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

[smpl]

KiwiWealth or Gareth Morgan Kiwisaver has a Growth investment direction which is 85% MSCI AC of which only 50% is hedged back to NZD.

This is the best fund out there.


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.

[huxley]

KiwiWealth or Gareth Morgan Kiwisaver has a Growth investment direction which is 85% MSCI AC of which only 50% is hedged back to NZD.

This is the best fund out there.


What are the fees on that fund? I see the Superlife overseas fund no longer passively tracks the MSCI ex AUST index since they've rolled the fund into their own ETF products.

BTW you're responding to a post from five years ago, hopefully they've already chosen a fund!

[mshierlaw]

KiwiWealth or Gareth Morgan Kiwisaver has a Growth investment direction which is 85% MSCI AC of which only 50% is hedged back to NZD.

This is the best fund out there.

I got one of these, in the last 12 months it has lost money. I would have agreed with you 12 months ago.

[Valuegrowth]

Among kiwi savor providers, which ones will manage funds prudently with minimum risk?
Which providers will give you the opportunity to manage your own kiwi savor money yourself?
Thanks.

[Vagabond47]

Among kiwi savor providers, which ones will manage funds prudently with minimum risk?
Which providers will give you the opportunity to manage your own kiwi savor money yourself?
Thanks.

None of them. They are all managed funds of some sort, you have little direct control over the fine grain details of where your money is invested, and they all diversify to reduce risk. If you are that worried about managing it yourself, just put the bare minimum to get the "free" govt money (I think it's $1043? to get $512) into one and invest the rest of your money elsewhere yourself where you have complete control.

[Investor]

None of them. They are all managed funds of some sort, you have little direct control over the fine grain details of where your money is invested, and they all diversify to reduce risk. If you are that worried about managing it yourself, just put the bare minimum to get the "free" govt money (I think it's $1043? to get $512) into one and invest the rest of your money elsewhere yourself where you have complete control.

$1,042.86 to receive $521.43 MTC. The Kiwisaver year is 1 Jul - 30 Jun

[BeeBop]

That is effectively what I did but I also maximised my employer contribution at the time (in its early days). The rules changed after I left the country but had I stayed, no extra would have gone in due to the costs of the KiwiSaver provider. That said, the return has been good for a growth fund and it now just sits ticking away nicely as the bulk of the contributions were in the GFC days. It should be there as a nest egg when I qualify to withdraw (at no loss of contributions).

[777]

But do you get the $543,21 if you are not in the country?

[BeeBop]

No, I stopped contributing when I left the country. It now just sits. I could cash it in now but I would lose the govt. contributions. Overall, it has a good enough performance to leave alone for the foreseeable future.

[heisenberg]

OP is a good example of momentum investment. I do a similar thing with my investment in the AMP Global Shares Index Fund. That fund mirrors the MSCI World Index, so each month I check the 200 DMA and if it sits below the price, I remain in the fund. If the price is below the DMA then I move to cash/bonds. As we’ve been in a bull market I’ve only had to swap out a few times, but I get the feeling this may become more frequent with the current economic climate.

I do this through InvestNow which is free to buy and sell. While you could do it with KiwiSaver, usually the fee to switch eats into potential profits. For example with my current KS provider you get one free switch per financial year and it’s $50 thereafter.

In saying this I have contemplated moving to more secure funds when there are potentially major bear markets or recessions around the corner. Right now my fund is mostly in global equities, but I am considering moving most of it into a defensive fund for a few years. I’ll probably keep my regular payments buying global equities though, just to DCA cheap shares!

I’d be interested to know if many other people have this approach with KS or index funds.

[NeverQuestion]

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

I would recommend researching into the debt cycle and how credit flows through the global economy. understanding this cycle is one of the best ways to grow wealth as far as I have researched into it. Ray Dalio's Lessons From The Financial Crisis book is a hot topic at the moment as it gives a detailed reason why he believe this debt cycle is the root cause of every Boom and Bust period ever recorded. Take a look at what happened to shares and potentially bonds around 2008, 2000 and again around the early 1990s crash to see what I am talking about.

Everyone knows you should buy low and sell high. But how does anyone really know when a stock is cheap or expensive. Chasing the larger trends will help grow your investment quickly. Treat your Kiwisaver like a growing snowball of money that you want to protect for the time you retire. Being aggressive at the start of the cycle when the share market is recovering quickly and defensive at the end of it when it has overshot and about to correct. Hence understanding what drives cycles will greatly assist in protecting it. To better understand what i'm talking about watch the following clip https://www.youtube.com/watch?v=7WXidoI9ppw

My Kiwisaver is with ASB and 100% Cash atm. Waiting for a market correction and then jumping in again to take full advantage. I have a small holding of NZ Shares that I manage myself through ASB that is currently invested in shares in the NZX and ASX.

[Scooter]

I'm with Summer KiwiSaver, really good, 0.9% amf and free switching as many times as I want, 70% intl shares, and 30% NZ shares, good returns over 18% for Intl shares after fees. Their balanced fund is near top returns for last year which for a broking firm is good.

[Sideshow Bob]

Moved to 100% Conservative with Kiwisaver about a week ago. Looked at the returns in the Milford fund and was around 6% over the last year - no doubt helped by currency.

Question is whether current turbulence is just a few bumps, or on the way to a bigger correction. But went for capital preservation in the meantime.

[smpl]

Rising rates, asset class sell off.


70% intl shares, and 30% NZ 100% in equities and presumably 100% NZD hedged too, these portfolios will be hit hardest.


100% Conservative Do you think that you are safe in bonds?

[blackcap]

Rising rates, asset class sell off.

100% in equities and presumably 100% NZD hedged too, these portfolios will be hit hardest.

Do you think that you are safe in bonds?

That is the question I have too. Rising interest rates could decimate a bond fund. Or do these funds just buy at par when a bond is issued and hold till maturity and take the interest along the way, ignoring the rise and fall in the actual value of the underlying securities?

[Baa_Baa]

Even in a downturn however severe, it's easy to forget that there is a constant stream of income flowing into the Kiwisaver providers, which has to go into their investment portfolios, including stocks. So when one stops exposure to stocks in whatever parts of their portfolio, to avoid the paper losses, they also forego the fact that the Kiwisaver provider continues investing in lower priced shares during a downturn.

Personally I used to think Kiwisaver was something I should actively manage, by changing portfolio spreads, but I've come around to thinking it's better to just choose the portfolio spread/balance that suits me overall and forget about it, and let time do it's magic thing.

[huxley]

That is the question I have too. Rising interest rates could decimate a bond fund. Or do these funds just buy at par when a bond is issued and hold till maturity and take the interest along the way, ignoring the rise and fall in the actual value of the underlying securities?


Isn't the unit price of the fund still marked to the current market clearing price of the assets under management? So if you hold a fund with a high exposure to vanilla fixed interest bonds you'll get a capital gain when rates fall and a loss if the rates rise.

[GTM 3442]

That is the question I have too. Rising interest rates could decimate a bond fund. Or do these funds just buy at par when a bond is issued and hold till maturity and take the interest along the way, ignoring the rise and fall in the actual value of the underlying securities?

AFAIK, because they have money coming in all the time, they have no option but to buy on the secondary market.

[blackcap]

AFAIK, because they have money coming in all the time, they have no option but to buy on the secondary market.

Thanks for thee replies. Ok that makes sense. So a conservative "bond" fund can then quite easily suffer capital losses in a time when the discount rate is rising. Interesting.

[heisenberg]

Personally I used to think Kiwisaver was something I should actively manage, by changing portfolio spreads, but I've come around to thinking it's better to just choose the portfolio spread/balance that suits me overall and forget about it, and let time do it's magic thing.

I agree in part, however I will adjust portfolio when major changes in market cycles seem apparent, like right now. In saying this I have opted to move funds to defensive positions, but have continued my regular contributions to continue to purchase international equities throughout any downturn.

[mshierlaw]

Even in a downturn however severe, it's easy to forget that there is a constant stream of income flowing into the Kiwisaver providers, which has to go into their investment portfolios, including stocks. So when one stops exposure to stocks in whatever parts of their portfolio, to avoid the paper losses, they also forego the fact that the Kiwisaver provider continues investing in lower priced shares during a downturn.



I have read a lot of this on kiwi saver providers websites. So how much of an opportunity do you loose if your not IN during the downturn?

My kiwi saver started in early 2008, 100% growth so it's a reasonable ballance. Looking at the new $$$$$ going in for 1 year it's 5% of the current account ballance (excluding fees & tax). That 5% additional buying opportunity does not excite me compared to the potential reduction in my account ballance.

A switch to conservative looks appealing if you can time the switch, thats the hard bit.

[777]

I have read a lot of this on kiwi saver providers websites. So how much of an opportunity do you loose if your not IN during the downturn?

My kiwi saver started in early 2008, 100% growth so it's a reasonable ballance. Looking at the new $$$$$ going in for 1 year it's 5% of the current account ballance (excluding fees & tax). That 5% additional buying opportunity does not excite me compared to the potential reduction in my account ballance.

A switch to conservative looks appealing if you can time the switch, thats the hard bit.

Actually the switch back is probably harder to time.

[Lego_Man]

Even in a downturn however severe, it's easy to forget that there is a constant stream of income flowing into the Kiwisaver providers, which has to go into their investment portfolios, including stocks. So when one stops exposure to stocks in whatever parts of their portfolio, to avoid the paper losses, they also forego the fact that the Kiwisaver provider continues investing in lower priced shares during a downturn.

Personally I used to think Kiwisaver was something I should actively manage, by changing portfolio spreads, but I've come around to thinking it's better to just choose the portfolio spread/balance that suits me overall and forget about it, and let time do it's magic thing.


Not necessarily true. In times of panic, people will be switching out of growth funds and into cash/conservative. If this is the case, a shrinking fund needs to realise assets to pay out redemptions. No cheap shares will be bought at the bottom, as all that cash will be required to fund the redemptions. In fact it's more likely that the fund manager will have to sell at the bottom.

One of the pitfalls of unitised structures is that your are beholden to the behaviour of other investors.

[Toulouse - Luzern]

[QUOTE=heisenberg;731518]OP is a good example of momentum investment. I do a similar thing with my investment in the AMP Global Shares Index Fund. That fund mirrors the MSCI World Index, so each month I check the 200 DMA and if it sits below the price, I remain in the fund. If the price is below the DMA then I move to cash/bonds. As we’ve been in a bull market I’ve only had to swap out a few times, but I get the feeling this may become more frequent with the current economic climate.

Hi Helsenberg

Time for us to think about what's next for portfolio protection ...


1 What is OP please?


2 Can you give a URL link for either AMP Global shares Index Fund with 200 DMA or MSCI World Index with 200 DMA.

I have google searched for these a few times without success.


Did you consider 100 or 30 DMA?


Thanks and regards

[Valuegrowth]

Where did you invest your kiwi saver and retirement money?

Individual stocks
Different types of funds
100% cash fund
Others

I am in 100% cash fund as I didn’t want to take extra risk from my retirement funds. I found in some situation even cash fund could become risky. Therefore, I am hoping to put entire money into individual stocks and looking for a quality retirement funds provider. Is it a risky decision? Thanks.

[RGR367]

Where did you invest your kiwi saver and retirement money?

Individual stocks
Different types of funds
100% cash fund
Others

I am in 100% cash fund as I didn’t want to take extra risk from my retirement funds. I found in some situation even cash fund could become risky. Therefore, I am hoping to put entire money into individual stocks and looking for a quality retirement funds provider. Is it a risky decision? Thanks.

On Kiwisaver, 100% on All Growth funds ever since.
Retirement money, 85% on TD, the rest on P2P.
And still fully invested on the Market too. Wouldn't change a thing to this strategy. I retired late last year too.

[kiora]

Where did you invest your kiwi saver and retirement money?

Individual stocks
Different types of funds
100% cash fund
Others

I am in 100% cash fund as I didn’t want to take extra risk from my retirement funds. I found in some situation even cash fund could become risky. Therefore, I am hoping to put entire money into individual stocks and looking for a quality retirement funds provider. Is it a risky decision? Thanks.

KS all in active growth..Bear markets appear to only last less than 2 years so I find its imperative that I have 2 years of liquidity(mainly revolving credit facility) without selling any investments.
My view is your investment risk is highest if you have long term term deposits.What will your term deposit be worth in 10,20,30 years?.Will it have kept up with inflation?

[peat]

KS all in active growth..Bear markets appear to only last less than 2 years so I find its imperative that I have 2 years of liquidity(mainly revolving credit facility) without selling any investments.
My view is your investment risk is highest if you have long term term deposits.What will your term deposit be worth in 10,20,30 years?.Will it have kept up with inflation?

Yes KS all in active growth with me too
but hey Kiora, just so you know it took 24 years for the high of 1929 to be broken.

[kiora]

Yes KS all in active growth with me too
but hey Kiora, just so you know it took 24 years for the high of 1929 to be broken.

:)That's why good to diversify into primary industries,land as well as shares.Seems to be farming up,share markets down or farming down share markets up.Just that primary industry investments tend to be less liquid so need 2 years of liquidity to offset.

[SBQ]

Has anyone done comparisons of Kiwi Saver fund performance to overseas ETF funds such as the Vanguard ETFs? I would be interested to know if Kiwi Saver funds have outperformed US ETFs holding equities.

I'm keen on knowing the impact of the upcoming 'capital gains tax' that would have on NZX shares and Kiwi Saver funds?

[huxley]

Superlife, Simplicity and ASB (and maybe others) invest directly in Vanguard funds, so the returns will just reflect their own fees, the PIE tax and any gains/losses from their currency hedging strategy (if applicable)

[SBQ]

Superlife, Simplicity and ASB (and maybe others) invest directly in Vanguard funds, so the returns will just reflect their own fees, the PIE tax and any gains/losses from their currency hedging strategy (if applicable)

That defeats the purpose and looks like double dipping. Good reason why I told wifey to keep opting out of Kiwi Saver.

[heisenberg]

Moved to 100% Conservative with Kiwisaver about a week ago. Looked at the returns in the Milford fund and was around 6% over the last year - no doubt helped by currency.

Question is whether current turbulence is just a few bumps, or on the way to a bigger correction. But went for capital preservation in the meantime.

So Bob, did you buy back in to growth funds?

[heisenberg]

Hi Helsenberg

Time for us to think about what's next for portfolio protection ...


1 What is OP please?


2 Can you give a URL link for either AMP Global shares Index Fund with 200 DMA or MSCI World Index with 200 DMA.

I have google searched for these a few times without success.


Did you consider 100 or 30 DMA?


Thanks and regards

Hi and sorry about slow reply.
OP means 'original post', nothing to do with investment.

I use barchart to get the 200 DMA data: https://www.barchart.com/etfs-funds/quotes/URTH/technical-analysis

As you can see the price is below the 200 DMA therefore last month I switched to cash/bonds.

The 30 DMA would likely be much too volatile and require lots more frequent changes of position. The 100 could work, however from the back testing of this strategy I have seen, the 200 seems to be the sweet spot where you are doing less admin for maximal profit.

Hope that helps.

[stoploss]

That defeats the purpose and looks like double dipping. Good reason why I told wifey to keep opting out of Kiwi Saver.

Why not get wifey to contribute $ 20 a week , and pick up the tax rebate of circa $ 520 form the govt ??? Not many investments give you 50 % return ........

[777]

That defeats the purpose and looks like double dipping. Good reason why I told wifey to keep opting out of Kiwi Saver.

Well that would be the dumbest advice she has ever received.

[Bjauck]

Well that would be the dumbest advice she has ever received. Yep. At this stage of the markets - If Were not already in KiwiSaver, I would be at least looking at making the minimum contribution to a big bank conservative fund to become entitled for the annual credit.
DYOR.

[Aaron]

That defeats the purpose and looks like double dipping. Good reason why I told wifey to keep opting out of Kiwi Saver.
No doubt kiwisaver saver has been a gold mine for fund managers and although I am not mad keen on investing in funds because of the fees.

The $521 tax credit would be one reason to join Kiwisaver but when you say "opt-out" I am assuming your wife is working for wages. Therefore not joining Kiwisaver means she misses out on the compulsory employer contributions which would be like a 3% pay rise. An additional 3% of her gross wages less the employer contribution superannuation tax (ESCT) going straight into her retirement savings every pay day. That should more than cover the fees.
Although I can't agree entirely with 777 I would suggest you relook at the pros and cons of joining Kiwisaver.

There are other cons including having that money tied up until retirement(this could also be a pro). I imagine eventually they will require Kiwisaver funds to be turned into annuities at retirement so people don't blow it all. Especially if we ever start means testing NZ super. Although this is wild speculation at this stage and an annuity isn't the end of the world.

My Kiwisaver strategy currently is to put it all in the most conservative fund and will switch back to grow after the next GFC.

[SBQ]

No doubt kiwisaver saver has been a gold mine for fund managers and although I am not mad keen on investing in funds because of the fees.

The $521 tax credit would be one reason to join Kiwisaver but when you say "opt-out" I am assuming your wife is working for wages. Therefore not joining Kiwisaver means she misses out on the compulsory employer contributions which would be like a 3% pay rise. An additional 3% of her gross wages less the employer contribution superannuation tax (ESCT) going straight into her retirement savings every pay day. That should more than cover the fees.
Although I can't agree entirely with 777 I would suggest you relook at the pros and cons of joining Kiwisaver.

There are other cons including having that money tied up until retirement(this could also be a pro). I imagine eventually they will require Kiwisaver funds to be turned into annuities at retirement so people don't blow it all. Especially if we ever start means testing NZ super. Although this is wild speculation at this stage and an annuity isn't the end of the world.

My Kiwisaver strategy currently is to put it all in the most conservative fund and will switch back to grow after the next GFC.

Having a background in finance, i'm not at all impressed with the whole NZ Kiwi Saver approach (keep in mind i'm speaking finance from a N. American point of view). Can you believe the insult I felt when speaking to countless of financial advisors in NZ when they could not tell me a clear cut example WITHOUT the advice of a SEPARATE TAX advisor? I questioned on tax minimisation and efficiency of the investments and they could not comment directly about taxation (regarding rules about FIF and FDR etc). Where I studied, attaining a CFA designation always accounts for taxation (meaning the person not only has to know accounting, but also taxation). It's a complete joke that the NZ advisor would charge out a fee for their service + another fee for a tax advisor. Just utter rubbish to think an investment advice does not include tax advice.

Anyways, coming from the Buffet and Munger side of investing, i'm not convinced the 3% matching will cover the fees in Kiwi Saver on a "cumulative basis" over say 10 or 20 years. Buffet has won his wager bet last year that no hedge (or actively managed) fund could beat the market index (S&P500) and he presented this at his Berkshire annual meeting last year. What purpose does a Kiwi managed fund service when they just buy the low cost Vanguard ETF? Sounds like the bureaucracy that NZ investors would be subjected to under the FDR/FIF if they bought Vanguard funds directly.

The $521 tax credit? That's called a bribe in my books.

There is a real reason why share investing isn't a hot topic for NZ. The reason is that you have an asset class (real estate) where the capital gains can be untaxed. Now recent news says the Labour Gov't will introduce a CGT to address this issue but the opposing National Party may remove it if they win the next election. Either way, when you talk about the realm of investing, one CAN'T speak without the issue of tax minimisation and my crystal ball think the NZ equity market pales in comparison to the US equity market (from a risk reward point of view). But what am I to judge? We have high paying 'actively manged' Kiwi Saver funds that would tell Buffet and Munger is wrong.

[Aaron]

Having a background in finance, i'm not at all impressed with the whole NZ Kiwi Saver approach (keep in mind i'm speaking finance from a N. American point of view). Can you believe the insult I felt when speaking to countless of financial advisors in NZ when they could not tell me a clear cut example WITHOUT the advice of a SEPARATE TAX advisor? I questioned on tax minimisation and efficiency of the investments and they could not comment directly about taxation (regarding rules about FIF and FDR etc). Where I studied, attaining a CFA designation always accounts for taxation (meaning the person not only has to know accounting, but also taxation). It's a complete joke that the NZ advisor would charge out a fee for their service + another fee for a tax advisor. Just utter rubbish to think an investment advice does not include tax advice.

Anyways, coming from the Buffet and Munger side of investing, i'm not convinced the 3% matching will cover the fees in Kiwi Saver on a "cumulative basis" over say 10 or 20 years. Buffet has won his wager bet last year that no hedge (or actively managed) fund could beat the market index (S&P500) and he presented this at his Berkshire annual meeting last year. What purpose does a Kiwi managed fund service when they just buy the low cost Vanguard ETF? Sounds like the bureaucracy that NZ investors would be subjected to under the FDR/FIF if they bought Vanguard funds directly.

The $521 tax credit? That's called a bribe in my books.

