How smart are Smartshares?

[Indy kiwi]

The downside is that the take their cut off the top, but it sure makes it easy to gain exposure to certain segments of the market. I have held MDZ for a number of years and they have been steady, solid performers, but not exceptional. I thought I'd try the same thing with the ASX and picked up some MZY but these have been a disappointment. Anyone have any thoughts on these? Thanks

[Snoopy]

There is nothing "smart" about them - they are simply an exchange traded fund. There is no ability to outperform the market, it is simply a useful way to get exposure to share investing without the risks in picking a lemon. If you think the overall share market is going up, and you don't know or want to choose your own shares and worry about diversification, its probably an ok choice. It's probably a good way for a beginner to start, and then you can add some speculative/high growth stocks like the next Xero or Diligent to try and get some wealth generation going.


I have never owned Smartshares either Sparky. But I think you are being a little harsh. For "most people", and most people don't frequent this forum, and are more interested in other things than following the market closely, I would say Smartshares are a very good idea. Certainly if you are just starting out with say $5k to invest I would say putting your money in Smartshares then trying some DIY investing on paper for a couple of years, then you would likely be far better off than if you had dived in first and put your own money and judgement on the line first up.

It is true that will will not outperform the market with Smartshares. But neither will you underperform it, which I think is quite important if you are first starting out. In this instance, having the nous to recognize you are likely to end up on the patsy side of a share trade as a beginner is actually quite smart.

SNOOPY

[Snoopy]

I thought I'd try the same thing with the ASX and picked up some MZY but these have been a disappointment. Anyone have any thoughts on these? Thanks

Over what period have you owned MZY? Does your disappointment stem from buying in just as the mid-cap mining boom was weakening? I think over the longer term MZY have been the best performing Smartshare.

SNOOPY

[CJ]

The problem with smartshares is their manager fees are high for a ETF. Ideally they should be half wha they are and then they would start being competitive with the overseas ones.

One benefit for new investors is you can invest say $100 per month until you have enough to buy individual stocks.

I use to own OZY and WIN to get international diversification while picking individual NZ shares. Now I am solely NZ shares.

[janner]

The problem with smartshares is their manager fees are high......

One benefit for new investors is you can invest say $100 per month until you have enough to buy individual stocks.

.

Totally agree CJ.. On both counts.. I work with many that spend more than twice that on Fags and Booze a week...

What a different country this would be if only half of them took the savings path..

[Harvey Specter]

Does anyone use SmartShares?

I used to for diversity but am now 100% direct.

Anyway, they have now launched 2 more funds https://www.nzx.com/files/attachments/206702.pdf which is weird in my view as they are both essentially OZ income funds which (I think) are relatively inefficent for NZ shareholders due to franking credits.

I would have much preferred a Global fund like the old WINZ fund run by AMP(?) since global diversification is the hardest to get from NZ (even if it just invested into a hedged iShares fund).

[blackcap]

Does anyone use SmartShares?

I used to for diversity but am now 100% direct.

Anyway, they have now launched 2 more funds https://www.nzx.com/files/attachments/206702.pdf which is weird in my view as they are both essentially OZ income funds which (I think) are relatively inefficent for NZ shareholders due to franking credits.

I would have much preferred a Global fund like the old WINZ fund run by AMP(?) since global diversification is the hardest to get from NZ (even if it just invested into a hedged iShares fund).

Yeah I saw that and think it is weird too because I own some of the Vanguard high yield Aussie fund which they have replicated. But the Vanguard MER is .25% whilst the Smartshare one is .54%.

The problem that Smartshares have is that they are competing with ETF's that we can purchase just as easily on the ASX for the same cost. One benefit is the opportunity to be able to drip feed money into them on a monthly basis. Their FNZ is IMHO their best product and on that cannot be purchased from an overseas provider.

[MAC]

They always seem a bit low liquidity to me but that may change with time. I’d quite like to see some defensive alternatives, especially given the difficultly within NZ to short anything really when or if so desired, an NZX equivalent to the BEAR even would be nice.

[Harvey Specter]

They always seem a bit low liquidity to me but that may change with time.Weren't they planning on adding a market maker to them, or am I just getting that confused with the NXT (which definitely is getting a market maker).

EFT are huge overseas but I guess NZ has a bit more of a DIY/No8 fence wire attitude.

[blackcap]

Weren't they planning on adding a market maker to them, or am I just getting that confused with the NXT (which definitely is getting a market maker).

EFT are huge overseas but I guess NZ has a bit more of a DIY/No8 fence wire attitude.

Smartshares now do have a market maker. Spread is pretty big... example FNZ currently bid 187.4 offer 188.9 by market maker.

