Kiwisaver Strategy

[lou]

Can you have a kiwisaver strategy?

My Idea is to sign up with the growth "smartkiwi" kiwisaver fund. Their aggressive fund invests in the smartFONZ and smartMOZY; these funds invest into the companies listed in the NZX 50 Index and the S&P Australian 50 MidCap Index.

I will then track the 200 day moving average for the two indices. Once the index price for the crosses the 200 day MA and starts trending down I ring up smartshares and get them to switch me to the conservative fund. The conservative fund is 80% fixed interest and 20% equity.

Once the indices cross back over the 200 day MA and starts trending back up I ring up smartshares and get them to switch me back to the growth fund.

What do you guys think of this strategy?
Is it a worth while strategy?
Would you guys suggest anything different?
One thing I am unsure of is the split that smartkiwi invests in the NZX50 & ASXMC50? Does anyone know this?
Any ideas to improve this strategy or something similar?

[arcticblue]

I see they have a management fee of 0.65%. The smartFONZ etc also have a management fee of about 0.6%. Are you going to be stung twice for management fees, I couldn't see anything that said you wouldn't be. It's probably worth back testing the shares and seeing how it performs with a 200 day MA. FNZ.NZ is smartFONZ, I'm sure it is possible to find the other ones too.
Also how often can you change between the different funds, it may be restricted to x times per year?

[CJ]

I see they have a management fee of 0.65%. The smartFONZ etc also have a management fee of about 0.6%. Are you going to be stung twice for management fees, I couldn't see anything that said you wouldn't be. I never thought of that. However, this would be the same for most funds wouldn't it except those that invest directly. Ie. the fee you see is for the admin of the fund, and does not include the fees of any of the funds they invest in. Having said that, I would have though Smartkiwi got a volume discount off the smartFonz fees fund.

It's probably worth back testing the shares and seeing how it performs with a 200 day MA. FNZ.NZ is smartFONZ, I'm sure it is possible to find the other ones too.
Also how often can you change between the different funds, it may be restricted to x times per year?I would also check how many switches you get per year.

The question has made me think. Does anybody have a kiwisaver stategy. Given the long term, locked in nature of the investment, I have always thought of it as a set and forget type of investment. Now that it 5 figure sum, it probably pays to think about it more.

http://www.superlifekiwisaver.co.nz/superlife/investmentoptions.aspx could be another option. they have low fees and free, unlimited switching.

[wbosher]

I only signed up to Kiwisaver about six months ago, mainly because the returns on my private super were appaling when the market was racing up in leaps and bounds, and to take advantage of the "free" money or course.

My strategy is to treat the fund as if it were a long term investment/trade, using primarily T/A but basic macro F/A as well, a similar strategy to lou from the sound of it. Most providers will allow you a certain number of free switches per year I think.

[ENP]

My strategy is just to leave it in a growth fund, perhaps take it out for a 1st home subsidy and then basically leave it. It's $20 a week I'd otherwise spend on unecessary stuff anyway.

I don't intend to get rich through kiwisaver. It's just a nice little back up plan if all my other investment goals turn to custard. If that's the case in 43 years when I'm 65 then I've probably screwed up extremely badly anyway.

[lou]

I gave smartkiwi an email to investigate a couple of concerns that were raised in the thread.

My Email:
The management fee is quoted on the website being .65% for +$30,000. The ETF that smart kiwi invests in also have fees as well. Does that mean we pay the smartkiwi management fees and the ETF management fees?
Are there any fees for transferring between the different smartkiwi options i.e between growth, balanced, and conservative?
How long does it take to process a switch between two different smartkiwi options?
The smartkiwi website says that the growth fund invests in the FONZ and MOZY. What ratio does the fund invest each ETF?

Smartkiwi response:
No absolutely not. That would definitely be double dipping which would be very unfair and incredibly unethical. What happens is that Smarkiwi will pay the full management fee, this is unavoidable with the way the fund has been set up, however what we then do is continuously calculate a rebate which is paid to the fund to offset the fee. So the net result is that the member is only charged the advertised fee.

There is no charge for changing between funds. In fact you change every month if you wish. The only fee you will ever be charged for anything is the 0.65% management fee. This fee is all inclusive. No front end fee, no trustee fee, no brokerage fee just the management fee and thats it. If you decided to switch between funds it would take one week to complete the transfer.

The Growth Fund invests 60% of its assets in FONZ and 40% in MOZY. There is a small amount left in cash to facilitate transfers in and out however this is negligible.