There is a real reason why share investing isn't a hot topic for NZ. The reason is that you have an asset class (real estate) where the capital gains can be untaxed. Now recent news says the Labour Gov't will introduce a CGT to address this issue but the opposing National Party may remove it if they win the next election. Either way, when you talk about the realm of investing, one CAN'T speak without the issue of tax minimisation and my crystal ball think the NZ equity market pales in comparison to the US equity market (from a risk reward point of view). But what am I to judge? We have high paying 'actively manged' Kiwi Saver funds that would tell Buffet and Munger is wrong.

$521 tax credit, bribe or incentive call it what you will. Probably not huge in the greater scheme of things.

I would strongly disagree with your statement "i'm not convinced the 3% matching will cover the fees in Kiwi Saver on a "cumulative basis" over say 10 or 20 years."

My thought processes might be wrong but the only way you could be worse off is if fees were more than 100% of invested funds. I think they are probably around 2%.

Maybe you could give an example of your reasoning behind this statement as I must have missed something.

[mfd]

$521 tax credit, bribe or incentive call it what you will. Probably not huge in the greater scheme of things.

I would strongly disagree with your statement "i'm not convinced the 3% matching will cover the fees in Kiwi Saver on a "cumulative basis" over say 10 or 20 years."

My thought processes might be wrong but the only way you could be worse off is if fees were more than 100% of invested funds. I think they are probably around 2%.

Maybe you could give an example of your reasoning behind this statement as I must have missed something.

You're not quite right - the 100% return only applies year 1, but then that money is nibbled at by fees potentially for 40 years. If you're paying too much, you could easily see the initial doubling being eaten away at. For example, if I invest $100 a year for 40 years and receive a net 7% return after tax/fees I end up with something like $20k. If I contribute $200 a year (employer doubling) for 40 years and receive a net 4% return, I only end up with $19k despite contributing twice as much. That said, this represents a 3% fee which is much higher than I've seen for Kiwisaver funds.

My Kiwisaver approach is to put in my 3%, I get 3% from my employer and $521 from the government. This goes into the cheapest general share fund I can find. If I could stick it straight into Vanguard or some other cheap index fund I would, as it is I currently pay Simplicity 0.3% to do this for me. Not ideal, but I'm happy the fee is low enough that the matched contribution + government addition will leave me significantly richer than investing in a similar but cheaper fund outside Kiwisaver.

[SBQ]

Since i'm my findings point more towards US equities and their rates of return, I would be interested to see how various Kiwi Saver funds have performed since they started 10 years ago? Also, i'm very weary of published data from NZ sources and would only take what the Kiwi Saver funds published rate with a grain of salt. Use a MER ? figure? How is that audited?

I grew up in Canada and saw the whole mutual (managed) fund industry be turned upsidedown when RRSP (equivalent Kiwi Saver) was introduced. You had all sorts of funds claiming to have consistent returns 'claiming' they've beat the S&P500 index etc. but those were gross figures not counting the ACTUAL returns and initially, they would never ever disclose the fee structure of these managed funds. Eitherway, I would be interested to see what Kiwi Saver funds have done and if there was a way to measure it on a cumulative 10 years basis. Because we all know all those managers of these funds need to get paid in times when the markets goes negative.

The 3% figure is too small despite the employer matching it. When I was in Canada they went through all these contribution issues and the results was it's way too small to generate ANY sizeable retirement fund UNLESS you were a HIGH income earner (but the savings and retirement pushed by the gov't was aimed at those on the low income ; high income earners or the rich don't need to save). Also there was a general view that employers would only contribute the minimum despite the employee could contribute a lot more. The tax dept in Canada allows up to 18% of a person's annual income as contributions and any unused limits can be carried forward with no penalty, but even still ; these efforts to encourage those on the low income did nothing but benefit the rich high income earners and because of that, I don't see the Kiwi Saver scheme being any different.

But we can talk differences until the cows run to the moon. The single factor that hurts all of us (and more particularly towards those on low incomes) is called "Inflation" and often at times if you simply don't have the $ to save, you're best to spend it on needs, or put it towards paying the house off faster. When I think about all this, it's probably a crime to believe what the gov't has done. People that needs $ the most, should not be coerced into a savings plan like Kiwi Saver when the end result is not much more than what the gov't could of done with their national pension plan by directly investing it into say the S&P500. There's a lot of inefficiencies involved by getting the public to invest ; just look at all those financial advisors fattening their back pockets, all those 'actively managed' funds in Kiwi Saver Funds (this is standard practice worldwide). While at the same time, when the National Party was in power they reduced or stopped investments into the NZ Super / Pension plan.

Now the gov't wants to attack those property speculators and investors by imposing CGT. (Historically, Kiwis enjoyed retirement from their real estate investment portfolio).

[SBQ]

and lookee here.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12194740

"Independent research firm MoneyHub has accused Fisher of "ripping off" customers by charging high management fees.
The 14 funds which have $289 million invested from around 20,000 people charge between 1.5 per cent and 6.83 per cent for management."


This is the kind of behaviour I hate. How do you justify 6.83% pa for management fee? I also laugh at the response saying the take over of these funds is complicated. What are they exactly doing to warrant such high fees?

[Aaron]

You're not quite right - the 100% return only applies year 1, but then that money is nibbled at by fees potentially for 40 years. If you're paying too much, you could easily see the initial doubling being eaten away at. For example, if I invest $100 a year for 40 years and receive a net 7% return after tax/fees I end up with something like $20k. If I contribute $200 a year (employer doubling) for 40 years and receive a net 4% return, I only end up with $19k despite contributing twice as much. That said, this represents a 3% fee which is much higher than I've seen for Kiwisaver funds.

My Kiwisaver approach is to put in my 3%, I get 3% from my employer and $521 from the government. This goes into the cheapest general share fund I can find. If I could stick it straight into Vanguard or some other cheap index fund I would, as it is I currently pay Simplicity 0.3% to do this for me. Not ideal, but I'm happy the fee is low enough that the matched contribution + government addition will leave me significantly richer than investing in a similar but cheaper fund outside Kiwisaver.

What I was thinking is if you don't join kiwisaver you don't get the 3% employer contribution. This is every year and is money you otherwise would not receive so fees would have to be more than 100% to negate this.

[mfd]

What I was thinking is if you don't join kiwisaver you don't get the 3% employer contribution. This is every year and is money you otherwise would not receive so fees would have to be more than 100% to negate this.

The issue is, your money is only doubled once when it's put in. The fees apply for years, or even decades. The maths is compound interest in reverse, which we all know is a powerful effect when you give it time.

Think of what happens in, say, year twenty. Your contributions are only maybe 2-3% of your total balance, so your employer contributions only add 2-3% to your balance. If you were paying 3% fees, this would totally counteract your employer matching.

Luckily, high fees are optional. SBQ, no argument that some companies charge silly amounts, anything above 1% is very hard to justify. Fees are coming down as scale increases, I'm paying 0.3% now and hopefully this will come down further in the future. At that level, you'd be crazy not to snap up the perks by putting in minimum contributions. My savings above 3% are invested elsewhere.

For long term returns I'd recommend interest.co.nz who publish comparisons every so often.

https://www.interest.co.nz/kiwisaver/97847/kiwisaver-results-are-december-2018-quarter-and-we-review-how-high-market-volatility

[SBQ]

I'll have to admit i'm not in a NZ position to invest in Kiwi Saver as my wife would be. Fortunately my father lives abroad where we can manage our investments jointly. So our NZ household savings take a different path ; which i've strongly advised the wife not to join Kiwi Saver. If there were prospecting shares (or managed funds) in NZ that would be attractive, we would of done so. But for the past 15+ years, we've pretty much done better by simply buying none other than "Berkshire Hathaway".

Most people in NZ have never heard of the company. They don't even know who Warren Buffet is. But time and time again Buffet has said you're playing a fools game if you can time markets when to buy or sell or know when to be in cash or bonds (hence the behaviour actively managed funds practice). He says, "That's not how you get rich in this industry... you can't tell your clients to go put their $ in the index fund because how else would they (the financial advisors) get paid? .. That's not how the system works".


For long term returns I'd recommend interest.co.nz who publish comparisons every so often.

https://www.interest.co.nz/kiwisaver...ket-volatility (https://www.interest.co.nz/kiwisaver/97847/kiwisaver-results-are-december-2018-quarter-and-we-review-how-high-market-volatility)

From a performance point of view, tt's a shame that the default Kiwi Saver funds 'net of fees' isn't doing any better than what the banks pay in term deposit. Of course, interest income is taxed at marginal tax rates but on a cumulative basis it might be very comparable? I recall during the Hanover Finance era banks were paying over 9% on term deposits.

[mfd]

I'll have to admit i'm not in a NZ position to invest in Kiwi Saver as my wife would be. Fortunately my father lives abroad where we can manage our investments jointly. So our NZ household savings take a different path ; which i've strongly advised the wife not to join Kiwi Saver. If there were prospecting shares (or managed funds) in NZ that would be attractive, we would of done so. But for the past 15+ years, we've pretty much done better by simply buying none other than "Berkshire Hathaway".

Most people in NZ have never heard of the company. They don't even know who Warren Buffet is. But time and time again Buffet has said you're playing a fools game if you can time markets when to buy or sell or know when to be in cash or bonds (hence the behaviour actively managed funds practice). He says, "That's not how you get rich in this industry... you can't tell your clients to go put their $ in the index fund because how else would they (the financial advisors) get paid? .. That's not how the system works".

From a performance point of view, tt's a shame that the default Kiwi Saver funds 'net of fees' isn't doing any better than what the banks pay in term deposit. Of course, interest income is taxed at marginal tax rates but on a cumulative basis it might be very comparable? I recall during the Hanover Finance era banks were paying over 9% on term deposits.

I have heard of Berkshire Hathaway - despite their history they haven't done any better than the S&P500 over the last decade at least. Their size is such that they're unlikely to outperform going into the future (especially as their secret sauce is likely to retire/die soon). Buffet himself has said on his death he will advise his wife to invest in the cheapest share tracker she can find. If your wife is able to get employer matching, you will not find an easier way to outperform. Even if not, may as well stick $1k in each year and get the member tax credit. The only downside is your money is locked up until 65, which is why I put in a minimum required to get the benefits and any extra cash goes elsewhere.

I agree, the default funds are not doing very well - I guess the decision was made to assume people want a conservative fund by default, so the default funds are in invested in about 80% cash and bonds. Sadly only a minority will ever question this and stick their money somewhere more appropriate.

[Bjauck]

As SBQ said, kiwis have invested heavily in real estate as most of the gains came from untaxed capital gains. Real estate whether owner-occupied or investor still forms the backbone of retirement savings.

Perhaps the the reason why real estate gains have not been taxed was as a result of the political influence of farmers with their land wealth and the desire not to force the break up of large farms?

Excluding the primary residence from any CGT will increase the relative appeal in NZ of using the family home as the pension plan - Especially in the absence of providing further tax incentives to invest in KiwiSaver (apart from the $521 annual credit on annual contributions over $1042 no matter how large the balance and how large the PIE tax payable on the balance each year.)

[SBQ]

I have heard of Berkshire Hathaway - despite their history they haven't done any better than the S&P500 over the last decade at least. Their size is such that they're unlikely to outperform going into the future (especially as their secret sauce is likely to retire/die soon). Buffet himself has said on his death he will advise his wife to invest in the cheapest share tracker she can find. If your wife is able to get employer matching, you will not find an easier way to outperform. Even if not, may as well stick $1k in each year and get the member tax credit. The only downside is your money is locked up until 65, which is why I put in a minimum required to get the benefits and any extra cash goes elsewhere.

I agree, the default funds are not doing very well - I guess the decision was made to assume people want a conservative fund by default, so the default funds are in invested in about 80% cash and bonds. Sadly only a minority will ever question this and stick their money somewhere more appropriate.

There is no secret sauce. Buffet's been able to beat the S&P500 10 out of the past 13 years:

https://www.fool.com/investing/2019/01/11/this-stock-has-beat-the-market-in-10-of-the-last-1.aspx

Total Return BRK: 247.8% Annualized Return: 7%Total Return S&P500: 164% Annualized Return: 3.8%

Buffet has mentioned many times to his shareholders that Berkshire's large size is an issue. But that's not how Buffet beats the market. Berkshire is not a company that can be compared to other mutual / managed or hedge funds, and this is where Kiwi Saver funds really fall short. They simply can't 'broker deals' like Berkshire can. Good examples was when the 2008 GFC hit, no one had $ to be bailed out. When Goldman Sac wanted money, where did they go? When GE wanted money, where did they go? They knocked on Buffet's door step asking for $ and in classic style, Buffet named his terms. 10% p.a. + options or convertible warrants or preferred shares. These kinds of deals managed funds don't have the ability to do or simply, are not in the loop of things. Buffet is also famous for conveying deals that require large amounts of $. Such as Burger King moving to Canada (to buy out Tim Hortons). Kraft Foods, Mars Confectionary, 3G. When one major corporation doesn't have the funds to buy out another, they usually knock on Buffet's door.

No one really knows the performance of Berkshire after Buffet is gone. But we are assured that succession plans are already in place and in Buffet's last years, he would simply let the younger managers take place and make sure the Berkshire culture remains within. It's a lot different to how Finance companies or managed funds operate where they may cycle through many different managers to tweak things in their portfolio throughout the years.

I'm hoping my wife understands my approach to investing and why i'm hesitant to Kiwi Saver. She knows that NZ may not be our home for the long term and there may be a good possibility our children may move abroad. So being locked into Kiwi Saver until we're 65 is not something in our books.

One thing for certain, no one really knows what the future will hold.

[SBQ]

As SBQ said, kiwis have invested heavily in real estate as most of the gains came from untaxed capital gains. Real estate whether owner-occupied or investor still forms the backbone of retirement savings.

Perhaps the the reason why real estate gains have not been taxed was as a result of the political influence of farmers with their land wealth and the desire not to force the break up of large farms?

Excluding the primary residence from any CGT will increase the relative appeal in NZ of using the family home as the pension plan - Especially in the absence of providing further tax incentives to invest in KiwiSaver (apart from the $521 annual credit on annual contributions over $1042 no matter how large the balance and how large the PIE tax payable on the balance each year.)

The CGT will just simply level the investment playing field. The reason why CGT is so hard to push through is simply, we have too many NZ politicians that own real estate. I hear Winston Peters owns like a dozen houses in his portfolio and isn't a fan of this CGT. So it would be interesting to see how serious these politicians will be when it comes implementing CGT and hopefully, it would encourage more people to invest in other areas of finance (which is more productive).

In Canada and i'm quite certain in the US. Farmers owning land is treated differently. They allow exemption of taxes when passed down to next generation after death. I don't see why NZ couldn't do the same. All I hear is excuses how complicated taxes will be in NZ when other countries have managed fine with concessions or exemptions. Like GST exemption of food? In this day of age of computers, can it be that difficult?

[mfd]

There is no secret sauce. Buffet's been able to beat the S&P500 10 out of the past 13 years:

https://www.fool.com/investing/2019/01/11/this-stock-has-beat-the-market-in-10-of-the-last-1.aspx

Total Return BRK: 247.8% Annualized Return: 7%Total Return S&P500: 164% Annualized Return: 3.8%

Buffet has mentioned many times to his shareholders that Berkshire's large size is an issue. But that's not how Buffet beats the market. Berkshire is not a company that can be compared to other mutual / managed or hedge funds, and this is where Kiwi Saver funds really fall short. They simply can't 'broker deals' like Berkshire can. Good examples was when the 2008 GFC hit, no one had $ to be bailed out. When Goldman Sac wanted money, where did they go? When GE wanted money, where did they go? They knocked on Buffet's door step asking for $ and in classic style, Buffet named his terms. 10% p.a. + options or convertible warrants or preferred shares. These kinds of deals managed funds don't have the ability to do or simply, are not in the loop of things. Buffet is also famous for conveying deals that require large amounts of $. Such as Burger King moving to Canada (to buy out Tim Hortons). Kraft Foods, Mars Confectionary, 3G. When one major corporation doesn't have the funds to buy out another, they usually knock on Buffet's door.

No one really knows the performance of Berkshire after Buffet is gone. But we are assured that succession plans are already in place and in Buffet's last years, he would simply let the younger managers take place and make sure the Berkshire culture remains within. It's a lot different to how Finance companies or managed funds operate where they may cycle through many different managers to tweak things in their portfolio throughout the years.

I'm hoping my wife understands my approach to investing and why i'm hesitant to Kiwi Saver. She knows that NZ may not be our home for the long term and there may be a good possibility our children may move abroad. So being locked into Kiwi Saver until we're 65 is not something in our books.

One thing for certain, no one really knows what the future will hold.

13 years is a strange timeline. Here's my source

https://seekingalpha.com/article/4150977-pretty-picture-buffett-vs-s-and-p-500

Looks like they did well around 2007 which bumps up your quoted 13 year returns. The trend is pretty clearly towards matching the market in the future, as you'd expect as the size of the company increases. Not a terrible place for your money, but don't expect the future returns to look like the past.

I can fully understand not wanting to be in kiwisaver if it's too inflexible. On a pure financial returns basis, I will take it over Berkshire anyday due to my employer and the tax man more than doubling all my contributions.

[SBQ]

13 years is a strange timeline. Here's my source

https://seekingalpha.com/article/4150977-pretty-picture-buffett-vs-s-and-p-500

Looks like they did well around 2007 which bumps up your quoted 13 year returns. The trend is pretty clearly towards matching the market in the future, as you'd expect as the size of the company increases. Not a terrible place for your money, but don't expect the future returns to look like the past.

I can fully understand not wanting to be in kiwisaver if it's too inflexible. On a pure financial returns basis, I will take it over Berkshire anyday due to my employer and the tax man more than doubling all my contributions.

The author's can pick the timeline to suit what every spin they want, also I would question where that SeekingAlpha link gets it's data from as their chart doesn't seem to reflect what I posted.

The employer matching of contributions is not always double. The minimum is 3% of person's income and the employer doesn't have to match any higher if the employee chooses to contribute more (up to 8% - a far cry from 18% that Canada allows).

My notion is at the minimum, the 3% matching contributions can easily be eaten up by the fund's mgt fees and this you lose out on compounding returns. More importantly, contributions only come if you're employed. What does that leave to those with disabilities or on the benefit? This is why I wonder if the NZ gov't would of been better to boost their superannuation pension fund by directly buying the S&P500 index so that everyone will see the benefit at retirement. Not just those that are able to work.

[mfd]

The author's can pick the timeline to suit what every spin they want, also I would question where that SeekingAlpha link gets it's data from as their chart doesn't seem to reflect what I posted.

The employer matching of contributions is not always double. The minimum is 3% of person's income and the employer doesn't have to match any higher if the employee chooses to contribute more (up to 8% - a far cry from 18% that Canada allows).

My notion is at the minimum, the 3% matching contributions can easily be eaten up by the fund's mgt fees and this you lose out on compounding returns. More importantly, contributions only come if you're employed. What does that leave to those with disabilities or on the benefit? This is why I wonder if the NZ gov't would of been better to boost their superannuation pension fund by directly buying the S&P500 index so that everyone will see the benefit at retirement. Not just those that are able to work.

Technically I agree, high fees could eat up the contributions. However, if I do a back of the envelope calculation of a 7% return without matching, versus a 6% return with employer matching (1% fee, so three times what I pay), the matched scenario wins until you get to 90 years from your first contribution. In reality, the matching far outweighs the cost of the fees. Even a 2% fee wins for 50 years.

As I said, I only contribute 3% as that is all that is matched. Savings above this go elsewhere. If the matching increased, I would put in more to maximise this

Fully agree the system is not well setup for those who don't earn much or don't work at all, but that doesn't change my response to the incentives.

[Valuegrowth]

My Kiwisaver started in early 2010. 100% cash fund. I feel like I should adjust my kiwisaver now. Is it wise to keep 100% cash? Are there any risks?Thanks in advance.

[Aaron]

My Kiwisaver started in early 2010. 100% cash fund. I feel like I should adjust my kiwisaver now. Is it wise to keep 100% cash? Are there any risks?Thanks in advance.
Are you pulling my leg as your name doesn't suggest someone who would be in cash mr valuegrowth

With the power of hindsight I would have suggested a growth fund from 2010 to Dec 2019 and then a move to cash.

Cash right now to me would seem the best option but it will depend on what central banks do. they have been working hard to debase currencies to clear debts but have been unsuccessful so far. I am not wise so take my ramblings with a grain of salt I would suggest a move to growth or balanced fund might be good sometime in the future but not yet as the virus might only be the pin that pricks the debt bubble. I believe the debt bubble is what the financial markets are really scared of.
https://www.theguardian.com/world/2020/mar/20/coronavirus-crisis-could-lead-to-new-credit-crunch-as-companies-struggle-with-debt

Personally my Kiwisaver will remain ultra conservative unless we go to negative interest rates or suggestions of a currency crisis.
When to move to growth is impossible to know but personally I don't think it is just yet.

