Which Index Fund to Invest In?

[Buffett Jr]

With my kiwisaver being in Superlife, I get the choice of choosing to invest in index funds in NZ, AUS, USA, UK, World, Emerging Markets, etc.

Which to choose?

I've arranged mine 25% NZ, 25% AUS and 50% USA.

What are everyone else's thoughts? This applies to kiwisaver as well as other index fund investments.

[winner69]

With my kiwisaver being in Superlife, I get the choice of choosing to invest in index funds in NZ, AUS, USA, UK, World, Emerging Markets, etc.

Which to choose?

I've arranged mine 25% NZ, 25% AUS and 50% USA.

What are everyone else's thoughts? This applies to kiwisaver as well as other index fund investments.

Your father would be proud of you, except he says just the S&P but seeing you shfted to NZ you allowed to split it between here and there

http://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13

[huxley]

With my kiwisaver being in Superlife, I get the choice of choosing to invest in index funds in NZ, AUS, USA, UK, World, Emerging Markets, etc.

Which to choose?

I've arranged mine 25% NZ, 25% AUS and 50% USA.

What are everyone else's thoughts? This applies to kiwisaver as well as other index fund investments.



I've been thinking about my superlife kiwisaver allocation since they launched the new ETF funds - so far happy to keep it the same. Currently my kiwisaver is

OS Shares (Unhedged) 94%
SuperLifeIncome 6% (bonds fund)

Super life member is 70/30 OSshares/AUS mid cap

(This is long haul money i.e. I'm not going to us it for a first home deposit etc

[johnluangco]

I personally have a mixture:
- ASB Kiwisaver Growth Fund which is an index fund
- Smart Share USF (S&P500) and FNZ
- Superlife 10% NZ and overseas bonds + 90% NZ, Overseas unhedged, Property and USF. (So far the overseas and USF has been performing poorly with negative returns. NZ stock seems to be going pretty strong.)

[Harvey Specter]

I personally have a mixture:
- ASB Kiwisaver Growth Fund which is an index fund
- Smart Share USF (S&P500) and FNZ
- Superlife 10% NZ and overseas bonds + 90% NZ, Overseas unhedged, Property and USF. (So far the overseas and USF has been performing poorly with negative returns. NZ stock seems to be going pretty strong.)Why not go superlife for all of those - they do all of those.

[johnluangco]

Good point :)

I didn't want to put all my eggs in one basket and so put my kiwisaver with ASB.

As for Smart Shares I started to invest with them (via FNZ) before I started with Superlife. I did consider consolidating everything into Superlife, but the only thing stopping me at the moment is psychological.

When buying shares and ETFs, I can clearly see how many units I own in the register and so when the market price goes down, it has less of a psychological impact.

However with Superlife, I don't have visibility in how many units I have against each fund, the reports I can see only provide information on the market value of your investment. The one thing I've always wondered is how gains and losses are allocated to investors in a superlife fund.

[Dr Cone]

Hi Everyone

I've been researching the difference between Index funds and ETFs, as I would like to invest in index funds, as opposed to ETFs. However, it seems it is hard to invest in standard index funds, as ETFs seem to be all the rage. For example, I rang Superlife, and they only invest in ETFs.

Is anyone able to help with investing in standard index funds? I've listed the key differences between index funds and ETFs below:

Index
Mutual Fund
Dividends re-invested automatically
Sale once a day, based on NAV
Easier to regularly invest without paying a commission

ETF
Security bought and sold on an exchange
Dividends not re-invested automatically
Traded throughout the day
Trading commission paid each time one invests

Thanks.

[huxley]

Hi Everyone

I've been researching the difference between Index funds and ETFs, as I would like to invest in index funds, as opposed to ETFs. However, it seems it is hard to invest in standard index funds, as ETFs seem to be all the rage. For example, I rang Superlife, and they only invest in ETFs.

Is anyone able to help with investing in standard index funds? I've listed the key differences between index funds and ETFs below:

Index
Mutual Fund
Dividends re-invested automatically
Sale once a day, based on NAV
Easier to regularly invest without paying a commission

ETF
Security bought and sold on an exchange
Dividends not re-invested automatically
Traded throughout the day
Trading commission paid each time one invests

Thanks.