[Harvey Specter]

Smartshares now do have a market maker. Spread is pretty big... example FNZ currently bid 187.4 offer 188.9 by market maker.1.5 cents or less than 1% isn't too bad (similar to most shares?). 1% daily movements on the NZX are common so not to bad. It was much worse when I was investing in them.

I assume it is loosely based on NTA so at least you wont have to sell at a discount to NTA.

[bmrm]

I agree it is odd for them to spend so much time on Australian funds, the market that is easiest for Kiwi's to access. I would be interested in something further afield, an emerging markets option could add a bit more to the mix.

[blackcap]

I agree it is odd for them to spend so much time on Australian funds, the market that is easiest for Kiwi's to access. I would be interested in something further afield, an emerging markets option could add a bit more to the mix.

They have mooted this possibility before with conversations I have had with them> But they would probably piggy back onto an existing fund because in reality it would be difficult for a NZ based ETF to purchase (efficiently) say 400 world stocks with the likely size of the fund.

[Bilbo]

I agree it is odd for them to spend so much time on Australian funds, the market that is easiest for Kiwi's to access. I would be interested in something further afield, an emerging markets option could add a bit more to the mix.

I agree totally. Am currently trying to work out the best way to invest in global shares without hedging to the NZD, and not finding many easy options. Funds like Milford Global and PIE global use currency hedging. Would be interested in what others do. Have started looking at iShares ETFs.

[D. Fender]

I agree totally. Am currently trying to work out the best way to invest in global shares without hedging to the NZD, and not finding many easy options. Funds like Milford Global and PIE global use currency hedging. Would be interested in what others do. Have started looking at iShares ETFs.

Hi Bilbo, try looking at Elevation Capital's fund of fund product - very competitive fees and unhedged. Also I believe Pathfinder offer a global fund investing in ETFs and with very active hedging.

[silu]

I have my Kiwisaver with Smartshares. Does that count? So far happy with the performance and their fee structure.

[bmrm]

I have my Kiwisaver with Smartshares. Does that count? So far happy with the performance and their fee structure.

I've heard very good things about their Kiwisaver option, not to mention the appeal of not paying some manager through the nose to under-perform an index anyway. I'm waiting until the next correction to join however.

[blackcap]

I've heard very good things about their Kiwisaver option, not to mention the appeal of not paying some manager through the nose to under-perform an index anyway. I'm waiting until the next correction to join however.

Exactly, I am with them for KiwiSaver as well. Very low fees and at least they will not underperform the index which so many managers seem competent in doing.

[Toulouse - Luzern]

I agree totally. Am currently trying to work out the best way to invest in global shares without hedging to the NZD, and not finding many easy options. Funds like Milford Global and PIE global use currency hedging. Would be interested in what others do. Have started looking at iShares ETFs.

Hi,

This may be of interest.

RaboDirect offer about 40 managed funds.

In global shares you can for example AMP Global Fund in hedged and unhedged.

The comparative performance figures from RaboDirect website today are below:

https://www.rabodirect.co.nz/cash-funds/managed-funds/find-funds/default.aspx

.................................................. 1 mth. 3 mth.. 6 mth.. 12 mths.. since inception


AMP Capital Core Global Shares Fund -1.19% 0.41% 11.46% 10.32% 0.77%

AMP Capital Core Hedged Gbl Shares 0.15% 5.88% 4.16% 13.97% 2.38%

I held the Hedged Gbl shares last year when the NZD was appreciating against most currencies.

[AppleCrumble]

Does anyone use SmartShares?

I used to for diversity but am now 100% direct.

Anyway, they have now launched 2 more funds https://www.nzx.com/files/attachments/206702.pdf which is weird in my view as they are both essentially OZ income funds which (I think) are relatively inefficent for NZ shareholders due to franking credits.

I would have much preferred a Global fund like the old WINZ fund run by AMP(?) since global diversification is the hardest to get from NZ (even if it just invested into a hedged iShares fund).
What are franking credits? And why is it inefficient?

[blackcap]

What are franking credits? And why is it inefficient?

Hi AppleCrumble. Franking credits are the Australian equivalent to our imputation credits. Unfortunately NZ tax resident holders of Australian stock cannot utilise these (and vice versa) so effectively you end up paying tax twice.

[BIRMANBOY]

The NZX has a new product in the ETF line...based on NZ dividend producers.
http://smartshares.co.nz/

[huxley]

For anyone who's interested SuperLife (now owned by nzx) seems to offer cheaper access to some of the Smartshares ETF products.

http://smartshares.co.nz/types-of-funds/smartmedium/mdz

http://superlife.co.nz/fees.html

.75% for the ETF or .4% plus $33 per year for SuperLife. Although you can only assess the NZ50 & Asx mid cap funds.

[Bobdn]

Good info thanks Huxley.