[Valuegrowth]

Thank you so much Aaron for your great Advise. Now I feel I am going to get opportunity to re-adjust my kiwisaver. I have few options. One is high growth. Other one is balanced. I am also thinking about kiwisaver funds which allow us to pick individual companies to invest or a very aggressive fund. As it is kind of retirement fund, I would think about margin of safety as well. As you suggest, balanced or growth seems to be good option.

[Aaron]

As you suggest, balanced or growth seems to be good option.
I was suggesting cash is a good option right now. Balanced or Growth sometime in the future.

[SBQ]

I was suggesting cash is a good option right now. Balanced or Growth sometime in the future.

Cash is a horrible option if you intend to invest / lock it in for 1 or 2 years. As Warren Buffet said, 'why would anyone lend cash ; such as buying gov't bonds, that return only 1 - 2 % when annual inflation is more than 2%?

We're going to see a lot of 'quantitative easing' meaning, the NZ reserve bank is going to print money like hell (no different to other gov'ts abroad). The unfortunate problem with NZ is we can't print our way out of debt. Our NZ currency exchange rate will take a massive hit over the coming years and this leads to higher prices on imported goods.

The NZ tax system is a joke. Consider the negative returns of this financial year and if the funds are invested abroad, they're are wacked with FIF / FDR on the entire managed fund balance. Don't forget, management fee takes a cut.

Why pay RWT on interest income ? It's a for sure way of not beating inflation.

[Aaron]

Cash is a horrible option if you intend to invest / lock it in for 1 or 2 years. As Warren Buffet said, 'why would anyone lend cash ; such as buying gov't bonds, that return only 1 - 2 % when annual inflation is more than 2%?
If you lock it in for one or two years wouldn't that be fixed interest rather than cash which is available at a moments notice. Agreed most of what is being done QE etc is to destroy cash and make debt affordable. I would hazard a guess that possibly we are in for a brief period of deflation in asset prices, if the market went down a further 5% this week while you got 0% in cash you would be better off in cash. Time will tell.

The big question would be when is the best time to switch out of cash which we all agree is a good idea.

[macduffy]

I was suggesting cash is a good option right now. Balanced or Growth sometime in the future.

I won't comment on the pros and cons thereof but I would suggest that this is one of the factors contributing to the wild swings, mainly down, in the current market, ie, the pressure on Kiwisaver providers to sell stock on behalf of account holders who decide to move to cash.

[Aaron]

I won't comment on the pros and cons thereof but I would suggest that this is one of the factors contributing to the wild swings, mainly down, in the current market, ie, the pressure on Kiwisaver providers to sell stock on behalf of account holders who decide to move to cash.

My understanding was Mr valuegrowth had been in a cashfund since 2010 (and would have missed out on the bull run) and was considering moving to a balanced or growth fund. Sometimes being a contrarian can work so if he waited until the other Kiwisavers, have moved to cash it might provide a better entry point. I am hopeless at market timing but it doesn't stop me from trying. I am not suggesting a jump from a growth or balanced portfolio to conservative as he is already in cash, but a bit more patience to see if shares continue down before switching from cash to balanced or growth.

The original question was "My Kiwisaver started in early 2010. 100% cash fund. I feel like I should adjust my kiwisaver now. Is it wise to keep 100% cash? Are there any risks?Thanks in advance."

The biggest risk in cash to me is a debt or currency crisis as company defaults could bring down the banks and the banks give depositors a haircut to get themselves out of the s**t. Or central bank money printing leads to a loss of faith in currencies.

[Aaron]

If I am reading my watchlist correctly so far today cash seems like the best option. Not sure what tomorrow will bring.

[Valuegrowth]

The biggest risk in cash to me is a debt or currency crisis as company defaults could bring down the banks and the banks give depositors a haircut to get themselves out of the s**t. Or central bank money printing leads to a loss of faith in currencies.

If banks give depositors a haircut, will if affect my kiwi saver too?

If it is so,I would go for balance fund/growth fund where I can have both cash and shares. Second option is I would put all my eggs in stocks after doing some research. My period for keeping stocks would be about 7 years.

[SBQ]

If you lock it in for one or two years wouldn't that be fixed interest rather than cash which is available at a moments notice. Agreed most of what is being done QE etc is to destroy cash and make debt affordable. I would hazard a guess that possibly we are in for a brief period of deflation in asset prices, if the market went down a further 5% this week while you got 0% in cash you would be better off in cash. Time will tell.

The big question would be when is the best time to switch out of cash which we all agree is a good idea.

People that hold cash typically lock it into interest bearing deposits or bonds. This is no different to the silly Kiwi Saver fund options between Conservative to Aggressive where the amount of return on the fund (and risk level) is based on the proportion of the investment held in equities and the rest held in interest bearing bonds or cash. (ie. 60/40 80/20 ratios). and I tell you, these fund managers don't have a plan on investing, they take the income streams day after day and just buy an ETF and the rest to some cash/bond fixed interest return. They won't operate a managed fund like hedge funds do or like Berkshire Hathaway would where the cash says in liquid form and buy in times of crisis. As I mentioned before, what point is earning 1 or 2% a year when the gains are far more by buying at the right time.

[SBQ]

My understanding was Mr valuegrowth had been in a cashfund since 2010 (and would have missed out on the bull run) and was considering moving to a balanced or growth fund. Sometimes being a contrarian can work so if he waited until the other Kiwisavers, have moved to cash it might provide a better entry point. I am hopeless at market timing but it doesn't stop me from trying. I am not suggesting a jump from a growth or balanced portfolio to conservative as he is already in cash, but a bit more patience to see if shares continue down before switching from cash to balanced or growth.

The original question was "My Kiwisaver started in early 2010. 100% cash fund. I feel like I should adjust my kiwisaver now. Is it wise to keep 100% cash? Are there any risks?Thanks in advance."

The biggest risk in cash to me is a debt or currency crisis as company defaults could bring down the banks and the banks give depositors a haircut to get themselves out of the s**t. Or central bank money printing leads to a loss of faith in currencies.

If you're going to hold cash, hold it in USD currency because it will provide the best option to invest into shares. I don't have confidence that the NZX will rebound as fast as US listings as over there, it's the bigger fish that eats the little fish. In NZ, the fish just die and no one would come along to eat it.

If Valuegrowth is asking what to do with the cash, it may not be to his discretion on how it's invested at the Kiwi Fund mgt level. If he chooses to change the ratio from moving more of the cash into holding more equities, that would all entirely depend on what shares are they investing in? Do you choose NZX listings or overseas ones?

Don't forget, cash is ONLY king when you're planning to seize opportunties and as what I said before, Kiwi Saver funds don't know how to allocate cash to take advantage of a stock market crash; they simply let the individual to DECIDE where to put the funds to in the form of 3 basic risk levels.

[heisenberg]

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?

Very interested to know if OP ever went through with his KS strategy. This is a form of momentum investment which I have wondered about myself recently.

[Crypto Crude]

If mr value growth had a high risk portfolio.. having the cash fund for the kiwis saver is a great idea...
This is exactly what I've done...
Looking to put the kiwis saver into the highest risk when I think its turned...
:cool:cc

[SBQ]

If mr value growth had a high risk portfolio.. having the cash fund for the kiwis saver is a great idea...
This is exactly what I've done...
Looking to put the kiwis saver into the highest risk when I think its turned...
:cool:cc

The problem is no one really knows when the market has bottomed out. Likewise, for Mr Value in a cash position, the relevant question would be what did he do for the past 10 years or so hold funds in cash? He would missed a lot of potential gains which is to say holding cash during this period is a poor strategy.

As I always say, cash is ONLY king if you're made the move TO cash in 'right timing'. Likewise, move the cash into equities is a problem of the same timing.

[kiora]

"As an ESG/sustainable manager – they are naturally going to be avoiding things that have not performed relatively well. Oil, airlines and gambling are avoided – and they are parts of the market that have been hardest hit. In fact our head of ESG investing in the US has been highlighting research that ESG tilted funds are performing better than general funds."
https://www.goodreturns.co.nz/article/976516619/caresaver-active-management-doing-what-it-should.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+8 +April+2020

[SBQ]

"As an ESG/sustainable manager – they are naturally going to be avoiding things that have not performed relatively well. Oil, airlines and gambling are avoided – and they are parts of the market that have been hardest hit. In fact our head of ESG investing in the US has been highlighting research that ESG tilted funds are performing better than general funds."
https://www.goodreturns.co.nz/article/976516619/caresaver-active-management-doing-what-it-should.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+8 +April+2020

Same rubbish, industry approach, for portfolio management I see pushed out by the Finance industry worldwide. Certainly not a view that Buffet (or any reputable hedge fund manager) would advise. No one bases their retirement investment on a 3 or 6 month focus where 'conservative' balanced funds have outperformed aggressive allocated funds. It's so obvious to understand that.

Oil and airlines etc have been crushed... the question to the smart investor is.. where will those asset prices be in 5 or 10 years time? I believe Ben Graham mentioned that you always allocate enough funds to buy at times of distress because the stats show, people have short term memories. Bear markets don't last nearly as long as Bull markets do and judging any investment over how much you have allocated between equities & cash is pointless unless you have the nerve to buy in a bear market and sell in the bull market.

[kiora]

Well done Juno,wow who would have guessed aggressive fund ?
https://www.scoop.co.nz/stories/BU2004/S00225/top-performing-kiwisaver-funds-revealed-post-covid-19-crash.htm?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+1 5+April+2020

[heisenberg]

How’s everyone going here with trying to time the bottom...?

[kiora]

How’s everyone going here with trying to time the bottom...?

I suspect some FOMO happening :)

[Valuegrowth]

Is it wise to put funds offshore when NZD is weak?
https://www.interest.co.nz/kiwisaver/103736/summer-kiwisavers-martin-hawes-says-having-three-times-much-invested-offshore-new

[SBQ]

Is it wise to put funds offshore when NZD is weak?
https://www.interest.co.nz/kiwisaver/103736/summer-kiwisavers-martin-hawes-says-having-three-times-much-invested-offshore-new

You mean with a weak NZD to the USD, is it wise for CURRENT investors to send their $ abroad? The more appropriate question would be, what has NZ done in the past 10 or 20 years in terms of NZD/USD exchange rate and will the NZD get weaker in the coming 10 to 20 years? Look at the trend, the NZD is not getting stronger and look with your eyes, NZ's standard of living has not improved compared to what has happened in America.

When 70% of ALL monies around the world in terms of value is US dollars, why would holding USD be such a concern or... such a negative?

The article makes no mention about NZ's tax approach that discriminates investors choosing tax free NZ real estate vs buying shares. It is of no surprise those knowledgeable in investing shares choose to invest abroad (question the Kiwi Saver fund managers that the article mentions why).

Let's question with the table's turned around. Why are US investors (or those on the international front) are NOT investing in the NZ sharemarket? If the appeal for investors all over the world look to the US to invest, what does that tell you?

Back in February I exchanged a large portion of my NZD to USD, at a time when the NZD use to be 0.68 some months prior. Was I thinking the NZD was weak? Yes. Was I thinking the NZD will get weaker over the long long term? YES!

[kiora]

Compounded by "dumb" fund managers not actively managing the risks of under performance
https://seekingalpha.com/article/4349885-arrival-of-unavoidable-pension-crisis?ifp=0&source=email_must_read:position_0&utm_medium=email&utm_source=seeking_alpha&mail_subject=must-read-the-arrival-of-the-unavoidable-pension-crisis&utm_campaign=nl-must-read&utm_content=link-1

[Baa_Baa]

How’s everyone going here with trying to time the bottom...?

Pretty good I think, instead of converting to a ‘safe’ portfolio and lock in losses, I dropped a few K into the bottom and remained largely aggressive and growth. Do people know it can take a couple of weeks at least for portfolio changes to take effect? Anyway, my KS is substantially up on the value as at the COVID collapse, not just from my top up but because my money has been invested in units that have rebounded significantly. I really don’t think KS is a trading tool, the delay to execute a portfolio change and a ‘trade’ is to slow, best imo to stick to the core purpose of it and just load up when prices crash, and chip in other times. Otherwise leave it alone. 😀

[kiora]

Agree with Baa Baa
Moved it into aggressive fund when it opened
https://milfordasset.com/funds-performance/view-performance
Top performer of all the Milford funds,surprised ?

[kiora]

Timely
https://www.goodreturns.co.nz/article/976516914/fma-warns-adviser-over-advice-to-go-conservative.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+29+M ay+2020

[peat]

Timely
https://www.goodreturns.co.nz/article/976516914/fma-warns-adviser-over-advice-to-go-conservative.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+29+M ay+2020

i would think its more the blanket nature of the advice that is the problem.

[GTM 3442]

Timely
https://www.goodreturns.co.nz/article/976516914/fma-warns-adviser-over-advice-to-go-conservative.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+29+M ay+2020

It might have been good advice on the first of March. It might have been poor advice later in the month.

I'm just amazed to see anyone in the New Zealand financial services industry doing something pro-active. Time for a cup of tea and a nice lie down. . .

[SBQ]

It might have been good advice on the first of March. It might have been poor advice later in the month.

I'm just amazed to see anyone in the New Zealand financial services industry doing something pro-active. Time for a cup of tea and a nice lie down. . .

The FMA is the product of NZ's Nanny State regulation. The same could equally apply to any adviser making the 'aggressive' recommendation instead of the 'conservative'.

But really... what are they really talking about? I'm looking for accountability of those Kiwi managed funds to man up on underperformance. From what I see, someone has to be in the top 1, 2, or 3. Where are those that say they're #1 for 5 or 10 consecutive years in a row? How about this bold move, no managed fund to charge any management fee if their fund does not beat the index return? Nope - instead the NZ Gov't has all these funds put out stupid risk levels for their clients in the form of "Defensive, Conservative... Balance... to all the way to Aggressive" and you know how all that risk level works? It's based on a proportion of the investment that is put into [cash interest / bond returns] : [share] ratio. Anotherwords, why would I pay a managed fund to put 2/3rds or 67% of the funds I give them into a low interest bond or cash deposit in the "Conservative Fund" when I could just only give them 1/3rd or 33% of the cash and tell them to invest it 100% into growth equties and let me deal with the 67% of the funds by putting it into a cash term deposit?

and before any person that is pushed into Kiwi Saver, where are the financial adviser that give advice to their clients that they can do what I said above? Maybe it's due to people don't know how to save so they figure all the $ should come off their wages and salaries and the fund managers would gladly take a fee off the gross sum.

[kiora]

""Then the tables, such as those provided by Morningstar and Sorted, need to rank providers on what is called a 'risk adjusted' basis so investors can compare providers on both the return they made and the risk they are taking."
https://www.stuff.co.nz/business/300031265/coronavirus-covid19-exposes-naked-risk-behind-kiwisaver-funds
https://sorted.org.nz/guides/kiwisaver/kiwisaver-which-fund-suits/

No one points out the effect of missing out on loosing a potential return of even a 1 % compounding return over ones life time
If opened at 17 yr old,closed at 65 yr,48 yr less return of 1 % compounding is huge
If deposit $5000 at age 17 yr & no more,1 % less return compounding is $8061 potential return not received
https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

[SBQ]

""Then the tables, such as those provided by Morningstar and Sorted, need to rank providers on what is called a 'risk adjusted' basis so investors can compare providers on both the return they made and the risk they are taking."
https://www.stuff.co.nz/business/300031265/coronavirus-covid19-exposes-naked-risk-behind-kiwisaver-funds
https://sorted.org.nz/guides/kiwisaver/kiwisaver-which-fund-suits/

No one points out the effect of missing out on loosing a potential return of even a 1 % compounding return over ones life time
If opened at 17 yr old,closed at 65 yr,48 yr less return of 1 % compounding is huge
If deposit $5000 at age 17 yr & no more,1 % less return compounding is $8061 potential return not received
https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

I've made this point in my post here :

https://www.sharetrader.co.nz/showthread.php?11597-New-NZ-Gov-t-Regulation-on-Overseas-Trading-Accounts&p=820032&viewfull=1#post820032

No one as been more vocal about the charging of high management fees than Warren Buffet. Even at 1% per year is a massive hit on the total compound returns over a person's total investment lifetime.

You know we have this FMA regulation in NZ, but as you say none of them are prioritizing management fees over which risk category so and so Kiwi Saver person should be invested in.

I'm still awaiting for various Kiwi Saver managed funds to come out with their hands clean and tell investors how much tax their manage funds actually pays (i'm talking everything from FIF to dividends to expenses they have in the managing of funds). Warren Buffet said it's robbery how they do it for "merely breathing air".

Such managed funds have been overly criticized in N. America and the trend has been clear. People saving for retirement or into some pension scheme DO NOT choose the actively managed portfolios. In recent years, and I can't recall the exact % but I would not be surprised if over 90% of all employee / employer matched contribution schemes in America go into a passive managed fund or ETF like the Vanguard S&P500. Why is this trend not duplicated in NZ but instead, the investment industry in NZ still pushes people to do the 1980s approach (in America) of having people invest in managed funds?

[Baa_Baa]

"The recovery showed a market downturn was the worst time to switch funds, Murphy said (https://www.stuff.co.nz/business/money/300070419/recovery-highlights-kiwisaver-members-370000-mistake). “It demonstrates the importance of long-term investment strategies for what is supposed to be a long-term investment.”

[SBQ]

"The recovery showed a market downturn was the worst time to switch funds, Murphy said (https://www.stuff.co.nz/business/money/300070419/recovery-highlights-kiwisaver-members-370000-mistake). “It demonstrates the importance of long-term investment strategies for what is supposed to be a long-term investment.”

Utter rubbish! The problem with all these stated figures is they make unrealistic assumptions. One being you can not assume the market return a static ie. 5 or 6% return compounded until the person retires nor can any advisor be held accountable if their investment plan does not work out. Believe me, these advisors are very good at tweaking things and pitching scenarios to their clients... but will never admit any fault.


“It really does demonstrate the importance and power of people not trying to market-time.”

People who pulled out of growth or aggressive funds in March, worried about the future, would have both locked in the losses their funds experienced that month", and missed out on the rebound experienced since. "


The article also doesn't say WHY individuals would switch from aggressive to conservative? Based on what logic? Do we assume the individual is scared and rather than 'risk' losing more by staying in the aggressive fund, they feel they want to go to a lower risk fund? What if there was no recovery and it proved the conservative funds fared better than the aggressive funds?? Sounds to be (like all these articles), they're cherry picking based on a hindsight 20/20 scenario. If you ask all of the top long time running stock pickers, from Buffet to Ray Dalio, to any reputable fund manager, they ALL agree that timing does matter. They also do not believe holding bonds, to any long term certainty, is a wise plan to reach retirement. Buffet has never been a big fan of investing into junk bonds but would gladly underwrite the terms of such bonds in his favour.

I've mentioned before, the whole problem of NZ's Kiwi Saver is the lack of any real financial advice and the absence of how funds manage their risk levels between portfolios. That is the difference between say an aggressive vs a conservative is mainly due to the % holdings in bonds or interest bearing assets in each portfolio. An aggressive fund would have a low allocation of cash & bonds while the low risk funds would have a very high % of holding cash and bonds. This is very different to the managed funds over in N. America where financial advisor point you to reputable mutual funds that specialise in that area. Out of the 5000+ managed funds you can pick, no financial advisor is going to pick ONE family of funds that so happens to have various portfolios and let their clients choose in between the risk categories.


I'm still waiting for Stuff to report the huge tax difference between investing in NZ residential properties vs investing in Kiwi Saver funds. Not even Ms Ardern could address this problem by not allowing CGT.

[Baa_Baa]

Utter rubbish! The problem with all these stated figures is they make unrealistic assumptions. One being you can not assume the market return a static ie. 5 or 6% return compounded until the person retires nor can any advisor be held accountable if their investment plan does not work out. Believe me, these advisors are very good at tweaking things and pitching scenarios to their clients... but will never admit any fault.



The article also doesn't say WHY individuals would switch from aggressive to conservative? Based on what logic? Do we assume the individual is scared and rather than 'risk' losing more by staying in the aggressive fund, they feel they want to go to a lower risk fund? What if there was no recovery and it proved the conservative funds fared better than the aggressive funds?? Sounds to be (like all these articles), they're cherry picking based on a hindsight 20/20 scenario. If you ask all of the top long time running stock pickers, from Buffet to Ray Dalio, to any reputable fund manager, they ALL agree that timing does matter. They also do not believe holding bonds, to any long term certainty, is a wise plan to reach retirement. Buffet has never been a big fan of investing into junk bonds but would gladly underwrite the terms of such bonds in his favour.

I've mentioned before, the whole problem of NZ's Kiwi Saver is the lack of any real financial advice and the absence of how funds manage their risk levels between portfolios. That is the difference between say an aggressive vs a conservative is mainly due to the % holdings in bonds or interest bearing assets in each portfolio. An aggressive fund would have a low allocation of cash & bonds while the low risk funds would have a very high % of holding cash and bonds. This is very different to the managed funds over in N. America where financial advisor point you to reputable mutual funds that specialise in that area. Out of the 5000+ managed funds you can pick, no financial advisor is going to pick ONE family of funds that so happens to have various portfolios and let their clients choose in between the risk categories.