[CJ]

Thanks Lou - that seems like quite a good response. So it would pay to move between conservative and growth for bear/bull markets. Will look into this going forward.

Disc - Smartkiwi growth since 2008 (should have started with conservative as it dropped a lot at the start.

[blackcap]

I gave smartkiwi an email to investigate a couple of concerns that were raised in the thread.

My Email:
The management fee is quoted on the website being .65% for +$30,000. The ETF that smart kiwi invests in also have fees as well. Does that mean we pay the smartkiwi management fees and the ETF management fees?
Are there any fees for transferring between the different smartkiwi options i.e between growth, balanced, and conservative?
How long does it take to process a switch between two different smartkiwi options?
The smartkiwi website says that the growth fund invests in the FONZ and MOZY. What ratio does the fund invest each ETF?

Smartkiwi response:
No absolutely not. That would definitely be double dipping which would be very unfair and incredibly unethical. What happens is that Smarkiwi will pay the full management fee, this is unavoidable with the way the fund has been set up, however what we then do is continuously calculate a rebate which is paid to the fund to offset the fee. So the net result is that the member is only charged the advertised fee.

There is no charge for changing between funds. In fact you change every month if you wish. The only fee you will ever be charged for anything is the 0.65% management fee. This fee is all inclusive. No front end fee, no trustee fee, no brokerage fee just the management fee and thats it. If you decided to switch between funds it would take one week to complete the transfer.

The Growth Fund invests 60% of its assets in FONZ and 40% in MOZY. There is a small amount left in cash to facilitate transfers in and out however this is negligible.


Im with Smartkiwi as well and happy to date. but my question is... I like the theory behind your strategy of swapping mind,.... how can you anticipate a bull or a bear market in advance?

[lou]

Im with Smartkiwi as well and happy to date. but my question is... I like the theory behind your strategy of swapping mind,.... how can you anticipate a bull or a bear market in advance?

That is a good question. If I had a full proof way of anticipating a bull or bear market I would not be sharing it here. I would be on my way to the bank laughing.

The main statistic I am using for predicting if it is bull a bear market is the 200 day MA. When the price goes below the 200MA the price is trending down (bearish). When the price goes above the 200MA the price is trending up (bullish).

The 200MA is my main signal however before I decide to switch from a growth to conservative I will take a broader look at what is happening in the market/world.

Does anybody else have a good/simple way of deciding if it is a bear or a bull market?

[p2r]

I guess keeping an ear to the ground & Phaedrus graphs helps but i don't know about thetime lag in a switch -probably is a few days to a week so not like a share. In the GFC I had some super in cash and it is only just now growth is catching up. The effect is muted by the NZ dollar going down when shares go down which makes overseas shares not so bad but the main effect is the shareprice.
I have switched mine last week to conservative, which makes me feel bad when you get a good day like yesterday, shares up and NZ dollar down but overall the price of oil is making me nervous. I figure don't bee too greedy and I have made 15% or so recently so sitting on small gains will still be OK overall. The whole inflation, money printing thing is a risk as your money gets eroded in cash but it is the only place to be in a bear, except maybe some overseas bonds.
I definately am trying to ride the switches with superlife - there seems no limit and do it on the internet for no cost.

[CJ]

I definately am trying to ride the switches with superlife - there seems no limit and do it on the internet for no cost.How long do switchs with superlife take?

[lou]

I have tried changing from one smartkiwi plan to another and it has been 9 working days and switch still has not been processed. I am thinking this is taking way to long so will be looking at switching providers.

How long does it take to switch between plans with other kiwisaver providers?

[p2r]

Superlife: They seem to do it at least weekly, sometimes seems faster like the next day. The prices similarly are about weekly. You get an e mail back almost instantly but you can go on and see the prices in your account realtime as well as how the different proportions of different funds. eg if you have 50% cash, 50% NZ shares next week it may be 49% Cash and 51% NZ shares.

I see they now have a emerging markets fund unhedged but no details yet. I like a fund like that because it can be a great hedge on all my NZ assets including my salary.

[lou]

I have applied to switch my Kiwisaver funds to Superlife. However it is taking forever to move my Kiwisaver funds across to it. Sigh.

[lou]

Two months+ to get my funds transfered across from one provider to another but finally with super-life kiwisaver. Went to customize my allocations will see howlong it takes to do the switch.

[Anonymous]

I customised my allocation with superlife last week. I did it online and had a email later the same day with my updated portfolio allocations effective same day. Was quite impressed.

[lou]

I customised my allocation with superlife last week. I did it online and had a email later the same day with my updated portfolio allocations effective same day. Was quite impressed.