Superlife funds invest in the underlying ETFs (mostly NZX Smartshares) so you'll get most of the features you list under Index funds above (i.e. you can DCA into a Superlife fund without buying on market or paying any additional fees).

[Dr Cone]

Thanks for this.

There is an advantage of saving fees by purchasing through a provider, such as SuperLife.

The question is finding a provider than can purchase, how shall I say, 'pure' index funds? For example, the Vanguard 500 Index is a standard index fund, whereas, the SPDR is the S&P 500 ETF. If I was a US Citizen, then I could just set up a Vanguard account and happily buy what I wanted (just like we can do on the NZX or ASX).

Whilst, in the case of SuperLife (as you say Huxley) I can get most of the features of an index fund, what I really want to do, is to be able to invest in other jurisdiction index funds. For that it seems, I need an intermediary, which is what I'm looking for.

Cheers!

[huxley]

Thanks for this.

There is an advantage of saving fees by purchasing through a provider, such as SuperLife.

The question is finding a provider than can purchase, how shall I say, 'pure' index funds? For example, the Vanguard 500 Index is a standard index fund, whereas, the SPDR is the S&P 500 ETF. If I was a US Citizen, then I could just set up a Vanguard account and happily buy what I wanted (just like we can do on the NZX or ASX).

Whilst, in the case of SuperLife (as you say Huxley) I can get most of the features of an index fund, what I really want to do, is to be able to invest in other jurisdiction index funds. For that it seems, I need an intermediary, which is what I'm looking for.

Cheers!


When you say "index funds" I think you mean mutual Funds? After all an index fund is just a fund which passively tracks an index (e.g. S&P500, MSCI world index etc etc) so you get the "market" return less fees. Is the S&PNZX50 ETF still an index fund in that the assets it holds just passively track the index? - it's just the units are listed on an exchange.

Sounds like you're just looking for a low cost passive fund.. good luck finding that in NZ!

[AppleCrumble]

Index funds,etfs, mutual funds....
I'm looking for the index type fund I. E. Low cost passive fund. Does that not exist in nz?
What is smartshares?Superlife bought them recently so not sure what happened to these products?

[smpl]

Empirical evidence shows that Minimum Volatility strategies outperform over the long term.

This could be particularly important if you are considering investing in equities during these times.

[AppleCrumble]

As far as I understand it smartshares have 19ETFs see here:
https://nzx.com/companies/NZX/announcements/273297
listed on the NZX. (Note there is index linked funds which are similar to ETFs but slightly differernt which I am learning what the exact difference is)

So these are listed on the nzx so if i take one for example, the*nz-dividend*here:
http://smartshares.co.nz/types-of-funds/smartdividend/nz-dividend
What is the best/cheapest way of buying this? Should I buy through a brokerage like ASB or should I open an account with smartshares?

For instance if I buy through ASB, the cost would be "0.3% with a minimum of NZ$30.00 per trade"
If I buy through smartshares can I avoid this ASB cost?*I'm thinking no but what do others think?

There is also a mgmt fee of 0.54% for this fund.But I probably would not see thi, that is I would just see the the return minus this fee.

So the long and short of it is should I buy through a broker (e.g. ASB) or apply directly through smartshares? Or is it much of a muchness. An interesting point made above is that if you buy through a broker you can see the number of units and the value whereas with smartshares (or superlife the example they gave) you would only see the value.

[AppleCrumble]

Also in relation to etfs and this etf in particular, the nz-dividend here:
http://smartshares.co.nz/types-of-fu...nd/nz-dividend

What happens the dividends?*Are they reinvested or can they be taken out as an Income, or to be reinvested elsewhere?

[peat]

As far as I understand it smartshares have 19ETFs see here:
https://nzx.com/companies/NZX/announcements/273297
listed on the NZX. (Note there is index linked funds which are similar to ETFs but slightly differernt which I am learning what the exact difference is)

So these are listed on the nzx so if i take one for example, the*nz-dividend*here:
http://smartshares.co.nz/types-of-funds/smartdividend/nz-dividend
What is the best/cheapest way of buying this? Should I buy through a brokerage like ASB or should I open an account with smartshares?