I'm still waiting for Stuff to report the huge tax difference between investing in NZ residential properties vs investing in Kiwi Saver funds. Not even Ms Ardern could address this problem by not allowing CGT.

Let’s just face it, you need to move back to Canada. So down on NZ investment opportunities. Kiwis don’t have an option to invest in overseas retirement savings schemes. Your glass half full it’s really tedious to be honest, and we still have no ideas whether you have any credentials to back up your assertions or advice. Do you?

The article simply said it was a bad idea to switch a long term fixed investment from growth to cash. And that’s exactly how it worked out. My KiwiSaver for example which I didn’t touch and is balanced/growth is substantially up since the COVID crash and recovery.

The message it’s pretty simple which you choose to distort and deflect from … Just decide a KiwiSaver strategy and stick to it, don’t duck around with it trying to time the market.

Back on ignore, you bore me to tears and I really dislike your negativity

[SBQ]

Let’s just face it, you need to move back to Canada. So down on NZ investment opportunities. Kiwis don’t have an option to invest in overseas retirement savings schemes. Your glass half full it’s really tedious to be honest, and we still have no ideas whether you have any credentials to back up your assertions or advice. Do you?

The article simply said it was a bad idea to switch a long term fixed investment from growth to cash. And that’s exactly how it worked out. My KiwiSaver for example which I didn’t touch and is balanced/growth is substantially up since the COVID crash and recovery.

The message it’s pretty simple which you choose to distort and deflect from … Just decide a KiwiSaver strategy and stick to it, don’t duck around with it trying to time the market.

Back on ignore, you bore me to tears and I really dislike your negativity

You mean it's ok for NZ financial advisors to tell half truths? 20/20 hindsight is all they work on and the real distortion is they make no mention on why those that really reach retirement in NZ quick, have done so in residential properties.

There is no deflection or distortion of the facts. We have a gov't that is simply not interested in leveling the playing field on taxation, and the financial advisors don't seem to be ethical enough to care. It's like talking to a car salesman trying to sell a lot full of cars knowing all of them have issues.

Perhaps you're not interested in hearing anyone to point fingers at this key problem and you can ignore it all you want. Hell, just look at the way NZ continues to build sub-standard housing or how the OECD continues to say NZ needs to do more to make housing affordable and implement some form of tax on real estate to discourage tax free investment in this area. It's not rocket science.

Going back to the article. I stand firm. The problem isn't about how people switch between risk categories. The problem is the lack of financial advice for these clients making the wrong move between portfolios without full disclosure. Accountability? nope and to have an article that simply rubs in the face of such investors for making the wrong choice? = FAIL!

[ratkin]

Have any of you made any voluntary contributions to kiwisaver?

Just had another term deposit mature, and was at a complete loss of what to do with it, so have just whacked it into the kiwi saver.
Sensible or silly?

[stoploss]

Have any of you made any voluntary contributions to kiwisaver?

Just had another term deposit mature, and was at a complete loss of what to do with it, so have just whacked it into the kiwi saver.
Sensible or silly?
Depends .
Are you able to get it out for first home purchase ?
If you’re over 65 can get out anytime so fine .
If in the middle , some of the providers have “ mirror” funds the same as their KiwiSaver offerings .
So this might be a better option if you might need access to the money for some unforeseen reason .
All in my opinion, not advice .

[ratkin]

Depends .
Are you able to get it out for first home purchase ?
If you’re over 65 can get out anytime so fine .
If in the middle , some of the providers have “ mirror” funds the same as their KiwiSaver offerings .
So this might be a better option if you might need access to the money for some unforeseen reason .
All in my opinion, not advice .

59 so figured in terms of time frame it not much different to sticking it in a term deposit. Feels a bit safer than having it in an NZ bank esoecially as was only being offered 1.85% interest on it

[Bjauck]

59 so figured in terms of time frame it not much different to sticking it in a term deposit. Feels a bit safer than having it in an NZ bank esoecially as was only being offered 1.85% interest on itI recently received an unexpected legacy. I dialled down my kiwisaver risk back to conservative balanced and added the legacy as a voluntary contribution. It boosted the balance by about a third. Even though it will be locked away for longer than any term deposit, I preferred the current risk/reward at current interest rates. I did not want to add to my current shareholdings or need it elsewhere.

[stoploss]

59 so figured in terms of time frame it not much different to sticking it in a term deposit. Feels a bit safer than having it in an NZ bank esoecially as was only being offered 1.85% interest on it
I think one of the major benefits is you have the services of a lot of "professional investors " working for you. This comes with the protection of the Kiwisaver reigme and compliance that entails .One of the good safety nets is all the money goes through a trustee company .
Certainly doesn't stop them losing money in the market , but nobody can get their hands on "your money "

[Bjauck]

I think one of the major benefits is you have the services of a lot of "professional investors " working for you. This comes with the protection of the Kiwisaver reigme and compliance that entails .One of the good safety nets is all the money goes through a trustee company .
Certainly doesn't stop them losing money in the market , but nobody can get their hands on "your money " I agree. The media interest, regulation and oversight of the Kiwisaver regime is a comparative drawcard compared to non-kiwisaver funds.

Also Kiwisaver funds can be treated differently in some situations. For example, if the applicant is under 65 (normal minimum age for access to kiwisaver funds), they are not included by WINZ in any asset or income testing. There may be other situations?

http://www.stuff.co.nz/business/8653428/Can-WINZ-take-my-KiwiSaver

[ratkin]

I agree. The media interest, regulation and oversight of the Kiwisaver regime is a comparative drawcard compared to non-kiwisaver funds.

Also Kiwisaver funds can be treated differently in some situations. For example, if the applicant is under 65 (normal minimum age for access to kiwisaver funds), they are not included by WINZ in any asset or income testing. There may be other situations?

http://www.stuff.co.nz/business/8653428/Can-WINZ-take-my-KiwiSaver

Yeah this is true, my other half was unable to claim any benefits after losing job due to covid, I had too much passive income. Really peeved me off, if I had stuck it all in kiwi saver it would not have been a problem.

[Bjauck]

Yeah this is true, my other half was unable to claim any benefits after losing job due to covid, I had too much passive income. Really peeved me off, if I had stuck it all in kiwi saver it would not have been a problem. That is tough. Especially if you exceeded the threshold based on passive income from an historic period which included rent or dividends and interest that may now have been cancelled or reduced as a result of Covid.

[ratkin]

That is tough. Especially if you exceeded the threshold based on passive income from an historic period which included rent or dividends and interest that may now have been cancelled or reduced as a result of Covid.

Yeah, they need to do something about the partner rules. Last thing I want is to have to dip into my future retirement savings. The wife paid her taxes for years and she should be entitled to the same benefits as the woman next door whose husband wasted all his money down the pub. Why should they get benefit and not us. Penalised for being careful with money.

[kiora]

Now this is hard to beat.100% in first year
https://www.goodreturns.co.nz/article/976517861/nikko-am-disrupts-kiwisaver-market-with-high-performing-ark-fund.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+27+N ovember+2020

[kiora]

Contrarian rules coming up?
"capital allocation, that people will re-up with managers who have won in the last year, and they will not allocate to managers who have lost. And we know that that's actually a losing strategy, that you do worse that way because of regression to the mean, and you're not taking luck into account, and you're just thinking about short-term results, in terms of as opposed to process.

Certainly true and-- you don't want to do this in options trading, as well. Whether you're up or down in a particular moment should matter very little. But it's a real mistake that we make and it's a weakness of human decision-making."
https://finance.yahoo.com/video/former-poker-champion-says-common-090000863.html

[kiora]

"In a conservative fund, they would end up with about $185,000, or $151 a week, compared to $272,000 or $222 a week in a growth fund."
https://www.stuff.co.nz/business/opinion-analysis/300192629/heres-why-you-need-to-embrace-investment-risk

[Baa_Baa]

"The recovery showed a market downturn was the worst time to switch funds, Murphy said (https://www.stuff.co.nz/business/money/300070419/recovery-highlights-kiwisaver-members-370000-mistake). “It demonstrates the importance of long-term investment strategies for what is supposed to be a long-term investment.”

"The problem was that many of those investors sold out of things like shares at the low point of the market, when they were worth less than they had been for years. They then shifted into funds that largely invested in things like term deposits and cash – and weren’t in the market when it rebounded afterwards. (https://www.stuff.co.nz/business/opinion-analysis/300192421/2020-the-year-kiwisaver-let-panicked-investors-down)Some switched back but it was too late to save the lost money.
This has made a tangible difference to balances, and to the end result that many of these people will have at retirement. One financial adviser estimated that people who panic-sold missed out on combined $3.5 billion in retirement savings. (https://www.stuff.co.nz/business/121598872/bank-kiwisavers-were-the-biggest-panickers-in-14-billion-march-selloff)"

[x2rider]

"The problem was that many of those investors sold out of things like shares at the low point of the market, when they were worth less than they had been for years. They then shifted into funds that largely invested in things like term deposits and cash – and weren’t in the market when it rebounded afterwards. (https://www.stuff.co.nz/business/opinion-analysis/300192421/2020-the-year-kiwisaver-let-panicked-investors-down)Some switched back but it was too late to save the lost money.
This has made a tangible difference to balances, and to the end result that many of these people will have at retirement. One financial adviser estimated that people who panic-sold missed out on combined $3.5 billion in retirement savings. (https://www.stuff.co.nz/business/121598872/bank-kiwisavers-were-the-biggest-panickers-in-14-billion-march-selloff)"

I did switch my Milford but went from the Growth fund to the aggressive fund and upped my contributions

[madmat]

I switched from Generate after they thought investing Kiwisaver funds into Social housing was a good idea. 1.5% returns for a feel good factor? No thanx, not with my money.

[Bjauck]

I am currently in the Balanced fund of a Big Bank scheme. The big bank is about to close its dedicated online portal for KiwiSaver account detailed information. The information available on the Internet Banking site is not very transparent and is in summary form with no information on units held or unit prices. So it will have insufficient information for updating the spreadsheet. Has anybody got any particular scheme recommendations? I see Milford were top in Canstar's 2020 review.

[justakiwi]

Simplicity. Switched from GMK and very happy.


I am currently in the Balanced fund of a Big Bank scheme. The big bank is about to close its dedicated online portal for KiwiSaver account detailed information. The information available on the Internet Banking site is not very transparent and is in summary form with no information on units held or unit prices. So it will have insufficient information for updating the spreadsheet. Has anybody got any particular scheme recommendations? I see Milford were top in Canstar's 2020 review.

[Bjauck]

Simplicity. Switched from GMK and very happy. Cheers I will send them an Email with various questions.

[kiora]

Better than the rest
https://milfordasset.com/funds-performance/kiwisaver-aggressive-fund

[kiora]

Better than the rest
https://milfordasset.com/funds-performance/kiwisaver-aggressive-fund

[iceman]

Simplicity. Switched from GMK and very happy.

Ditto. Switched from GMK (now Kiwi Wealth) after Kiwibank took it over and performed poorly for first couple of years and went to Simplicity. Happy so far after 18 odd months since the switch

[Jaa]

I am currently in the Balanced fund of a Big Bank scheme. The big bank is about to close its dedicated online portal for KiwiSaver account detailed information. The information available on the Internet Banking site is not very transparent and is in summary form with no information on units held or unit prices. So it will have insufficient information for updating the spreadsheet. Has anybody got any particular scheme recommendations? I see Milford were top in Canstar's 2020 review.

Switched from Milford after their trader was caught manipulating share prices to Superlife and been pretty happy.

Low fees, free switches, reasonable reporting and you can split your funds into any of the NZX ETFs or into various funds. A good home for those already familiar with share investing.

[arekaywhy]

Also with Superlife, pretty happy so far and I can avoid the trendy ESG crap to a better degree

[smpl]

Now the strategy is to choose the providers who are most savvy with crypto...

[kiora]

"Kiwi Wealth invests more into private equity

Kiwi Wealth KiwiSaver has committed up to $50 million to leading investment firm Pioneer Capital with a focus on New Zealand businesses exporting high-value products and services in large international markets."
https://www.goodreturns.co.nz/article/976518585/kiwi-wealth-invests-more-into-private-equity.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Tuesday+11+ May+2021

Good strategy?
They will need to factor in liquidity issues otherwise they could trip up?

https://www.cnbc.com/2019/10/15/star-uk-fund-manager-woodford-forced-to-close-embattled-flagship-fund.html

[Stumpynuts]

Milford KS - Aggressive fund here - 90% aggressive, the remaining 10% in active growth.
I'm sure this is mostly a one-off COVID related return, but the website link for Milford that Kiora already posted up - 36.22% return, after fees but before tax as at the end of April 2021 year

https://milfordasset.com/funds-performance/kiwisaver-aggressive-fund

All the selling pre & during the beginning of pandemic scared away a lot of money - realising those losses from paper to actual.

[SBQ]

"Kiwi Wealth invests more into private equity

Kiwi Wealth KiwiSaver has committed up to $50 million to leading investment firm Pioneer Capital with a focus on New Zealand businesses exporting high-value products and services in large international markets."
https://www.goodreturns.co.nz/article/976518585/kiwi-wealth-invests-more-into-private-equity.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Tuesday+11+ May+2021

Good strategy?
They will need to factor in liquidity issues otherwise they could trip up?

https://www.cnbc.com/2019/10/15/star-uk-fund-manager-woodford-forced-to-close-embattled-flagship-fund.html

"Kiwi Wealth KiwiSaver has committed up to $50 million to leading investment firm Pioneer Capital with a focus on New Zealand businesses exporting high-value products and services in large international markets. "

My view is simply, proceed with caution. As i've mentioned before the level of risk is very high and if you expect NZ businesses to get a foot in the door in overseas markets, you've got another thing coming.

Many OECD places have lower corporate tax rates than NZ's 28% - what is the incentive? Why did NZ startups like Xero end up listing on the ASX? Why do the smartest like Elon Musk end up moving to America?

Here's Canada's corporate tax rates (VERY competitive on the global scale): https://www.taxtips.ca/smallbusiness/corporatetax/corporate-tax-rates-2021.htm

On the grand of schemes, $50M would hardly shake a stick. It seems they want to target maybe already established NZ businesses that need extra funding to promote more exports. Reality is they're competing against the banks and worse of all, the NZ gov't / central bank that can lend at best rates. The NZ retail investor that puts their $ into these ventures will not see the full deal and the overall outcome (so many things can go wrong as times goes by and when things go bust).

Liquidity is always an issue if any partner wants out or any retail investor has shares that trade on the NZX. Again $50M is small beans - translate that to what volume would that be on the NZX in trading?

[fungus pudding]

Yeah, they need to do something about the partner rules. Last thing I want is to have to dip into my future retirement savings. The wife paid her taxes for years and she should be entitled to the same benefits as the woman next door whose husband wasted all his money down the pub. Why should they get benefit and not us. Penalised for being careful with money.

How on earth can you waste money at the pub?

[Bjauck]

Milford KS - Aggressive fund here - 90% aggressive, the remaining 10% in active growth.
I'm sure this is mostly a one-off COVID related return, but the website link for Milford that Kiora already posted up - 36.22% return, after fees but before tax as at the end of April 2021 year

https://milfordasset.com/funds-performance/kiwisaver-aggressive-fund

All the selling pre & during the beginning of pandemic scared away a lot of money - realising those losses from paper to actual. That is a fantastic return of 19.75% pa since inception on 1/8/19 - Almost double the return from the NZX50 in that period. As most of it would be from capital gains/appreciation I think it would be little diminished by PiE tax.

[Stumpynuts]

That is a fantastic return of 19.75% pa since inception on 1/8/19 - Almost double the return from the NZX50 in that period. As most of it would be from capital gains/appreciation I think it would be little diminished by PiE tax.

Yeah it's not bad right?
Milford has always been one of the more consistent and higher returning KS managers. With those sort of annualised returns I don't mind paying a little bit more in management fees if you're getting substantially higher double-digit returns.

[peat]

So the default providers who lost their status actually lose the clients who were placed with them!!! I'm a bit surprised coz that is verging on the punitive.

Those in default funds managed by organisations losing their default manager status will be automatically shifted to one of the ongoing providers unless they actively choose a manager.

Lower KiwiSaver default fund fees, performance seemingly ignored | BusinessDesk (https://businessdesk.co.nz/article/finance/lower-kiwisaver-default-fund-fees-performance-seemingly-ignored) (paywalled)

The main thrust of the article though is how myopic the govt was in only considering fees.... even with my financial planning training I still think its best to pay a bit more and get quality active management.

Fisher Funds was first outright but cast out from the default selection


Fisher Funds chief executive Bruce McLachlan said his company was surprised and disappointed at not making the cut, given its strong track record, but stressed that the default fund was only one aspect of its KiwiSaver business.
"We're proud of the returns and value for money we have delivered for our KiwiSaver members since 2007," McLachlan said.
"Our default fund has consistently outperformed peer group averages and, after fees, ranks first or first equal on the one, three and five-year results, based on Morningstar results," he said.

[stoploss]

So the default providers who lost their status actually lose the clients who were placed with them!!! I'm a bit surprised coz that is verging on the punitive.

Those in default funds managed by organisations losing their default manager status will be automatically shifted to one of the ongoing providers unless they actively choose a manager.

Lower KiwiSaver default fund fees, performance seemingly ignored | BusinessDesk (https://businessdesk.co.nz/article/finance/lower-kiwisaver-default-fund-fees-performance-seemingly-ignored) (paywalled)

The main thrust of the article though is how myopic the govt was in only considering fees.... even with my financial planning training I still think its best to pay a bit more and get quality active management.

Fisher Funds was first outright but cast out from the default selection


Fisher Funds chief executive Bruce McLachlan said his company was surprised and disappointed at not making the cut, given its strong track record, but stressed that the default fund was only one aspect of its KiwiSaver business.
"We're proud of the returns and value for money we have delivered for our KiwiSaver members since 2007," McLachlan said.
"Our default fund has consistently outperformed peer group averages and, after fees, ranks first or first equal on the one, three and five-year results, based on Morningstar results," he said.

Hi Peat , the way I read it unless the default provider can make contact and transfer them into one of their other funds they would then lose it .
I think FMA had been on at them for a while to make contact with the client and see if they might be better suited in a higher or slightly higher risk fund ....
Be very interesting to see how many of them they can suddenly make contact with and get them into a balanced fund :)
As of 31 March ASB had $ 4.1 Bio in their default fund , AMP $ 1.3 bio and ANZ 1.2 Bio
https://cdn.morningstar.com.au/mca/s/documents/KiwiSaver_survey-2021Q1.pdf

[justakiwi]

Never mind.

[SBQ]

Hi Peat , the way I read it unless the default provider can make contact and transfer them into one of their other funds they would then lose it .
I think FMA had been on at them for a while to make contact with the client and see if they might be better suited in a higher or slightly higher risk fund ....
Be very interesting to see how many of them they can suddenly make contact with and get them into a balanced fund :)
As of 31 March ASB had $ 4.1 Bio in their default fund , AMP $ 1.3 bio and ANZ 1.2 Bio
https://cdn.morningstar.com.au/mca/s/documents/KiwiSaver_survey-2021Q1.pdf


In my early years of finance studies (nearly 25 years ago), the level of risk the individual should make would depend on their age. Meaning the so called 'default' fund in these Kiwi Saver funds do a poor job of addressing the age status situation for those investing for retirement. Why is this not considered? Does the FMA use age as a factor when they scold at KS funds having poor performance on their default providers managed funds?

What are the make up of these KS funds in terms of risk level? The mgt fees they take is an issue if they're only tweaking % proportions of their investments into fixed income / bonds to equity ratio. What I see is industry gives out awards to these fund managers for merely just tweaking things around or doing more diversification and by luck, they do better, they win. There's no 'real' art into their level of stock picking but they sure do know how to rake in the advertising.

[kiora]

"As we have seen recently, when market corrections occur some KiwiSaver members have realised losses by switching to options that are more conservative. Access to good advice will also be an important contributor to KiwiSaver member outcomes, and hopefully help not only getting Kiwis into the right funds, but keeping them there through the good and not so good market outcomes"
https://www.goodreturns.co.nz/article/976519244/how-many-kiwis-has-kiwisaver-saved.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+10+Sep+ 2021

[SBQ]

"As we have seen recently, when market corrections occur some KiwiSaver members have realised losses by switching to options that are more conservative. Access to good advice will also be an important contributor to KiwiSaver member outcomes, and hopefully help not only getting Kiwis into the right funds, but keeping them there through the good and not so good market outcomes"
https://www.goodreturns.co.nz/article/976519244/how-many-kiwis-has-kiwisaver-saved.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+10+Sep+ 2021

I'm afraid I will have to disagree with the outcome of Kiwi Saver in that article. This one particularly:

"A number of commentators have said KiwiSaver is not a good savings vehicle but, simply put, they are wrong. Many overseas countries have looked at our system and endeavoured to try to replicate it in some way or another over the past few years. I know for a fact Ireland are interested in how it works."

