
  • Transparency 
  • Relative Value
  • Cost
  • Tax Efficiency 
  • Potential Returns

www

SIPO

Does Kiwi Wealth 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

The Investment Manager maintains a responsible investment policy with some exclusions and giving consideration to environmental, social and governance issues. The IM excludes investments in companies that act significantly against the principles of Kiwi Wealth, members and shareholders. The IM will identify companies for exclusion on behalf of the Kiwi Wealth Group based on significantly unethical products and/or services and/or corporate behaviour.

The IM will attempt to identify industries and/or companies: 

  • To be excluded for both direct and indirect investment, deemed “zero tolerance”. 
  • To be excluded from direct holdings on the basis of poor ESG behaviour, including under an investment management agreement (IMA). 
  • Industries and/or companies where enhanced sensitivity is appropriate in direct investment decisions are made by the IM. 

Further, zero tolerance applies to companies which are involved in any of the following product areas, and they will be excluded for both direct and indirect investment: 

  • Tobacco 
  • Controversial and nuclear weapons 
  • Whaling and whale meat processing 

Follow the link below to read more about the Responsible Investment Policy:

www

Responsible Investment Policy

 

Ethical Exclusions

Kiwi Wealth will identify and exclude companies that partake in highly unethical practices, especially in the following areas: 

  • Human rights abuse.
  • Abuse of the environment.
  • Endemic illegal activities, whether by New Zealand or local law. 

These companies will be excluded from directly held investments only, including where such investments may be made by another investment manager under an IMA.

Kiwi Wealth also identifies areas of sensitivity that it takes into consideration when making decisions. These areas refer to industries that have a propensity to victimise the environment or people: 

  • Defence and firearms 
  • Gambling services 
  • Thermal coal 
  • Nuclear power 
  • Palm oil

Corporate Governance & Proxy Voting

Kiwi Wealth Investments Limited Partnership (KWILP) will exercise proxy votes at their discretion for securities held in portfolios managed by KWILP, with the aims of enhancing long term shareholder value, supporting strong voting rights for shareholders and promoting responsible corporate behaviour.  KWILP believes that responsible corporate behaviour generally contributes to long term shareholder value.

KWILP may engage the services of proxy voting advisor(s) as required when formulating proxy voting and engagement strategies, deciding how to exercise specific voting rights, and in the actual execution of such voting rights.  KWILP may permit delegated investment managers to exercise proxy votes on securities they manage according to their own proxy voting policy.  KWILP may decide not to exercise voting rights at its discretion.

How does Kiwi Wealth compare to others?

Best Performing KiwiSaver Funds

FUND TYPE
FUND NAME
5YR AVERAGE
Conservative
Milford
Conservative
6.7%
Moderate
Aon Russell
Lifepoints
7.7%
Balanced
Milford
Balanced
9.5%
Growth
Fisher Funds
Growth
11.2%
Aggressive
Booster
GearedGrowth
13.8%

*Past performance is not necessarily indicative of future performance.

*All returns are after fees and before tax, updated 31st December 2020.

*Source: MorningStar Fund Report December 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 Kiwi Wealth KiwiSaver Funds