For instance if I buy through ASB, the cost would be "0.3% with a minimum of NZ$30.00 per trade"
If I buy through smartshares can I avoid this ASB cost?*I'm thinking no but what do others think?

There is also a mgmt fee of 0.54% for this fund.But I probably would not see thi, that is I would just see the the return minus this fee.

So the long and short of it is should I buy through a broker (e.g. ASB) or apply directly through smartshares? Or is it much of a muchness. An interesting point made above is that if you buy through a broker you can see the number of units and the value whereas with smartshares (or superlife the example they gave) you would only see the value.


From the documents online




When Unitholders first subscribe for Units they will pay an application fee to the Manager, which will be

deducted from their Subscription Amount. For Subscription Amounts of less than $20,000 this will be a flat

fee of $30, and for Subscription Amounts equal to or greater than $20,000 the subscription fee will be 0.2%

of the full Subscription Amount. This fee is not payable for subsequent Cash Applications, subscriptions

under the Regular Savings Plan or the Distribution Reinvestment Plan





You can also add to your investment through the Distribution

Reinvestment Plan
– where your distributions are automatically reinvested as additional Smartshares Units

or you can choose to have your distributions paid directly to you by direct credit

[AppleCrumble]

Tks peat I always struggle to find what I want on their site.

[peat]

I use these via Rabobank.


8028
The AMP one is not currency hedged, the others are although the Devon Divi is only NZ/Aussie stocks.
Fisher Funds Growth is the most volatile. They all seem to track well, as far as I can tell.
Fees aren't too bad, considering the retail features.

[Dean@Smartshares]

Hi there,

Differences between buying ETFs directly through Smartshares or buying on market are highlighted below:

Buying on market
You can trade on-market on any trading day and the price paid will depend on current supply and demand. Noting that there is a market maker in place providing liquidity at spreads around the NTA value. You can also set price limits this way. For example, you may only want to buy or sell if the unit value reaches to a certain price. Please be aware there will likely be a brokerage cost with the trade and this will be set by the broker you elect to use.

Buying direct from Smartshares
Applications are processed on a monthly basis, with all approved online applicants having their application amount direct debited from their bank account on the 20th of the month. Units will be issued at the NTA price on or about the last business day of the month and the units will appear in your registry account on the 3rd business day. You don’t have the flexibility to set a buy or sell price or decide what day to trade using this method, but the benefit is that after your first investment, there is no fees for ongoing investments.
Smartshares application fees are as follows:
· Initial $30 fee for a new fund investment - Peat, we amended our application fees in Sept 2016 to a flat $30 irrespective of application amount
· There are no application fees on any further lump sums into an existing fund holding, or on the regular savings plan function we offer
Ongoing management fees for the various funds can be found at http://smartshares.co.nz/fund-investor-report
Distributions from the ETFs are automatically set to reinvest as additional units. If you would like to receive the distribution as cash, you can elect this in your registry account by logging in at: http://www.linkmarketservices.co.nz/

[Aaron]

Hi there,

· Initial $30 fee for a new fund investment - Peat, we amended our application fees in Sept 2016 to a flat $30 irrespective of application amount
· There are no application fees on any further lump sums into an existing fund holding, or on the regular savings plan function we offer
Ongoing management fees for the various funds can be found at http://smartshares.co.nz/fund-investor-report
Distributions from the ETFs are automatically set to reinvest as additional units. If you would like to receive the distribution as cash, you can elect this in your registry account by logging in at: http://www.linkmarketservices.co.nz/


Dear Dean

Thanks for the information.

Your fees I guess are .75% per annum but is this charged on the initial cost price of the investment or an NTA per unit at some given point in time each year?

[Dean@Smartshares]

Hi Aaron,

The management fees are calculated daily within the NTA value. The management fees vary by fund and the full list can be viewed here :

http://smartshares.co.nz/fund-investor-report

[Aaron]

Thanks for that Dean I didn't realise you had so many funds.

I assume the higher fees for Aussie and NZ Mid Cap is a higher rate of change of shareholdings in companies moving through the mid cap range, up and down.

I will take a closer look after the next major financial market crash which I am expecting any day now. (and have been for a number of years)

When the half price sale is on I'll start buying.