I would be interested to know which countries would regard NZ's KS so great? Certainly not in the US and definitely not in Canada. The key distinction about KS (when compared to other employer contribution plans overseas) is how IRD taxes individuals on the fund's gains. The approach has been taxing the gains at the start and not taxing the gains at the end at retirement. When you take taxation out, this leaves less 'compound' returns. The key advantage to US's 401K plans and Canada's RRSP is ALL the contributions grow 100% tax free. In addition the amount of contributions is a direct deduction of the person's taxable income. When retirement comes, YOU CHOOSE how much income and tax you would like to have in a year when you make disbursements ; ie structure so you're retirement income is taxed at the low tax bracket. In KS, the higher the income, the higher YOUR KS returns are taxed. If there is no disincentive than that, then I can understand why the details are rarely spoken about in NZ or why financial advisors don't disclose the full tax workings of the funds and from the client's point of view. But I suppose I should not be so critical to NZ. KS was a start of a system that most OECD nations already had decades before. In Canada, the individual has 3 sources of pension. OAS which is like our NZ Super. CCP which everyone employed pays (there's no NZ equivalent). RRSP which would be comparable to our KS. Also for many professions in Canada they have their own investment retirement plan - such as the Teachers where they pay into a Teacher's Retirement scheme. End result a teacher can retire with 4 income streams ; OAS, CPP, RRSP, & Teacher Pension income.

Putting these key advantage aside, here's my thoughts on the following from the article (one's with my concerns):

What are the stand-out benefits of KiwiSaver today?




If you put 3% of your salary or wages in, your employer, in most circumstances (more to come on this) have to match that. No ifs or buts. If they do not, they are breaking the law.

- seriously putting 6% of the individuals income is a joke and it won't get you to riches for the vast majority of people in KS. In Canada individuals can max at out 18% and these contributions are a direct credit off the taxable income.



The Government will give you an extra $521 dollars a year every year (until you reach retirement age) if you put in a minimum of $20 dollars a week. Think of it as a 50% return on those contributions every year!

- the gov't and financials advisors call this an incentive to join KS, to me I call this a bribe.



For those who are first homebuyers you can use your KiwiSaver funds (excluding the $1,000 kick start if you were lucky to get that at the time) to go towards your first home. It is one of the quickest ways you can build up a deposit because it is not only your contributions but your matching employer and government contributions that can be used to get there quicker.

- in Canada the Home Buyer's Plan allows the individual to withdraw up to $35K from their RRSP. Keep in mind, contributions to the RRSP reduce the person's taxable income, and is compounded in the investment tax free (the notion that at retirement, the CGT applies however, $35K is withdrawn with no tax penalty). This is very different to KS or PIE funds where gains are taxed annually at RWT.



The government has recently reviewed KiwiSaver default providers and we have got one of the lowest range of investment management fees in the world. This is even more remarkable given we only have around $62 billion of funds compared to say Australia that has $3 trillion of funds under management and their fees are higher than ours. So big tick there.

- the investment mix whether default, aggressive, conservative, is all a bunch of rubbish. You don't relegate the investment risk based on the % proportion in fixed term investments (bonds, term deposits, etc) as a ratio to the equity investment. Instead, the investment make up should be based on the individual's age and with a slight consideration of when a stock market has crashed or not. Those younger should take on more risk and go all in 100% equity. Those near retirement age, go the other way around and have a small % in equities. Of course if you're like Warren Buffet and all the famous gurus - they say fixed income investments are a waste of time one should staying invested in equities all the time.

The article goes on asking why some don't join KS. I say the key reason is they may be people who are already wealthy enough and can invest directly with their own savings... ie such as buying NZ houses - leverage it through the bank kind of deal that you can't do in KS. As a friend once told me, "Kiwi Saver is only for people who can't manage their own savings and invest... but the people that know how to get rich, don't do so with KS".

[Swala]

I'm afraid I will have to disagree with the outcome of Kiwi Saver in that article. This one particularly:

"A number of commentators have said KiwiSaver is not a good savings vehicle but, simply put, they are wrong. Many overseas countries have looked at our system and endeavoured to try to replicate it in some way or another over the past few years. I know for a fact Ireland are interested in how it works."

I would be interested to know which countries would regard NZ's KS so great? Certainly not in the US and definitely not in Canada. The key distinction about KS (when compared to other employer contribution plans overseas) is how IRD taxes individuals on the fund's gains. The approach has been taxing the gains at the start and not taxing the gains at the end at retirement. When you take taxation out, this leaves less 'compound' returns. The key advantage to US's 401K plans and Canada's RRSP is ALL the contributions grow 100% tax free. In addition the amount of contributions is a direct deduction of the person's taxable income. When retirement comes, YOU CHOOSE how much income and tax you would like to have in a year when you make disbursements ; ie structure so you're retirement income is taxed at the low tax bracket. In KS, the higher the income, the higher YOUR KS returns are taxed. If there is no disincentive than that, then I can understand why the details are rarely spoken about in NZ or why financial advisors don't disclose the full tax workings of the funds and from the client's point of view. But I suppose I should not be so critical to NZ. KS was a start of a system that most OECD nations already had decades before. In Canada, the individual has 3 sources of pension. OAS which is like our NZ Super. CCP which everyone employed pays (there's no NZ equivalent). RRSP which would be comparable to our KS. Also for many professions in Canada they have their own investment retirement plan - such as the Teachers where they pay into a Teacher's Retirement scheme. End result a teacher can retire with 4 income streams ; OAS, CPP, RRSP, & Teacher Pension income.

Putting these key advantage aside, here's my thoughts on the following from the article (one's with my concerns):

What are the stand-out benefits of KiwiSaver today?




If you put 3% of your salary or wages in, your employer, in most circumstances (more to come on this) have to match that. No ifs or buts. If they do not, they are breaking the law.

- seriously putting 6% of the individuals income is a joke and it won't get you to riches for the vast majority of people in KS. In Canada individuals can max at out 18% and these contributions are a direct credit off the taxable income.



The Government will give you an extra $521 dollars a year every year (until you reach retirement age) if you put in a minimum of $20 dollars a week. Think of it as a 50% return on those contributions every year!

- the gov't and financials advisors call this an incentive to join KS, to me I call this a bribe.



For those who are first homebuyers you can use your KiwiSaver funds (excluding the $1,000 kick start if you were lucky to get that at the time) to go towards your first home. It is one of the quickest ways you can build up a deposit because it is not only your contributions but your matching employer and government contributions that can be used to get there quicker.

- in Canada the Home Buyer's Plan allows the individual to withdraw up to $35K from their RRSP. Keep in mind, contributions to the RRSP reduce the person's taxable income, and is compounded in the investment tax free (the notion that at retirement, the CGT applies however, $35K is withdrawn with no tax penalty). This is very different to KS or PIE funds where gains are taxed annually at RWT.



The government has recently reviewed KiwiSaver default providers and we have got one of the lowest range of investment management fees in the world. This is even more remarkable given we only have around $62 billion of funds compared to say Australia that has $3 trillion of funds under management and their fees are higher than ours. So big tick there.

- the investment mix whether default, aggressive, conservative, is all a bunch of rubbish. You don't relegate the investment risk based on the % proportion in fixed term investments (bonds, term deposits, etc) as a ratio to the equity investment. Instead, the investment make up should be based on the individual's age and with a slight consideration of when a stock market has crashed or not. Those younger should take on more risk and go all in 100% equity. Those near retirement age, go the other way around and have a small % in equities. Of course if you're like Warren Buffet and all the famous gurus - they say fixed income investments are a waste of time one should staying invested in equities all the time.

The article goes on asking why some don't join KS. I say the key reason is they may be people who are already wealthy enough and can invest directly with their own savings... ie such as buying NZ houses - leverage it through the bank kind of deal that you can't do in KS. As a friend once told me, "Kiwi Saver is only for people who can't manage their own savings and invest... but the people that know how to get rich, don't do so with KS".


Those are exactly the people that Kiwisaver is designed for. Probably the vast majority of the population.

[SBQ]

[/B]


Those are exactly the people that Kiwisaver is designed for. Probably the vast majority of the population.

As I dig for answer, how MUCH does KiwiSaver actually help these individuals? Consider it from an aggregate point of view. The fund managers that take their commissions, admin mgt fees, and IRD's taxation on these funds, paperwork involved by the employer, etc. Since the start of KS, to the person that gets 6% of their taxable income into this scheme, how much exactly do they have today and let's see their NET returns? Since we can assume the majority of people would be on average to low income levels - ie $50K/year @ 6% contribution is only $3000/year (and I can assure you these figures would be A LOT less when KS was introduced), we are seriously not talking significant sums to make them millionaires at retirement. Someone should look

I'm going to discredit that guy in that article link and say he's just another salesman working in industry to fuel the investment firm he represents. I mean how many industries can you name were a person is getting paid (for merely doing nothing) because that is accepted industry practice and the gov't and regulatory supports that role? Don't agree with me, here's Buffet's comments over 20 years ago:

https://youtu.be/uRdDwgmzLvU?t=48

In Buffet's shareholder meeting he was given the question, on what advice he can provide to a school classroom full of equity fund managers. His response was, "In this world there's a saying you can't get something for nothing... well the truth is in aggregate, investment managers have essentially got something for nothing" and he carries on what he would say to that class of graduating fund manager, "for their psychological well being they should probably leave the room". Buffet made notable mention how the individual retail investor can simply do better than the actively managed fund by simply investing in a low cost index ETF. Oh boy did I laugh when I saw a NZ TV commercial on how active fund managers are so good and in their interpretation, better than the passive fund managers.

Why is it in NZ, the trend has always been handling one's investment through investment managers while in N. America, the trend is huge shifts from the actively managed, to a passive approach into low cost ETF index funds like Vanguard's VOO ?

[Swala]

I think the longer term plan in NZ is for Kiwi Saver to become compulsory as it is in many countries. In addition, the percentages contributed by employers and employees will probably increase and it will eventually become the main retirement fund for most people. I lived for many years in Singapore and Malaysia. Both countries have had similar schemes for over 30 years. They are really well run and actively managed by government departments.

I think some NZ Kiwi Saver suppliers adopt a passive or semi passive approach. I am in Simplicity who use Vanguard funds, are non profit and have very low fees. I have been very impressed with them so far.

[SBQ]

I think the longer term plan in NZ is for Kiwi Saver to become compulsory as it is in many countries. In addition, the percentages contributed by employers and employees will probably increase and it will eventually become the main retirement fund for most people. I lived for many years in Singapore and Malaysia. Both countries have had similar schemes for over 30 years. They are really well run and actively managed by government departments.

I think some NZ Kiwi Saver suppliers adopt a passive or semi passive approach. I am in Simplicity who use Vanguard funds, are non profit and have very low fees. I have been very impressed with them so far.

Michael Cullen tried to make Kiwi Saver compulsory and i'm glad he failed. You mentioned in Singaporean and Malaysian pension schemes but the key distinction is they are gov't managed entirely (much like Canada's CPP system). The KS we have in NZ is nothing like that as individuals CHOOSE who will invest their funds. A compulsory scheme in this sense would be very bad because as in my previous post, it only benefits 1) the managed funds & 2) IRD. It's not a pension scheme that gives a real incentive for investing; well when compared to overseas ie 401K plans.

There are plenty of KS funds that operate passively by buying the index ETF. However, there's a big problem. Their management fees do not correlate to say buying the Vanguard S&P500 VOO that has a 0.03% per year fee vs some of the NZ passive funds that charge 0.5 - 1% for essentially doing nothing as they buy VOO. Who is creaming more fees, Vanguard or the KS fund?

Another thing that is not mentioned is the issue that NZ does not have a formal CGT. A savvy investor could invest up to $50,000 in total to their overseas index ETF like VOO and pay no CGT on the gains and let that amount compound until retirement. When you compare how many years it would take a person on say $50K a year income, contributing $3,000 a year under a KS scheme, that's a good 15 years before you reach that capital threshold limit where FIF kicks in. But I can assure you the KS route will not have a higher cumulative balance than if the individual were to invest directly (as the KS funds have taxation to address, less their mgt fees they charge).

[Valuegrowth]

If I am correct Simplicity doesn't have 100% cash fund for Kiwi Saver. I am particularly interested in preserving capital rather than capital gain. I do have a 100% cash fund but I found 40% of my kiwi saver has deposited in one bank. I am looking for 100% cash fund where there is a good number of diversification. I found Milford 100% cash fund as ideal place to transfer my kiwi saver. Do you have any experience with their fund management? At this juncture I am not interested in growth or balance funds. Thanks .

[SBQ]

If I am correct Simplicity doesn't have 100% cash fund for Kiwi Saver. I am particularly interested in preserving capital rather than capital gain. I do have a 100% cash fund but I found 40% of my kiwi saver has deposited in one bank. I am looking for 100% cash fund where there is a good number of diversification. I found Milford 100% cash fund as ideal place to transfer my kiwi saver. Do you have any experience with their fund management? At this juncture I am not interested in growth or balance funds. Thanks .

The problem with such a high cash investment (and assuming we are talking about fixed income assets such as bank term deposits, gov't bonds, corporate bonds aka junk bonds, income streams from other fixed term deposits such as in real estate, etc.) is you will not get diversification. While a higher proportion of investment into fixed income assets is considered less risky, it does not mean you will not lose. For eg. a high degree of this asset class (using cash) is invested in assets called 'debentures' and the terminology I see in NZ by various brokers selling these products do come up with some interesting terminology. Such as '1st ranking or 2nd ranking secured debenture' which is an oxymoron in that phrase. I recall some years ago when Hanover Finance had collapsed and yes, the vast majority of the investors lost out or some were able to retrieve maybe 50% of their initial investment. So while you may believe that such "cash funds" are diversified, they are far from that in reality.

I am not trying to change your mind, but regardless of what you choose to invest in, there will always be some level of risk. One thing that is certain though, as Warren Buffet has spoken about is the time frame of risk is reduced, for the longer you hold the investment in equities. He boasts at a time when Berkshire purchased Coca Cola over 30 years ago, at a time when people thought he paid too much for it. We've see the stock market crash in March 2020, and various other crashes in the past. Yet the share price of KO continues to rise. So what he's saying is the compounded growth of the stock has grown so much that future stock market crashes will not go below to what you've paid for, as the longer you hold it. The DOW Jones was around 3,000 in 1990, 10,000 in 2000, roughly around 10,000 in 2010, and today it's around 35,000. Meanwhile, the return on gov't bonds has relatively been flat over the multi-decades and don't forget the inflation factor. We have people that still want bank term deposits that pay around 2.6% pa while NZ inflation has been over 3.6%. After you minus the RWT off interest income, your cash is really at a loss.

[Norwest]

Those are exactly the people that Kiwisaver is designed for. Probably the vast majority of the population.

Yep, I totally agree. I put my minimum into my Kiwisaver each year to get the Government credits and not a cent more, but for a percentage of the population if they didn't have Kiwisaver they would just spend it on consumer goods instead.



If I am correct Simplicity doesn't have 100% cash fund for Kiwi Saver. I am particularly interested in preserving capital rather than capital gain. I do have a 100% cash fund but I found 40% of my kiwi saver has deposited in one bank. I am looking for 100% cash fund where there is a good number of diversification.
Valuegrowth I am betting that 40% allocation was with one of the big four Aussie banks, if thats the case I wouldn't worry about that at all. There are Kiwibonds available (and the interest rate has gone up recently) if you are really concerned about return of capital.


The problem with such a high cash investment (and assuming we are talking about fixed income assets such as bank term deposits, gov't bonds, corporate bonds aka junk bonds, income streams from other fixed term deposits such as in real estate, etc.) is you will not get diversification. While a higher proportion of investment into fixed income assets is considered less risky, it does not mean you will not lose. For eg. a high degree of this asset class (using cash) is invested in assets called 'debentures' and the terminology I see in NZ by various brokers selling these products do come up with some interesting terminology. Such as '1st ranking or 2nd ranking secured debenture' which is an oxymoron in that phrase. I recall some years ago when Hanover Finance had collapsed and yes, the vast majority of the investors lost out or some were able to retrieve maybe 50% of their initial investment. So while you may believe that such "cash funds" are diversified, they are far from that in reality.
This is exactly the same terminology used for Term Funds by the big four banks, whilst they are lower down the risk chain of creditors, its still one of the safest places in the world to park your money. To compare between the big four and Hanover finance is ludicrous. The Australian government won't let one of them fail and they are very well capitalized in any case. If your Kiwisaver investments were loading up 40% fixed cash into a Tier 3 equivilant like Hanover I would be very worried.

[SBQ]

Yep, I totally agree. I put my minimum into my Kiwisaver each year to get the Government credits and not a cent more, but for a percentage of the population if they didn't have Kiwisaver they would just spend it on consumer goods instead.

Valuegrowth I am betting that 40% allocation was with one of the big four Aussie banks, if thats the case I wouldn't worry about that at all. There are Kiwibonds available (and the interest rate has gone up recently) if you are really concerned about return of capital.


This is exactly the same terminology used for Term Funds by the big four banks, whilst they are lower down the risk chain of creditors, its still one of the safest places in the world to park your money. To compare between the big four and Hanover finance is ludicrous. The Australian government won't let one of them fail and they are very well capitalized in any case. If your Kiwisaver investments were loading up 40% fixed cash into a Tier 3 equivilant like Hanover I would be very worried.

While I agree in terms of safety, most banks are in a world of difference in credit risk when compared to Hanover. However, I will not go as far to say the 'big four' banks, and i'm assuming they're Australian ones, are in the same category of risk as the big financial banking players in the US. In fact, the problem with these 'debentures' is just that - NZ has NO depository insurance on cash holdings PERIOD. Hop over too Canada, banks there have CDIC and in the US, they have FDIC. US brokers even have more investment protection through SPIC. So before financial advisors in NZ continue to spew how 'safe' investments are with NZ banks, when compared to the US and Canadian banks, they are only telling half of the story. (fyi, the indication of credit worthiness also depends on the bank insuring client cash deposits).

This kind of thinking reminds me of the discrepancies in the Japanese bond markets where investors within Japan are illusioned to the credit risks when foreign investors view Japan at an entirety different credit risk. In NZ, I would say a lot of that has to do with regulatory and tax policies creating a negative bias against overseas investments vs NZ/Aus ones.

In my years of studying finance in Canada, this is what uni classes taught us on the definition of a 'debenture':

https://www.investopedia.com/terms/d/debenture.asp

"A debenture is a type of bond or other debt instrument that is unsecured by collateral (https://www.investopedia.com/terms/c/collateral.asp). Since debentures have no collateral backing, they must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds."

But what we have in NZ, I see confusing terms in bond prospectuses - "Secured First Ranking Debenture". And keeping with this Kiwi Saver thread, how secured are we really talking here on the fix term investment portion of the KS pool? (ie going from aggressive growth to conservative?) To me, a world class low risk bond would be the US Treasury Bills. Another would be any large US bank which would be > than any NZ/Aus bank.

[Panda-NZ-]

Deposit garuntee of $100k to be introducted soon.

https://www.stuff.co.nz/business/124917223/what-the-planned-bank-deposit-guarantee-scheme-means-for-you

[Valuegrowth]

Thank you all for giving me some great ideas on Kiwi saver. I am looking forward to a fullback, correction or bear market in global markets to transfer my cash fund to balance fund, dividend fund or growth fund. I think in that way I can preserve my capital in some extend. Probably we may see bear market in 2022. Many predicted bear market from 2020 but still they couldn't stop the longest bull market.

[kiora]

""Given that time horizon, we’ve built a growth-oriented portfolio that will generate strong returns over the long term and performs strongly in periods of market expansion," says Whineray."
But why then does it have 16% ($7 b ?)in bonds?
What is that achieving?
Likely to have missed out on $2.1 b if had been invested in the same mix as the rest of its funds that likely returned over 30%
https://www.goodreturns.co.nz/article/976519268/big-returns-for-nz-super-fund.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+14+Sep+ 2021

[SBQ]

""Given that time horizon, we’ve built a growth-oriented portfolio that will generate strong returns over the long term and performs strongly in periods of market expansion," says Whineray."
But why then does it have 16% ($7 b ?)in bonds?
What is that achieving?
Likely to have missed out on $2.1 b if had been invested in the same mix as the rest of its funds that likely returned over 30%
https://www.goodreturns.co.nz/article/976519268/big-returns-for-nz-super-fund.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+14+Sep+ 2021

Gov't pension funds (and i'm speaking nation wide, long running, funds) must operate within careful boundaries. I am actually surprised they have a 16% bond holding allocation. There is no need to question that.

Perhaps the most significant benefit in question is how well the NZ Super fund has done compared to all the other Kiwi Saver funds have done? After all both are trying to achieve the same goal and it annoys me how the gov't seriously screwed this up by having Michael Cullen serve Kiwi Saver to the masses when the same objective can be easily achieved at the NZ Superannuation Fund level. As mentioned before, IRD is the primary beneficiary of having Kiwi Saver. Second would be the fund managers, and finally 3rd would be the investors. The NZ Superannuation Fund does not discriminate on who receives the pension at retirement. There are no transaction costs associated from having individuals wanting to change from 'conservative' to 'aggressive' allocation, and certainly there is no IRD or tax paperwork involved.