Hi Anonymous did you just receieve an email say that allocation had been updated or was it confirming that your investments pools had been changed?

When I changed mine the other day I got a confirmation email saying that I had just changed my allocations however my investments on pool by pool basis had not changed.

When I checked today my investments by pool had changed to my new allocations. Good work supperlife a one day turn around! However this maby just a fluke or they do there transfers every firday or something. If any one else has some more info on there transfer schedule please share it on the thread.

[Anonymous]

Hi lou. I made the change online around midday and received an immediate automated email confirming receipt of my request to change my allocations. Then at 9am the next day I received an email confirming the changes had been made the day before with a statement attached showing the actual dollar allocations as at that day.

I only recently joined kiwisaver so there wasn't a lot of money to move around but either way I was very impressed how quickly they actioned the request. I also like the way you can see what actual shares they have invested in in each sector (as at 30 June). I don't know how often this is updated though.

[D B Cooper]

Hi Lou

I have been with Superlife for over 3 years and have changed my investment strategy about 4 times. Each time it has been changed within 1-2 days, so a very quick process. I highly recommend Superlife as they have good customer service and everything is straightforward and clear.

[p2r]

Yes they update the portfolios pdfs about monthly.
I have made about 10% this year in the Gemino growth one but I am currently switched to mostly cash & bonds which is good as that fund has dropped about 10% lately. Got the last $1000 last month from the govt which was a nice boost. I have been in 2 years and have contributed $5000, employer the same, $3000 from govt and $1000 return ... nearly 200% on my investment so just keeping a head of inflation so far and a bit! $28.75 fees $166 tax. Too good to last I know but a decent start.
They are mostly passive funds but I have probably switched 12 times a year, and the kids $1000 ones a bit. It's amazing really what they will do compared to my ASB superscheme.
I see they are suggesting putting only enough into kiwisaver this year to get the $512 from the government and then freeze & put the rest into a super scheme that is available sooner ie before 65. Interesting.

[frostyboy]

Does anyone know of any provider that does more than 50% (ideally I want 100%) of overseas shares unhedged and Australian shares aren't included in that.

[lou]

Super life has a pool for overseas shares unhedged, they also have one pool for overseas shares hedged.

[p2r]

Man Gemino up 15% or so last few months, inconceivable!.

Yes I think having unhedged overseas shares in your kiwisaver is easy and balances your $NZ assets like bank deposits, australasian shares, your house and job.

With Superlife you can choose between 1 and 100% of any pool. There is also an emerging markets pool which meets the overseas unhedged criteria. I think the ethical fund has quite a lot of unhedged overseas shares and bonds - oh no only 25% at the moment. It's all there on the website.

Overseas shares is currently 50% US, 10% Japan. Mobil, Apple, IBM, Nestle, AT &T Microsoft, Chevron, General Electric etc

Emerging markets is in funds with in decending order 13% China, Brazil, India, Taiwan, Korea, South Africa 8%, Mexico, Russia, Poland

Anyway why are the Greens wanting the government to offer a cheap Kiwisaver option run in a non profit manner when there is Superlife which already does that?
And why don't PSIS & Kiwibank use Superlife who are the best and cheapest and local...?
In fact if the big default institutions used Superlife and charged their 3% and cost is 1% surely they would make more money? I don't know...

[lou]

@p2r crazy that Gemino is up %15. I would not think that I was expecting they would of had a horrible couple of months.

I personally have not been in the Gemino fund as I have been risk adverse the last couple of months. Crap, LOL.

Pacific Edge Biotech (PEB) holds 16.7% of Gemino's assets and they are up 38% the past month. So that is a big chunk of the gain. However they would still have to invested the other 83.3% well. So Cudos to them.

I like the emerging markets pool at superlife. It is quite hard to invest in emerging markets from NZ so this is an easy option :)


Discl: Superlife Pools;
25% Cash
25% NZ Bonds
25% Overseas Government Bonds
25% Overseas Bonds

[absolut-advance]

http://www.interest.co.nz/kiwisaver/performance-ranking

I was with ASB Growth Fund, are changing to Milford aggressive, sent transfer letter today.

What are your thoughts on Milford? (im not chasing historic returns, just believe the make up will provide better returns long term, alas more volatility shorter terms and with less diversification admittedly)

http://milfordkiwisaver.co.nz/

I put in 8% currently, silly I know on so many fronts, but at the end of the day I don't really require the extra money and with luck the power of compounding will kick in? So a larger amount in early will/should in theory work harder, if the fund beats inflation plus some.

AA