[Panda-NZ-]

All of the tax goes to themselves. No brainer to be investing heavily in the super fund.

[Bjauck]

All of the tax goes to themselves. No brainer to be investing heavily in the super fund. The government does get a nice amount of tax from The Super Fund ($2.3 Billion last year) and from Kiwisaver accounts too of course.

Just 4% of its assets are in NZ equities. I wonder, is that the lowest percentage of any nation's sovereign fund invested in its own country's equities? All while so many successful NZ companies end up relocating to Australia to access funding....

It seems the Superfund invests more into NZ land if I understand the breakdown correctly!

https://www.nzsuperfund.nz/news-and-media/nz-super-fund-posts-best-ever-annual-return/
https://www.stuff.co.nz/business/126380224/nz-super-fund-posts-record-return-but-warns-of-challenges-ahead

[SBQ]

The government does get a nice amount of tax from The Super Fund ($2.3 Billion last year) and from Kiwisaver accounts too of course.

Just 4% of its assets are in NZ equities. I wonder, is that the lowest percentage of any nation's sovereign fund invested in its own country's equities? All while so many successful NZ companies end up relocating to Australia to access funding....

It seems the Superfund invests more into NZ land if I understand the breakdown correctly!

https://www.nzsuperfund.nz/news-and-media/nz-super-fund-posts-best-ever-annual-return/
https://www.stuff.co.nz/business/126380224/nz-super-fund-posts-record-return-but-warns-of-challenges-ahead

Don't leave out the most important aspect of the Superannuation Fund in the previous linked article:

"its funding model means that over time Government contributions tend to offset tax paid. Government contributions to the fund over 20201/21 were $2.1 billion with the total tax paid by the fund in the 2020/21 year was $2.3 billion."

So essentially the Superannuation Fund operates on a tax free basis. On the other hand with Kiwi Saver, unlike individuals over in N. America, there is no tax credit to the person in NZ contributing to Kiwi Saver. I will go to say both funds are not even comparable.

Capital flows all over the world and NZ should NOT be the only place to consider for any investor. Particularly those KS funds and NZ brokers that are promoting investment in NZ equities. The historic performance of the NZ Superannuation fund is proof that investments in US growth equities does far better than keeping your $ in NZ. Yet in industry, NZ financial advisors and brokers tend to have a different point of view. After all, they get nothing out of it when clients choose to buy US stocks or ETFs.

[Panda-NZ-]

If our stock market was as mediocre as the ASX (0% gain since 2007 vs 400% for NZX) I'd agree.

In a perfect world there would be no local bias. It will bring new currency into the country when the gains are realised.

[Bjauck]

Don't leave out the most important aspect of the Superannuation Fund in the previous linked article:

"its funding model means that over time Government contributions tend to offset tax paid. Government contributions to the fund over 20201/21 were $2.1 billion with the total tax paid by the fund in the 2020/21 year was $2.3 billion."

So essentially the Superannuation Fund operates on a tax free basis. On the other hand with Kiwi Saver, unlike individuals over in N. America, there is no tax credit to the person in NZ contributing to Kiwi Saver. I will go to say both funds are not even comparable.

Capital flows all over the world and NZ should NOT be the only place to consider for any investor. Particularly those KS funds and NZ brokers that are promoting investment in NZ equities. The historic performance of the NZ Superannuation fund is proof that investments in US growth equities does far better than keeping your $ in NZ. Yet in industry, NZ financial advisors and brokers tend to have a different point of view. After all, they get nothing out of it when clients choose to buy US stocks or ETFs. I am not sure if I would call the superfund operating a tax-free basis. The original capital came from tax receipts, its income is taxed again and subsequent capital contributions come from tax receipts too.

I agree that NZ should not be the only place to consider for investments. I think NZ should figure more highly than it does for a NZ pension fund. However the small allocation to NZ shares just reflects the share market's relative position for investment in NZ

[epower]

Wife and I are mid 30s and both in KiwiSaver.

Have own home, a rental property, around 150k combined in KiwiSaver and 20k in a managed index fund.

So all up 170k in index funds across 3x accounts. They are all invested into Superlife TWF total world fund with from memory 8000+ companies invested in.

In lieu of the previous comments is there any reason to invest some of this into NZX50 indexes instead?

[Fuzzy Dunlop]

If our stock market was as mediocre as the ASX (0% gain since 2007 vs 400% for NZX) I'd agree.

In a perfect world there would be no local bias. It will bring new currency into the country when the gains are realised.


I'm not sure it is as clear cut as that. The NZX50 has ostensibly outperformed the ASX200 by far on a price basis, but then the former presupposes the reinvestment of dividends, while the latter does not (like most major indices). The total return on the ASX200 has trailed the NZX50 by two to three pre cent per annum on a five and ten year basis (I'm not sure about since 2007 in particular) - which is still a notable difference on a compound basis.

[kiora]

Food for thought

"Barry isn't your typical retiree. As a self-described "natural risk-taker", Barry has repeatedly put it all on the line to survive and thrive in the face of the challenges life has thrown at him and, most of the time, he has reaped the rewards. "
https://www.livewiremarkets.com/wires/meet-barry-the-retiree-who-isn-t-afraid-to-take-a-risk

[SBQ]

Food for thought

"Barry isn't your typical retiree. As a self-described "natural risk-taker", Barry has repeatedly put it all on the line to survive and thrive in the face of the challenges life has thrown at him and, most of the time, he has reaped the rewards. "
https://www.livewiremarkets.com/wires/meet-barry-the-retiree-who-isn-t-afraid-to-take-a-risk

Yes it's stories like these that say if you want to get rich, you got to take risks. He also describes he never borrows $ to buy shares. To me I find this a loss opportunity as the window of opportunity (ie peak of the share market crash) can only last 1 or 2 days. If your brokerage account does not allow you the ability to margin trade, then quite simply you are going to miss out on real investment gains. On countless times i've done margin to purchase at times of peak crisis - and to fund the account with cash in the following week or month (which takes the account out of margin).

Barry is also correct that the investment industry is never going to look out in best interest for the client. Regulations is not about that. Regulations is about so there's no fraud but has no regard in terms sub-optimal or exceptional performance. Here in NZ Kiwi Saver is not going to get you the latter. Just recently I noticed on talk radio these ads by Kiwi Saver funds ANZ and Fisher Funds etc. misconstruing the public about the investing. The ANZ example was how a 'passive fund' does worse than an 'actively managed fund'. This is such a crock of s**t how actively managed funds can make such claims. Warren Buffet has spoken well about this for decades and no one has proven him wrong:

https://youtu.be/FDxfyX_ESuE

https://youtu.be/xp9KUCel778

If people understood what Buffet is saying, then they would not be in investment schemes like Kiwi Saver. That's because KS has frictional costs and taxation. Your employer matches 3% but that 3% is negated by high fund mgt fees, in addition RWT and hidden FIF if those funds invest offshore. And no fund manager is going to advise a client to buy the Vanguard S&P500 ETF because that's not how they make their money. Active management means they get paid so they can try to time the markets, time what stocks to buy, or as Buffet calls them the "Hyperactives".

So it's certainly clear in that article, Barry has realised you can't fully leave all your funds under some form of active management.

[Panda-NZ-]

Also there's the currency part. In a crisis the dollar goes down protecting you from losses when in a currency unhedged fund.

[Panda-NZ-]

NZX is a good alternative to the S&P500.

During boom: S&P500, unhedged and no margin.

Afterwards switch to the NZX and call asb/booster.
https://fundfinder.sorted.org.nz/fund/booster-kiwisaver-scheme---geared-growth-fund-booster-financial-services/

[kiora]

I back the aggressive fund any day
https://milfordasset.com/funds-performance/view-performance
Returns to 31/10/2021 (After fees)

1 Month 3 Months 6 Months 1 Year 3 Year (p.a.) 5 Year (p.a.) Inception (p.a.) View Chart
KiwiSaver Cash Fund 0.04% 0.13% 0.22% 0.42% - - 0.40%
KiwiSaver Conservative Fund -1.27% -1.02% -0.15% 2.89% 5.27% 5.55% 7.98%
KiwiSaver Moderate Fund -0.49% 0.13% 1.89% 8.84% - - 12.29%
KiwiSaver Balanced Fund 0.48% 1.78% 4.53% 16.40% 11.71% 10.53% 10.43%
KiwiSaver Active Growth Fund 0.80% 2.56% 5.86% 23.80% 14.28% 12.78% 13.03%
KiwiSaver Aggressive Fund 2.62% 1.98% 7.48% 26.30% - - 18.76%

[SBQ]

I back the aggressive fund any day
https://milfordasset.com/funds-performance/view-performance
Returns to 31/10/2021 (After fees)

1 Month 3 Months 6 Months 1 Year 3 Year (p.a.) 5 Year (p.a.) Inception (p.a.) View Chart
KiwiSaver Cash Fund 0.04% 0.13% 0.22% 0.42% - - 0.40%
KiwiSaver Conservative Fund -1.27% -1.02% -0.15% 2.89% 5.27% 5.55% 7.98%
KiwiSaver Moderate Fund -0.49% 0.13% 1.89% 8.84% - - 12.29%
KiwiSaver Balanced Fund 0.48% 1.78% 4.53% 16.40% 11.71% 10.53% 10.43%
KiwiSaver Active Growth Fund 0.80% 2.56% 5.86% 23.80% 14.28% 12.78% 13.03%
KiwiSaver Aggressive Fund 2.62% 1.98% 7.48% 26.30% - - 18.76%

But not after taxes at the individual level (RWT). When you minus what's really going on, the end results won't be so spectacular over a long term multi-decade outcome.

The robbing of compound returns are significant as described by Buffet and Jack Bogle.

[Panda-NZ-]

Capitals gains are completely exempt aren't they, unlike in nearly all other countries:

https://www.booster.co.nz/media/970721/geared-growth-fund-factsheet-sept-2021-booster-kiwisaver-scheme.pdf

The returns don't seem much different with changing PIRs

[kiora]

But not after taxes at the individual level (RWT). When you minus what's really going on, the end results won't be so spectacular over a long term multi-decade outcome.

The robbing of compound returns are significant as described by Buffet and Jack Bogle.

Maybe some have missed the point I was trying to make.
The point is not about being investing in K/S or another investment
Rather which K/S fund to be in once they had decided to invest in K/S

I understand it is difficult to compare retirement savings country by country as ours are taxed before deposited in K/S & along the way?
Compared to a lot of other countries it is taxed when withdrawn with a massive liability at the end

[SBQ]

Capitals gains are completely exempt aren't they, unlike in nearly all other countries:

https://www.booster.co.nz/media/970721/geared-growth-fund-factsheet-sept-2021-booster-kiwisaver-scheme.pdf

The returns don't seem much different with changing PIRs

Have you heard of FIF? For someone quite active in this forum, i'm surprised you've not studied the impact what FIF has when any individual or KS fund chooses to buy a foreign share or ETF such as the Vanguard ETF, or Berkshire Hathaway, or even AAPL. The only exemption you are thinking of is buying NZ based equities (or those that may trade on the ASX that qualify to be exempted from FIF). But at the end of the day, it's not very wise to hold all the investments in just NZ companies.

FIF is max 5% if you choose the FDR method. This is significant because if a managed fund does not beat 5% per year, then it doesn't leave much in terms of returns for their clients. On years with spectacular returns says 15%, that extra 10% gain is captured under FIF in the following year (as it is reflected on the portfolio balance).

I've worked through the math when compared to other countries like US or Canada where matching employer contribution schemes like KS, they go with 'deferred' taxation. Everything is grown tax free until at time of retirement, where the person chooses how much they want to withdraw so they pay tax on only what they want out, vs in NZ, if you want to contribute more to KS, then it's only those on the high income tax bracket that can (and IRD rubs it's hands all the way - which is why PIE funds came about).

@kiora:

Well without a doubt, it's been proven the one that chooses the more aggressive allocation will have more returns at the end on a long term investment plan. Warren Buffet himself tells others the same. 'Don't let managed funds choose your allocation between equities vs bonds or fixed term assets... you should be invested FULLY in equities regardless if you are looking to invest for multi-decade investment plan. Having a % that say KS shows is invested in fixed term assets is basically saying the investors don't have a clue to keep some of their cash holdings in a bank account.

[TeslaGod]

Kiwi saver is a joke/

A bad year for me is 15%pa/

I aim for 20 to 30% return on equities

I'm excluding the massive gains the past 2 year's due to the Fed expanding the money supply 40%.

Kiwisaver hedge too much with bonds/there also using covered calls to bet against there own buys

It's stupid/that's why kiwisaver gets an average return of 8/9%

Hedge funds only work if you have 1m+ /the Portfolio manager is basically protecting the rich and there wealth while everyone else is getting SreweD on returns.

[BIRMANBOY]

Kiwi Saver was set up to be a pension fund for all Kiwi workers...its premise is to encourage and assist people in saving for retirement. As such it would be a "bad look" if the investment profile allowed for anything other than stable and relatively conservative investment decisions. Your returns of 20-30% are impossible unless there is extensive risk involved and pension schemes achieving those sorts of returns are not going to be able to deliver at that level year after year..if ever. So I'm not sure what relevence your comments have. Retirement funds look for steady year on year growth not yo=yo investing. A good year is embraced of course but a bad year and the bad publicity that goes with it will kill the whole premise behind retirement investments and KS would become a laughing stock. Investing with 20-30% returns is not investing its gambling and governments dont take kindly to that sort of behaviour. Hopefully you are not working in the retirement industry...if so please let us know so we can avoid your fund:ohmy:
Kiwi saver is a joke/

A bad year for me is 15%pa/

I aim for 20 to 30% return on equities

I'm excluding the massive gains the past 2 year's due to the Fed expanding the money supply 40%.

Kiwisaver hedge too much with bonds/there also using covered calls to bet against there own buys

It's stupid/that's why kiwisaver gets an average return of 8/9%

Hedge funds only work if you have 1m+ /the Portfolio manager is basically protecting the rich and there wealth while everyone else is getting SreweD on returns.

[TeslaGod]

Kiwi Saver was set up to be a pension fund for all Kiwi workers...its premise is to encourage and assist people in saving for retirement. As such it would be a "bad look" if the investment profile allowed for anything other than stable and relatively conservative investment decisions. Your returns of 20-30% are impossible unless there is extensive risk involved and pension schemes achieving those sorts of returns are not going to be able to deliver at that level year after year..if ever. So I'm not sure what relevence your comments have. Retirement funds look for steady year on year growth not yo=yo investing. A good year is embraced of course but a bad year and the bad publicity that goes with it will kill the whole premise behind retirement investments and KS would become a laughing stock. Investing with 20-30% returns is not investing its gambling and governments dont take kindly to that sort of behaviour. Hopefully you are not working in the retirement industry...if so please let us know so we can avoid your fund:ohmy:

No

I do not "YOLO" invest

I definitely don't use hedge funds but I do use index funds to hold as cash reserves rather than bond's or cash/

20 to 30% is very achievable/I can also guarantee the fund managers invest exactly the same way as me on there own personal portfolio.

With there commission.

It's just a matter of understanding true compounding growth/understanding your companies/staying away from dividends/bond's and cash.

Using margin the way it's meant to be used safely and responsibly to accelerate your return.

The problem with media in New Zealand is they promote the share market as being risky.

Like NZ real estate if you plan your strategy on risk and reward /it's not risky at all .

If you set it and forget it then you probably deserve to blow your account up.

You grow old getting rich slowly/I retired at 36.

[BIRMANBOY]

Your super-human investment capacity is something to be admired:p...I'm surprised your talents have not been suitably rewarded with the recognition your ego is obviously so desperate to receive lol. Headhunters must be lining up in droves to lure you away to Switzerland in private jets where you will presumably establish your own fund and be adored by all and sundry. :t_up:
No

I do not "YOLO" invest

I definitely don't use hedge funds but I do use index funds to hold as cash reserves rather than bond's or cash/

20 to 30% is very achievable/I can also guarantee the fund managers invest exactly the same way as me on there own personal portfolio.

With there commission.

It's just a matter of understanding true compounding growth/understanding your companies/staying away from dividends/bond's and cash.

Using margin the way it's meant to be used safely and responsibly to accelerate your return.

The problem with media in New Zealand is they promote the share market as being risky.

Like NZ real estate if you plan your strategy on risk and reward /it's not risky at all .

If you set it and forget it then you probably deserve to blow your account up.

You grow old getting rich slowly/I retired at 36.

[TeslaGod]

Your super-human investment capacity is something to be admired:p...I'm surprised your talents have not been suitably rewarded with the recognition your ego is obviously so desperate to receive lol. Headhunters must be lining up in droves to lure you away to Switzerland in private jets where you will presumably establish your own fund and be adored by all and sundry. :t_up:

It's why I'm in the position I am/I don't follow the sheep.

Good luck with your divies mate.

Don't forget to pay tax on your 5% return.

[SBQ]

It's why I'm in the position I am/I don't follow the sheep.

Good luck with your divies mate.

Don't forget to pay tax on your 5% return.

I'm afraid to say Mr TeslaGod but both you and I have have something in common. We both hate KiwiSaver.

@BIRMANBOY:

Returns of +20% or 30% in a year is very achievable in an investment retirement fund. What matters is the CUMULATIVE averages of returns and if you looked at what Buffet was ranting about, over a 10 year period, these 'active' managed funds can not beat the market index return. There is simply no way a KS fund, net of taxation (ALL taxation), less of mgt fees etc, can beat a low cost index ETF. KS has done so little for the working class and it will not make them rich at retirement. This is VERY different to the retirement funds in Canada that aim to give tax breaks to the working class, while penalising the rich who over contribute into their pension funds. For eg. Canada has RESP which is an education fund that you start upon the birth of your baby and all the gains grow 100% tax free and after highschool, the disbursements withdrawn are 100% tax free as it pays for tuitions, books, cost of living, etc. Then there's the disability fund RDSP where families who have children with disabilities, can invest in the plan and again, grows 100% tax free. When the child is an adult, the withdrawals can be 100% tax free. Get the picture? In NZ any savings towards retirement makes no distinction between the rich or the poor.

As a matter of discussion on 30% returns in a year. I'm already near +30% return by closing my position in Visa back in Sept and buying ALB at end of Sept. I made a significant stake in ALB representing over 60% of the portfolio in this stock. All the nay sayers and financial advisors screaming that we are at record highs for the past year - never had a game plan like I did. Giving your money in a KS plan where the active fund manager tries to give you better returns is a farce. The minimum they should be doing is on a weekly basis, disclosing their "game plan" to their investors and an ongoing constant review of their past actions if it worked or not. After all if you depend on your hard working money for some guy in KS... there should be more transparency. But that's not how the FMA set things up in NZ. Those that don't take an active role in their own investments deserve to lose most of it in a bad year.

[justakiwi]

.................................................. ..




I'm afraid to say Mr TeslaGod but both you and I have have something in common. We both hate KiwiSaver.

@BIRMANBOY:

Returns of +20% or 30% in a year is very achievable in an investment retirement fund. What matters is the CUMULATIVE averages of returns and if you looked at what Buffet was ranting about, over a 10 year period, these 'active' managed funds can not beat the market index return. There is simply no way a KS fund, net of taxation (ALL taxation), less of mgt fees etc, can beat a low cost index ETF. KS has done so little for the working class and it will not make them rich at retirement. This is VERY different to the retirement funds in Canada that aim to give tax breaks to the working class, while penalising the rich who over contribute into their pension funds. For eg. Canada has RESP which is an education fund that you start upon the birth of your baby and all the gains grow 100% tax free and after highschool, the disbursements withdrawn are 100% tax free as it pays for tuitions, books, cost of living, etc. Then there's the disability fund RDSP where families who have children with disabilities, can invest in the plan and again, grows 100% tax free. When the child is an adult, the withdrawals can be 100% tax free. Get the picture? In NZ any savings towards retirement makes no distinction between the rich or the poor.

As a matter of discussion on 30% returns in a year. I'm already near +30% return by closing my position in Visa back in Sept and buying ALB at end of Sept. I made a significant stake in ALB representing over 60% of the portfolio in this stock. All the nay sayers and financial advisors screaming that we are at record highs for the past year - never had a game plan like I did. Giving your money in a KS plan where the active fund manager tries to give you better returns is a farce. The minimum they should be doing is on a weekly basis, disclosing their "game plan" to their investors and an ongoing constant review of their past actions if it worked or not. After all if you depend on your hard working money for some guy in KS... there should be more transparency. But that's not how the FMA set things up in NZ. Those that don't take an active role in their own investments deserve to lose most of it in a bad year.

[SBQ]

.................................................. ..

@justakiwi: I'm afraid I must of hit a soft spot? What i'm getting at is the crux of the whole investment system in NZ. The FMA regulations is suppose to make investing in NZ shares on an equal playing field but instead, it's done nothing to education the very customers that put up 100% of the money and is exposed to 100% of the risk. Here's what Jack Bogle had to say:

https://www.youtube.com/watch?v=K4lwJ5aQGlI

and he's only working on an assumed 7% market return but the actively managed fund takes 2%. The difference compounded over multiple decades prove that the investor only gets back 1/3rd of the total returns. Yes and if you think that 2% is a killer, consider how IRD's FIF using the FDR method creams 5% off on the paper gain TOTAL on a portfolio that invests in US shares (assuming the paper gains in a year exceed 5%). Then that 5% of 'taxable income' goes all the way back to the investor and is taxed at RWT rates. Remember, this is excluding active management fees so when you add it all up, you're not getting much in return at the end.

Is it not a surprise to those that were able to save and borrow mortgage on more houses were the ones that really won in NZ? How could you miss when you hold a house for more than 10 years, and all it's capital gains are 100% tax free, and the bank is rubbing it's hands too with ultra low interest rates (leverage). It does seem that Kiwi Saver was nothing but leftover crumbs for the working class of NZ.

[BIRMANBOY]

What? You havent left yet...still trying to remake the NZ financial systems into the "SBQ" model? Pointless exercise of course but must be frustrating for you to know that you have all the answers and everybody here is too stupid to listen to you. I feel for you but remember Canada has so much more to offer and would probably, no actually, would certainly appreciate your intellectual acumen if you made the move. I would even be happy to start a "give a little" fund to help out with all the expenses.
@justakiwi: I'm afraid I must of hit a soft spot? What i'm getting at is the crux of the whole investment system in NZ. The FMA regulations is suppose to make investing in NZ shares on an equal playing field but instead, it's done nothing to education the very customers that put up 100% of the money and is exposed to 100% of the risk. Here's what Jack Bogle had to say:

https://www.youtube.com/watch?v=K4lwJ5aQGlI

and he's only working on an assumed 7% market return but the actively managed fund takes 2%. The difference compounded over multiple decades prove that the investor only gets back 1/3rd of the total returns. Yes and if you think that 2% is a killer, consider how IRD's FIF using the FDR method creams 5% off on the paper gain TOTAL on a portfolio that invests in US shares (assuming the paper gains in a year exceed 5%). Then that 5% of 'taxable income' goes all the way back to the investor and is taxed at RWT rates. Remember, this is excluding active management fees so when you add it all up, you're not getting much in return at the end.

Is it not a surprise to those that were able to save and borrow mortgage on more houses were the ones that really won in NZ? How could you miss when you hold a house for more than 10 years, and all it's capital gains are 100% tax free, and the bank is rubbing it's hands too with ultra low interest rates (leverage). It does seem that Kiwi Saver was nothing but leftover crumbs for the working class of NZ.

[FTG]

What? You havent left yet...still trying to remake the NZ financial systems into the "SBQ" model? Pointless exercise of course but must be frustrating for you to know that you have all the answers and everybody here is too stupid to listen to you. I feel for you but remember Canada has so much more to offer and would probably, no actually, would certainly appreciate your intellectual acumen if you made the move. I would even be happy to start a "give a little" fund to help out with all the expenses.

...perhaps it would be a win-win for both countries, with the IQ of both increasing once SBQ returns to Canada?:cool:

(Sorry SBQ, possibly a bit mean of me. But with you confirming that you are worth 8 figures, I have total confidence that you are resilient & willing enough to take a much needed ribbing now & again.)

[Bjauck]

...perhaps it would be a win-win for both countries, with the IQ of both increasing once SBQ returns to Canada?:cool:
...
A throwback to the Rob Muldoon style, although Muldoon used it in relation to Australia.

The unique regressive NZ tax system certainly encourages over-investment into capital gains producing residential real estate and a poorly-diversified investment portfolio generally. And, Hey presto we have the price of an average home over a million dollars now.

[SBQ]

A throwback to the Rob Muldoon style, although Muldoon used it in relation to Australia.

The unique regressive NZ tax system certainly encourages over-investment into capital gains producing residential real estate and a poorly-diversified investment portfolio generally. And, Hey presto we have the price of an average home over a million dollars now.

and when people like myself, who are a bit more vocal, try to point this problem out here in NZ, the appropriate response is (well maybe NZ is not your place and you should go back to where you came from). ;)


...perhaps it would be a win-win for both countries, with the IQ of both increasing once SBQ returns to Canada?:cool:

(Sorry SBQ, possibly a bit mean of me. But with you confirming that you are worth 8 figures, I have total confidence that you are resilient & willing enough to take a much needed ribbing now & again.)

Again, the typical arrogance I see in NZ fashion. Would you of preferred, my wealth to be achieved through owning NZ houses (like TeslaGod and any rich person in NZ has done so?). I've made an ethical stance that $ invested into businesses is far more productive than owning more houses. NZ's situation is just that - can't change the stripes off a zebra and call it a horse.

@BIRMANBOY:

You know leave it to NZ trying to reinvent the wheel. The financial systems I speak of abroad are nothing unique. Canada's RRSP was introduced in 1957. America's 401K plan was introduced in 1978. Is it a wonder NZ did not have all that time to have a look how these retirement schemes worked abroad before finalising Kiwi Saver in 2007? Surely there should be some thought about benefiting the 'working class'? This is not the NZ that I was accustomed to know upon first arriving near 25 years ago. A financial system aimed to benefit IRD and the fund managers more than the individual investors.

[BIRMANBOY]

Lets lay the blame for million dollar houses where it should truly be placed. Severe housing shortages. Shortage of housing supply will alway drives house prices up and regardless of whether the commodity is houses, cars, kayaks or Kapiti ice cream, if the demand is there and the supply drops, up the prices go. The new builds havent kept up with a growing population for many years so here we are. And here we shall remain until we get to the point where we have enough qualified builders, plumbers, electricians and building supplies, not to mention fewer obstacles like heavy handed and difficult bureacratic processes. Of course you cannot blame people for investing in a good thing...so the quandry we find ourselves in is that there appears to be a concerted lack of political will to reverse this. Follow the money and we have the middle class and political "silent majority" vested in the status quo. Lets be honest no house owner wants to support policies that will see their major asset drop in price. Consequently we have the panorama of successive governments largely ignoring the issue but voicing sincere concerns lol. However all of this has nothing to do with KS. Nowdays being able to afford a house or a mortgage has mostly only been an option for someone with a very well paid job or funds from mum and dad. That is pushing up all the time so wheras in the 50's and 60's and 70's almost all people in decent employment could manage to become house owners, we have arrived at a very difficult place. High housing prices, rapidly increasing rental accomodation and growing disatisfaction in a growing portion of society. So back to KS...this is filling the gap for those disaffected...with help and contribution from the Govt and employers, the relevence of KS is obvious. AS of August 2021 the number of people enrolled in KS was 3.1 million. The demographic breakdown was 0-17 years old 254,000, 18-24 390,000, 25-34 695,000, 35-44 583,000, 45-54 540,000, 55-64 480,000 and 65 plus 190,000. Now this buy-in is a strong vote of approval for the scheme and it also has the obvious benefits of assisting those unable to participate in the housing market become involved and participating in their retirement at a safe and low risk environment. So is it the BEST investment....for many of those with assets and investing experience, maybe not, but for the majority with neither time, inclination or will its superb.
A throwback to the Rob Muldoon style, although Muldoon used it in relation to Australia.

The unique regressive NZ tax system certainly encourages over-investment into capital gains producing residential real estate and a poorly-diversified investment portfolio generally. And, Hey presto we have the price of an average home over a million dollars now.

[SBQ]

Lets lay the blame for million dollar houses where it should truly be placed. Severe housing shortages. Shortage of housing supply will alway drives house prices up and regardless of whether the commodity is houses, cars, kayaks or Kapiti ice cream, if the demand is there and the supply drops, up the prices go. The new builds havent kept up with a growing population for many years so here we are. And here we shall remain until we get to the point where we have enough qualified builders, plumbers, electricians and building supplies, not to mention fewer obstacles like heavy handed and difficult bureacratic processes. Of course you cannot blame people for investing in a good thing...so the quandry we find ourselves in is that there appears to be a concerted lack of political will to reverse this. Follow the money and we have the middle class and political "silent majority" vested in the status quo. Lets be honest no house owner wants to support policies that will see their major asset drop in price. Consequently we have the panorama of successive governments largely ignoring the issue but voicing sincere concerns lol. However all of this has nothing to do with KS. Nowdays being able to afford a house or a mortgage has mostly only been an option for someone with a very well paid job or funds from mum and dad. That is pushing up all the time so wheras in the 50's and 60's and 70's almost all people in decent employment could manage to become house owners, we have arrived at a very difficult place. High housing prices, rapidly increasing rental accomodation and growing disatisfaction in a growing portion of society. So back to KS...this is filling the gap for those disaffected...with help and contribution from the Govt and employers, the relevence of KS is obvious. AS of August 2021 the number of people enrolled in KS was 3.1 million. The demographic breakdown was 0-17 years old 254,000, 18-24 390,000, 25-34 695,000, 35-44 583,000, 45-54 540,000, 55-64 480,000 and 65 plus 190,000. Now this buy-in is a strong vote of approval for the scheme and it also has the obvious benefits of assisting those unable to participate in the housing market become involved and participating in their retirement at a safe and low risk environment. So is it the BEST investment....for many of those with assets and investing experience, maybe not, but for the majority with neither time, inclination or will its superb.

I beg to differ. While housing shortages contribute to rising prices, I would say it is not the major contributing factor. One just has to look over in America and Canada, Australia, etc and see how much house prices has risen (psst. their rates are no where near as high as NZ). Jacinda Ardern pointed out earlier in the year with her speech: (and I was hopeful at the time)

https://www.youtube.com/watch?v=nToXpVvnGkU

1) by year end of 2020, 40% of ALL houses purchases was made by those who already owned multiple properties. (meaning, there's no way a 1st home buyer can compete. Buyers of houses for the sole purpose of renting out and investing will always pay more)
2) and from June to Nov 2020, the level of mortgage borrowing by these 'property investors' had increased by 116%. (no surprise here with record low mortgage rates, I saw as low as 2% last year)
3) From 1991 to 2019, NZ experienced the HIGHEST real growth of housing prices in the OECD !!! (Yes higher than places like Vancouver Canada and my friends are crying there)
4) Since last year, 15,000 houses were purchased by people who ALREADY owned 5 (FIVE) or more houses !!!

Look at the total wealth of NZ composition mix. The riches in NZ have done it through owning NZ houses or some form of real estate. The riches in N. America, have done it through stock ownership in publicly listed companies. (like your RRSP, 401K plans etc). When 2/3rds of the NZ wealth is tied up in hard assets like real estate, that tells me only one, the prices will go up in unprecedented ways.

Remember - in NZ, not ALL ASSET classes are the same (because taxes distort the investment outcome) so your example of a normal good like ice cream or kayaks is irrelevant. Those who are able to opt out of KS and use those funds in a more efficient manner (like investing directly into shares or index ETF), will do far better if they can meet the minimum deposit LVR for buying a house. The proof is there with Jacinda's speech citing how many houses were bought this past year by those who already owned multiple properties. That my friend is NOT HOW KIWI SAVER was suppose to be marketed as. The reality is KS never had a chance. Owing houses did far better. Even if they made KS as a tax free compounding scheme comparable to 401K plans, it would still not beat the performance of owning houses because in my previous post, a 2% cut out of the 7% annual market return results in only the investor seeing 1/3rd of the profits after 50 years of compound returns. The person that owns a rental house, uses the income streams to pay off rates and maintenance and gets the full tax free benefit of capital gain.

Let me put it in another way. If the top 10% income earners of NZ focus their investments in residential properties, what % is left for KS? The remaining 60% (as bottom 30% are too poor to be in KS)? The demographic figures mean nothing. They need to attach how much of their total earnings is going into the scheme (6% of their annual minimum?). Think about it, how is it the best option for a person making $100K a year that only sees $6,000 going into their KS? In Canada, RRSP contributions can be high as 18% of the person annual income (and those unused limits are carried forward so the working class person will have gobs of incentives to contribute more if they feel ie 3rd week March 2020 was the bottom of the market).

[Aaron]

Is it just me (older white male) or is Kiwi wealth massively overreacting.

https://www.stuff.co.nz/business/industries/128549213/kiwisaver-fund-blacklists-dgl-over-ceos-derogatory-nadia-lim-comments

The comment was that the My Food Bag IPO lacked substance compare to DGLs IPO and he said Nadia Lim in a low cut top was indication of this. He described her as Eurasian fluff (whatever that means)

Kiwiwealth has now blacklisted the company. I know which IPO I would have rather invested in and between the two companies which one I would prefer to be invested in currently.

Admittedly what he said was dumb and unnecessary and possibly hurtful to Nadia who as far as I know has said nothing about this but Kiwi Wealth chief executive Rhiannon McKinnon said it was in the process of adding DGL to its exclusions list in response to Henry’s “derogatory comments”.

I am not sure where Rhiannon has her retirement savings invested but I am not happy she is taking this stance with my savings. It doesn't sound like the actions of a thoughtful investor but a kneejerk reaction, not sure what that says about the rest of her team.

Thoughts on which Kiwisaver to switch to.

I was thinking lowest fees from a larger provider with better systems.

Ironically this is an emotional kneejerk reaction from me so maybe both me and Rhiannon should not be making long term investment decisions.

[Aaron]

Simplicity is also out as managing director Sam Stubbs said it would blacklist DGL until Henry had retracted the comments and “made amends”.

Maybe if there are enough social justice warriors running kiwisaver funds my decision for new fund manager might get easier.

I don't think much of Henry's statements but don't think they are that big a deal. If it was a company run or owned by Ron Brierley then I would definitely be on board.

I wonder if Kiwiwealth and Simplicity invested in MFB.

I guess if Henry had just said that he brought his company to market to invest and grow the business and the people bringing MFB to market were cashing out and in hindsight may have ripped off the idiots who invested in MFB, he might have come off better.

[SBQ]

@Aaron:

I'm not in a Kiwisaver scheme and never will be. But if I was forced to, I would pick the fund that has the absolute LOWEST, PASSIVELY managed fund there is. One that just does nothing but buy Vanguard's S&P500 ETF ticker VOO or VOOG. It sounds like the fund you are in with such a person like Ms Rhiannon, is an ACTIVELY managed fund; if you say how she manages your investment in their portfolio. As Charlie Munger always reiterates, 'there shall be no compensation scheme to pay these fund managers for merely doing the same as everyone else... by choosing an overly diversified portfolio because they're too scared and too lazy to actually learn what companies they want to invest'. A person investing in KS does not need to be invested in 1000s of different companies and asset classes for the sake of 'DiWORSEsification'.

[Aaron]

@Aaron:

I'm not in a Kiwisaver scheme and never will be. But if I was forced to, I would pick the fund that has the absolute LOWEST, PASSIVELY managed fund there is. One that just does nothing but buy Vanguard's S&P500 ETF ticker VOO or VOOG. It sounds like the fund you are in with such a person like Ms Rhiannon, is an ACTIVELY managed fund; if you say how she manages your investment in their portfolio. As Charlie Munger always reiterates, 'there shall be no compensation scheme to pay these fund managers for merely doing the same as everyone else... by choosing an overly diversified portfolio because they're too scared and too lazy to actually learn what companies they want to invest'. A person investing in KS does not need to be invested in 1000s of different companies and asset classes for the sake of 'DiWORSEsification'.

Thanks for that pretty much my way of thinking as well.

I wonder if the advice to sit tight is valid if you are turning 65 in the next year or two and we are like Japan in the 1990s. The actions of the central banks are historically extreme from what I understand and every action has an equal and opposite reaction.

https://www.nzherald.co.nz/business/no-need-to-panic-kiwisaver-investors-told-after-sea-of-red/6EI4WUTJO2LDPY553ERPW7J2HA/

[ynot]

Doesn't effect me but does my kids. I'm interested to know if some of you have jumped into cash in kiwisaver. Markets not looking to hot currently.

[SBQ]

Doesn't effect me but does my kids. I'm interested to know if some of you have jumped into cash in kiwisaver. Markets not looking to hot currently.

Hindsight is 20/20. To sell stock (or equity holding in a Kiwi Saver scheme) would be selling at a markets much lower and the lesson to that can be you may lose out on potential future gains on a market rebound. No one knows where the bottom will be as going into a cash position, you are saying you can buy LATER on at a LOWER price.

The whole idea of Kiwi Saver is to give your money to a KS provider, who is suppose to know how to 'navigate' market volatility and provide long term returns. They charge a fee for the administration of your investments and for their professional advice, they should be the ones making the decision when to buy or sell stocks or when to sit on cash etc. However this is rarely done as majority of managed fund providers do not do better than the index market return. Why do people pay KS administration / mgt fees to these managed funds for doing what the rest of others do? They obviously do no know when to go cash and buy at the lows or when to sell high. The excise 'non-performance' by just taking weekly contributions and buying the an index ETF or a certain stock that is in favour. They certainly are not in the business of timing markets like a hedge fund would do.

Therefore if it's in your decision to decide when to sit on cash and try and time the market, you best to do so OUTSIDE of any KS scheme. You owe the mistake to yourself if you timed when to buy in the worse way or by missing out gains when the market returns violently. I've seen this happen back during the 2008 GFC when many investors thought they could wait it out to buy lower but after a few years, they end up doing worse by buying at prices much higher.

[kiwico]

If we were in Australia our KiwiSaver or equivalent might be this high. This comes courtesy of the weekly Barefoot Investor email.

I was above my age group average but I'm with Juno KiwiSaver, so I'm down 24% from my early September high and now below my age group average. They have a weird way of showing the shortfall through, they instead show what I have gained (or lost in this case) since I joined them almost two years ago. So despite the big gains in 2020 and 2021 I am down despite 14% of my salary going in a month. WOW!

13858

[Bjauck]

Doesn't effect me but does my kids. I'm interested to know if some of you have jumped into cash in kiwisaver. Markets not looking to hot currently. I was in a conservative unit from before Covid but am now in a balanced growth unit. It is worth less than the Kiwico posted Australian male average for my age group (early 50s) though.

According to sharesight my KS has returned 1.5% pa after tax and fees since January 1st 2020….!

[SBQ]

Thanks for that pretty much my way of thinking as well.

I wonder if the advice to sit tight is valid if you are turning 65 in the next year or two and we are like Japan in the 1990s. The actions of the central banks are historically extreme from what I understand and every action has an equal and opposite reaction.

https://www.nzherald.co.nz/business/no-need-to-panic-kiwisaver-investors-told-after-sea-of-red/6EI4WUTJO2LDPY553ERPW7J2HA/

NZHerald does a pay subscription or registration block so can't read the article. But regarding on the effect of central banks, I would say the RBNZ vs the US Fed central bank would be a world of difference in terms of impact on the share markets. When interests rates go up in the US, it's usually the 'growth / tech' stocks that have NO earnings or massive losses that get punish the most. US stocks that are long well established with proven earnings regardless of the interest rate outcomes will weather the storm fairly. To illustrate this, just look at the the DOW Jones index which over 33,000 recently vs the crash of March 2020, it was around 18,000.

I can't really comment much on the Kiwi Savers that are solely invested on the NZX because all that convinces me to not touch any NZ companies is the fact that the NZ investment environment tends to prefer 'dividend payments' to shareholders instead of maintaining profits on the balance sheet which -> increases book value per share -> increase share price (which the capital gains are tax free ; note most NZ companies don't get the full 100% imputed dividend credit!! Guru investor Peter Lynch has said "over the long term there's a 100% correlation for a company's stock price to go up if their earnings continue to be booked in on the balance sheet". But pay those profits out and you will simply deflate the shareholder's equity.

[SBQ]

If we were in Australia our KiwiSaver or equivalent might be this high. This comes courtesy of the weekly Barefoot Investor email.

I was above my age group average but I'm with Juno KiwiSaver, so I'm down 24% from my early September high and now below my age group average. They have a weird way of showing the shortfall through, they instead show what I have gained (or lost in this case) since I joined them almost two years ago. So despite the big gains in 2020 and 2021 I am down despite 14% of my salary going in a month. WOW!

The benchmark metric should be based on the market index return. So again, take the Dow Jones index today and compared to it back in 2020. It is still WAY HIGHER now than it was at the peak of 2020. There should be NO excuse for any fund managers that can't book a massive gain over the past 3 years. If they have managed to lose most of the gains in 2020 and 2021, then they must be invested in highly speculative stocks with no earnings. Many of the tech stocks on the Nasdaq have lost 70% of their value and on average, say 50% for the big common name tech stocks that have no earnings. Look at Roblox for eg that had a peak of $140 earlier in the year to be around $30 these past weeks.

@Bjauck: 1.5% since Jan 2020 to now??? That is a complete fail and your $ would have been better in the bank. The idiots in these fund managers always get their cut. As Buffet says, "The helpers help themselves"

[777]

The benchmark metric should be based on the market index return. So again, take the Dow Jones index today and compared to it back in 2020. It is still WAY HIGHER now than it was at the peak of 2020. There should be NO excuse for any fund managers that can't book a massive gain over the past 3 years. If they have managed to lose most of the gains in 2020 and 2021, then they must be invested in highly speculative stocks with no earnings. Many of the tech stocks on the Nasdaq have lost 70% of their value and on average, say 50% for the big common name tech stocks that have no earnings. Look at Roblox for eg that had a peak of $140 earlier in the year to be around $30 these past weeks.

@Bjauck: 1.5% since Jan 2020 to now??? That is a complete fail and your $ would have been better in the bank. The idiots in these fund managers always get their cut. As Buffet says, "The helpers help themselves"

You are correct for $'s invested two years ago but that has to be balanced out by the $'s invested since then in a market that was higher than now.

[Aaron]

Sorry careless post

[kiora]

Could be worth a look
"We are partnering with research house Research IP to make available (free) a large set of reports that focus on what matters to investors – fees, investment professionals’ credentials, returns and benchmarks, responsible investing, and more. Investors and financial advisers can more easily assess whether a Fund Manager is true to label.

Our service provides you access to more than 250 RIPPL Effect reports to “help you make financial decisions”."
https://www.interest.co.nz/investing/116252/we-launch-new-free-service-giving-access-range-key-metrics-investors-need-know

[kiora]

Co Duplicate

[Logen Ninefingers]

My strategy has been to do the opposite of what the paid spruikers on TV say, and so far it has worked well.
Would hate to think what state KiwiSaver and bank investment fund balances (and the Cullen Fund) will be in by the time this emerging financial crisis is done.

[SBQ]

My strategy has been to do the opposite of what the paid spruikers on TV say, and so far it has worked well.
Would hate to think what state KiwiSaver and bank investment fund balances (and the Cullen Fund) will be in by the time this emerging financial crisis is done.

I would say with confidence, lower than the S&P500 index. Jack Bogle (RIP) even knows it. But what do all these financial advisors have to say? Well they're always going to say, "We are investing for the LONG TERM...." When that long term gets the investor 50% less than what buying the index ETF over 50 years compounded would have at the end.

[Valuegrowth]

What do you think about Kiwisaver Funds entering Bitcoin?

https://www.stuff.co.nz/business/124637257/investment-or-speculation-kiwisaver-fund-enters-the-bitcoin-era
Investment or speculation: KiwiSaver fund enters the bitcoin era

[dobby41]

What do you think about Kiwisaver Funds entering Bitcoin?

https://www.stuff.co.nz/business/124637257/investment-or-speculation-kiwisaver-fund-enters-the-bitcoin-era
Investment or speculation: KiwiSaver fund enters the bitcoin era

26th March 2021 article - have they learned from the recent performance?

[kiwico]

I've just been having a look at some of the KiwiSaver "growth" returns for the last 12 months. Although too short a period to measure how they operate over the long term, Juno KiwiSaver seems to in the lead for crappiest returns over 12 months.
Juno (active): down 26.65, pretty much in line with Pie Funds' two Australasian growth funds (https://www.piefunds.co.nz/Performance-and-Unit-Prices).
Milford (active): neutral at 0.62% - a pretty good return compared with the likes of Juno
Simplicity (passive until their vocal leader gets in a snot about a company or two, e.g. GNE and DGL): down 3.88% but is before tax.

[kiwico]

My view on passive vs active is that the good active should beat the passive, but they will charge for it. When everything goes wrong they have the opportunity to sell high and buy low, something which Milford seems to have done well. Perhaps they could share their ideas with Juno / Pie Funds.
I now have the decision to make whether Juno, relying on Pie Funds, will bounce back or is it time to stop throwing good money after bad rubbish and move to one of the others.

[Valuegrowth]

Still, I am with 100% cash fund. I am looking forward to transfer my cash fund to balance fund, dividend fund or growth fund once I see value in the market. At this juncture, I would like to preserve my capital.

[smpl]

Us too...........................


Still, I am with 100% cash fund.

[kiora]

I'm not sure that some investors here don't confuse risk and volatility ?
Take for example this fund manager
https://milfordasset.com/funds-performance/view-performance
There are all sorts of risks with investing.
The main risk I perceive is underperformance over a time period.

[SBQ]

My view on passive vs active is that the good active should beat the passive, but they will charge for it. When everything goes wrong they have the opportunity to sell high and buy low, something which Milford seems to have done well. Perhaps they could share their ideas with Juno / Pie Funds.
I now have the decision to make whether Juno, relying on Pie Funds, will bounce back or is it time to stop throwing good money after bad rubbish and move to one of the others.

The only thing that matters to the investor is the net return after their take. So when you fact their commissions and management fees in active fund, the DO NOT beat the market index. The financial industry is baked into the idea of selling the concept that 'active fund managers' do better but they often omit their end fees and taxes (ie buying in and out triggers taxes to pay within the fund vs long term passive buy the index and hold does not).

Warren Buffet made this wager between actives vs passives over 10 years ago that in a 10 year time frame, cumulatively, active fund managers do NOT beat the S&P index returns net of taxes and admins fees. I believe the same priciples apply here in NZ with the NZX when investors have a habit of expecting dividend payments from NZ shares when it erodes the stock price of having no capital gains (ie TWG.NZ has a diviidend paying policy... and it's stock price has stayed the same for over 20 years; even less if you factor inflation). Anyways, Buffet's rank on active / hedge funds is on YouTube if serious investors care to watch it.

[Valuegrowth]

https://www.stuff.co.nz/business/money/102385754/critics-want-changes-to-new-zealands-bank-rescue-plan

[SBQ]

https://www.stuff.co.nz/business/money/102385754/critics-want-changes-to-new-zealands-bank-rescue-plan

Is this article a little out of date? Mar 21st, 2018. Already Parliament has been working on a deposit insurance plan for NZ:

https://www.beehive.govt.nz/release/depositor-compensation-scheme-protects-kiwis%E2%80%99-money#:~:text=New%20Zealanders%20will%20have%20up, legislation%20introduced%20in%20Parliament%20today

[Valuegrowth]

Still, I am with 100% cash fund. I am looking forward to transfer my cash fund to balance fund, dividend fund or growth fund once I see value in the market. At this juncture, I would like to preserve my capital.

I am doing well with my Kiwisaver. Finally, it is up by more than 2% where as other types of funds have dropped by more than 5% over the last one year. I found there is a no value fund to choose for my Kiwisaver. I don't think growth stocks will do well in the coming decade.

[GTM 3442]

I have a KiwiSaver account. It's a balanced fund. It's not very big.

I use it to benchmark my non-KiwiSaver portfolio performance. It's really handy.

[Aaron]

You have to wonder, Kiwisaver default schemes are now directed to "balanced" funds rather than "conservative" funds just in time for a recession.

It might have the benefit of people taking more notice of their Kiwisaver funds especially if we have a recession and rising interest rates mean negative returns.

Probably not what the world improvers were hoping for but as is often the case intelligent well meaning meddling world improvers making things worse for the people they are trying to help.

They need to understand their theory only works if interest rates keep dropping and money continues to be debased. Which is probably not a bad bet, probably only a little early on the timing.

[kiora]

Value creating

"Morningstar data director Greg Bunkall said Milford was a high performer because it had a very loose mandate around asset allocation. “It allows them to generate a differentiated return profile, as they can substantially dial up or down the portfolio’s risk buckets as they see the markets evolving.”"

https://www.stuff.co.nz/business/money/300998655/the-kiwisaver-fund-that-lost-almost-30-in-a-year

[iceman]

I have just looked at my Kiwisaver holdings in some detail. I am invested in Simplicity Growth Fund. I find it alarming that 2 of Simplicity's own schemes, appear in the top 10 holdings overall and number 1 & 3 in their NZ portfolio.
Here are the 10 biggest holdings from highest to lowest: Apple, Microsoft, Simplicity Living Ltd, Fisher & Paykel, Simplicity Home Mortgages, NVIDIA , Spark, Infratil, Meridian.

I have been happy with this fund to date but this recent change concerns me. I don't like how Sam Stubbs can just decide where, when and how he wants to "do the right thing" and invest a large proportion of our Kiwisaver money into his schemes. As an example, his 2 schemes combined hold more of my Kiwisaver than any of the other holdings in the fund, including Apple, Microsoft & NVIDIA.


What do others think about this ?

[stoploss]

I have just looked at my Kiwisaver holdings in some detail. I am invested in Simplicity Growth Fund. I find it alarming that 2 of Simplicity's own schemes, appear in the top 10 holdings overall and number 1 & 3 in their NZ portfolio.
Here are the 10 biggest holdings from highest to lowest: Apple, Microsoft, Simplicity Living Ltd, Fisher & Paykel, Simplicity Home Mortgages, NVIDIA , Spark, Infratil, Meridian.

I have been happy with this fund to date but this has recently changed and I don't like how Sam Stubbs can just decide where, when and how he wants to "do the right thing" and invest a large proportion of our Kiwisaver money into his schemes. As an example, his 2 schemes combined hold more of my Kiwisaver than any of the other holdings in the fund, including Apple, Microsoft & NVIDIA.

What do others think about this ?
It's not so much "passive investment" is it if he can move the money into his own projects .

[iceman]

It's not so much "passive investment" is it if he can move the money into his own projects .

No definitely not. I think its time to do some research for an alternative. Then when I looked further down the list, Simplicity Living Limited Redeemable Preference shares appear at 13th biggest holding. More alarm bells !

[audiav]

No definitely not. I think its time to do some research for an alternative. Then when I looked further down the list, Simplicity Living Limited Redeemable Preference shares appear at 13th biggest holding. More alarms !
Same boat as you, except it’s my kids accounts, which have a pretty good whack in them, through good fortune rather than intentional. Wanted to switch them to Kernel but they still don’t offer kids accounts. MoneyKingNZ tries to review the different options while staying neutral.

[iceman]

Same boat as you, except it’s my kids accounts, which have a pretty good whack in them, through good fortune rather than intentional. Wanted to switch them to Kernel but they still don’t offer kids accounts. MoneyKingNZ tries to review the different options while staying neutral.

Just received an advice from Simplicity saying my money has been transferred from them. I am pleased as I am alarmed at what is happening to Simplicity's Kiwsaver funds.

[Whio]

I transferred out of simplicity for similar reasons to those mentioned (moving a bit close to active). Still have a small amount in their global fund, I think this is possibly the cheapest fees on offer. Cheapest I could find anyway. KiwiSaver now with kernel who seem a solid operator.

[Waikaka]

Just received an advice from Simplicity saying my money has been transferred from them. I am pleased as I am alarmed at what is happening to Simplicity's Kiwsaver funds.

I had something similar with ASB kiwi saver a while ago. The degree of concentration was unsettling and then when I asked for specific holdings so I could asses exposure or leverage they wouldn't give that to me except in the most generally terms. Changed over to Craig's self selected. Get gouged on brokerage and fees but at least I can rest easy knowing exactly what I am invested in.

[Jaa]

Same boat as you, except it’s my kids accounts, which have a pretty good whack in them, through good fortune rather than intentional. Wanted to switch them to Kernel but they still don’t offer kids accounts. MoneyKingNZ tries to review the different options while staying neutral.

Are you with Kernel for your own account? They seem like a good option and a bit cheaper than Superlife.

Where did you move to Iceman if you don't mind saying?

[audiav]

Are you with Kernel for your own account? They seem like a good option and a bit cheaper than Superlife.

I do have a Kernel account, only hold Global 100 and Infrastructure unhedged

[iceman]

Are you with Kernel for your own account? They seem like a good option and a bit cheaper than Superlife.

Where did you move to Iceman if you don't mind saying?

I don't mind you asking. I actually decided to go to Milford Growth Fund. It is an actively managed fund and is quite concentrated in a few stocks that are not your normal run of the mill in passively managed funds. I liked what I saw and will be watching it closely and possibly moving to a passively managed index tracking fund quickly if I don't like it. So a bit of a punt, but my punt.

I lost faith in Simplicity when they started several schemes they think is "socially responsible" and then invest my retirement savings in these schemes without me having a say in it. Simplicity scares the **** out of me now.

[audiav]

I do have a Kernel account, only hold Global 100 and Infrastructure unhedged
Sorry Jaa, just realised you were asking who my Kiwisaver provider is, it is Milford Growth, like Iceman. I’ve been with them since 2009.

[Bjauck]

I don't mind you asking. I actually decided to go to Milford Growth Fund. It is an actively managed fund and is quite concentrated in a few stocks that are not your normal run of the mill in passively managed funds. I liked what I saw and will be watching it closely and possibly moving to a passively managed index tracking fund quickly if I don't like it. So a bit of a punt, but my punt.

I lost faith in Simplicity when they started several schemes they think is "socially responsible" and then invest my retirement savings in these schemes without me having a say in it. Simplicity scares the **** out of me now.
Milford’s active growth? I have my KiwiSaver split between Milf’s active growth, balanced and aggressive. I have changed the mix proportions a couple of times. They supply good information and have good online access. The returns seem to be above the industry averages. Certainly more detailed information and more flexibility than the big bank scheme I was initially with.

[Ricky-bobby]

I’m the same, just pulled some back from aggressive to balanced… 50% growth, 25% balanced, 25% aggressive

[Snoopy]

I lost faith in Simplicity when they started several schemes they think is "socially responsible" and then invest my retirement savings in these schemes without me having a say in it. Simplicity scares the **** out of me now.


Are you referring to this fund?
https://simplicity.kiwi/investment-funds/funds/homes-and-income-fund

It is certainly a novel approach to an investment fund. But it looks like it is 'contained'. IOW if you like the Simplicity cost structure, but don't like this particular 'sector' that Simplicity has created, then you don't have to invest in it.

Looking at the target asset allocation for the 'homes and income' fund, there is a 10% allocation to 'community social housing'. The bit you don't like? But on the upside, I guess most of the rent for those properties would be guaranteed by WINZ?

25% allocation to 'residential mortgages'? I don't have a problem with Simplicity providing competition for the banks in this area.

25% allocation to 'unlisted property'? The listed property sector in NZ I find quite limited. There are only eight NZX listed companies that provide suitable liquidity for a fund manager to invest in. And despite the PIE tax benefits they offer, my take is that none of them are bargains. So I can understand the sidestep by Simplicity to unlisted property.

What concerns me the most is the 40% allocation to cash or cash equivalents. Cash is handy for providing access to liquidity for opportunity. But as a long term investment class, cash has traditionally provided the lowest returns. To be fair, Simplicity itself is only suggesting an up to three year time horizon for this investment. High interest rates are likely providing a sweet spot for cash investments right now, that one would not expect to see continue into the future. It seems odd to have a long term target of having 40% of your fund in cash or cash equivalents! But then I thought again about how illiquid those other constituents of this fund are. So it could be the cash is needed to provide for the ebb and flow of investor money, and in particular the position of the fund if a whole lot of investors suddenly want out? Although in practice Kiwisaver is an ever rising tide and Sam Stubbs is on record as saying in the seven years since they have existed, they have never had to sell any investment to meet redemption demand.

It is this high cash allocation that would put me off investing in this fund. But personally I don't have a problem with the rest of the fund allocation. YMMV and obviously does?

SNOOPY

[thegreatestben]

I think the concern Snoopy was that the Simplicity Growth and High Growth funds feature holdings of Simplicity Living in the top 5.
Growth it's number 2 and High Growth it's number 4.

Shane Brealey and Sam Stubbs are people who get things done. They make it very clear they want to do good things and that doesn't have to involve not making money for investors.

[Snoopy]

A Sam Stubbs podcast interview, where he discusses Simplicity's investment in community housing is here::
https://simplicity.kiwi/learn/updates/sam-stubbs-duncan-garner-podcast

Notes I have taken from this podcast on his community housing venture are below.

Simplicity manages the savings of 147,000 New Zealanders. Being a charity, the management structure of Simplicity will never make any money, as fees are set 50-70% below the rest of the industry. So they will never be bought out or sold to another market player.

Community housing being built now by Simplicity includes a 51 unit complex of one and two bedroom apartments in Mt Albert (where there is the biggest demand). 10 year leases are on offer, and Simplicity intends to be the long term owner. 42% of people in the OECD live in apartments. In NZ it is about 3%. This is because we have built out, out and out. By land area, Auckland is now the fourth largest city in the world. Building up next to transport hubs, supermarkets and schools is where residential development has to head. Simplicity buys the land, builds the apartments, rents them and maintains them in a vertically integrated 'in house operation'. The building code says you have to build something to last 50 years. Simplicity builds are designed to last 100 years, built out of concrete, brick and aluminium (windows): Never needs washing, never needs painting. But despite the quality build materials, costs are saved by building all of the apartments to be exactly the same, including colour schemes. Interior decor is all white, although tenants are allowed to paint the walls a different colour if they wish. Architects will say that is 'cookie cutter' design. But everything else people buy, be it cars or baked beans, is cookie cutter. Cookie cutter does not necessarily mean poor quality.

In some parts of Germany, renters are into their third generation renting the same house. They regard these long term rental units as their own home and treat them as such. When you have happy tenants with long term occupation security, they are not 'tearing the place up' and they are 'looking after each other'.

Construction expertise has been provided by townhouse developer 'NZ Living' (who have built state houses for Housing NZ before) which was formerly owned by philanthropists Shane and Anna Brearly, who transferred that company to become 'Simplicity Living'. The target for Simplicity Living is to be building 1,000 homes per year within five years Simplicity are even prepared to build on hospital board land and iwi land that they do not own, with suitable lease arrangements in place. Tenants could include the elderly who want to live close to hospitals and hospital staff (including the cleaners) who can avoid 'the big commute'.

What is Sam Stubb's view on the wider housing market, that has drawn him towards taking his own path, via Simplicity, into investment in this space? State house building and private house building were a match for each other up until about 1980. But since then the build rate of state housing has halved, leading to a 45 year supply/demand imbalance that has pushed up house prices well ahead of inflation. Leaving the private sector to take most of the initiative in house building is a convenient way to keep house prices high and house owners feeling wealthy and free to spend their own money. But it also disenfranchises a whole generation that cannot get onto the property ladder. 25% of NZers spend more than 40% of their income on rent or mortgage, making NZ the least affordable country in the OECD in which to live. The last bill you won't pay is the rent or the mortgage. So if you are invested in housing it is very secure cashflow.

SNOOPY

[thegreatestben]

Shane has the right idea and was getting a lot done for Kainga Ora and Kiwibuild but he clearly got the ****s with those programmes being a handbrake.
Pairing up with Simplicity has allowed him to crack on, I've listened to and read alot about what they do and how they do it.

Both are very active and vocal on linked in if you don't already follow:

https://www.linkedin.com/in/shane-brealey-635373297/
https://www.linkedin.com/in/sam-stubbs-2783181a/

Shane and Anna are already very very rich and successful, originally I thought they were cashing out when they announced NZ living was becoming Simplicity Living. I had it all wrong and was letting my pessimism of the average housing developer influence my view. They are bringing the overseas model of BTR to NZ, if they fail it's because they won't be allowed to succeed rather than doing anything wrong.

[Snoopy]

Shane has the right idea and was getting a lot done for Kainga Ora and Kiwibuild but he clearly got the ****s with those programmes being a handbrake.
Pairing up with Simplicity has allowed him to crack on, I've listened to and read alot about what they do and how they do it.

Both are very active and vocal on linked in if you don't already follow:

https://www.linkedin.com/in/shane-brealey-635373297/
https://www.linkedin.com/in/sam-stubbs-2783181a/


I must say when I heard about Simplicity getting into 'Build to Rent', I thought "Do these guys really know what they are doing?" It is one thing to have an image about 'doing the right thing'. But it is quite another to bring such a project to successful fruition. It sounds like Sam Stubbs has teamed up with a pair who indeed 'do know what they are doing.' Reassurance I think for Simplicity customers 'who did not know'.

SNOOPY

[iceman]

I think the concern Snoopy was that the Simplicity Growth and High Growth funds feature holdings of Simplicity Living in the top 5.
Growth it's number 2 and High Growth it's number 4.

Shane Brealey and Sam Stubbs are people who get things done. They make it very clear they want to do good things and that doesn't have to involve not making money for investors.

That's exactly right. Before I pulled out, my growth fund had these as the 10 biggest holdings from highest to lowest: Apple, Microsoft, Simplicity Living Ltd, Fisher & Paykel, Simplicity Home Mortgages, NVIDIA , Spark, Infratil, Meridian.
So it only held more Apple & Microsoft than Simplicity Living Ltd, which combined with Simplicity Home Mortgages was a bigger holding than F&P, Spark, Infratil and Meridian combined.
That is not a responsibly managed Kiwisaver growth fund in my view. I agree with posts on here that this is good work and some very well qualified people involved, but it has no place in my growth Kiwisaver fund.