I have Ozy and mzy smart shares and contribute a modest amount to each monthly through an AP. they haven't done all that well over the last 5 years but I'm ok with that. Drip feeding and reinvesting dividends mean that I should do ok...eventually.

[p2r]

Yes and you can switch to cash or between the funds on the internet in a few days and monitor them on the internet with superlife. May not always be that way I guess. But low fees & low tax got to be good in the long run. The taxable and untaxable parts of your ks income are clearly shown. NZ shares and property seems to be very good for tax if you are on the top rate, being a PIE helps. Also for kids under 18 you can open a parallel account which is not KS so accessable and they waive the $33.
Don't overseas and smaller ozzy shares attract an extra 5% tax? Which smartshare funds would that effect most?

[huxley]

Hey p2r

This is from their website:

In New Zealand, the tax laws are complex. (haha)

NZ & Australian sharesTax is generally payable only on the dividends received. In the case of NZ shares, any imputation credits received offset the tax liability payable. In a few cases, tax is payable under the FDR regime applicable to overseas shares. No tax is payable on market movements. Therefore, if the market goes down the total return may be negative, but tax is still payable on the dividends received.

Overseas shares & emerging markets sharesTax is payable throughout the year. It is based on taxable income equal to 5% of the market value, under the FDR regime. In the case of overseas shares currency hedged, tax is also payable on the currency hedging gains/losses throughout the year as they arise. Because tax is paid on notional income of 5% of the market value, there will be years when the market value goes down and the return is negative, but tax is still payable.

http://superlife.co.nz/allocation-of-investment-returns.html

[PSE]

Good info thanks Huxley.

I have Ozy and mzy smart shares and contribute a modest amount to each monthly through an AP. they haven't done all that well over the last 5 years but I'm ok with that. Drip feeding and reinvesting dividends mean that I should do ok...eventually.


Probably due to the NZ/AUD exchange rate best dealt with by the dollar cost averaging you have done. I prefer STW and VAS on the ASX200 as their fee is 0.3% per annum vs 0.7% and their much larger size means less spread between buyers and sellers.
NZX is madly overvalued right now, the ASX200 slightly less so but still a large weighting to banks and mining which is why I am not owning any at present.
I understand ETFs are derivatives but they do buy parcels of shares so there is something real behind them. It just makes me a little uneasy, I like to have my name on the share registry but if you haven't the inclination to pick stocks dollar cost averaging the index is the smart way to go.
Yes ETFs and dollar cost averaging is very smart but smartshares may not be the smartest in the field.

[p2r]

yes there are probably better options for investing in nz & oz indexs but not for kiwisaver. I think this is part of nzx's business they could come up with some new things in the future = always room for new innovative smartshare products.

[AppleCrumble]

I have my Kiwisaver with Smartshares. Does that count? So far happy with the performance and their fee structure. was happy with there fees until found out u had to invest all ur KS in 1 of there 3 funds.so ended up going with super life. But they are all the now.hopefully that will benefit us.

[p2r]

Yes certainly can see the smart shares effect in the NZ & OZ shares port folio. The latter is 45% Aussie dividend and 20% Aussie resource and financials index. Been romping along lately. NZ has 14% NZ dividend trust so slowly changing over. http://www.superlife.co.nz/investment-portfolios.html

[Harvey Specter]

Good news for EFT fans - 9 new smartshares: https://www.nzx.com/companies/NZX/announcements/267235

no word on fees :(


1. US 500 Trust (USF) – invests in Vanguard’s S&P 500 ETF, which aims to track 500 large securities listed on the NYSE or NASDAQ markets
2. Europe Trust (EUF) – invests in Vanguard’s FTSE Europe ETF, which aims to track securities in developed European markets including Germany, Switzerland and the UK
3. Asia Pacific Trust (APA) – invests in Vanguard’s FTSE Pacific ETF, which aims to track securities in developed Asia Pacific markets, including Japan, Singapore and Australia
4. Emerging Markets Trust (EMF) – invests in Vanguard’s FTSE Emerging Markets ETF, which aims to track securities from emerging markets including Brazil, China, and India
5. Total World Trust (TWF) – invests in Vanguard’s FTSE Total World Stock ETF, which aims to track securities from both developed and emerging markets including Hong Kong, Norway, and USA
6. US Large Value Trust (USV) – invests in Vanguard’s Value ETF, which aims to track large value securities listed on the NYSE or NASDAQ markets
7. US Large Growth Trust (USG) – invests in Vanguard’s Growth ETF, which aims to track large growth securities listed on the NYSE or NASDAQ markets
8. US Mid-Cap Trust (USM) – invests in Vanguard’s Mid-Cap ETF, which aims to track mid-cap entities listed on the NYSE or NASDAQ markets
9. US Small-Cap Trust (USS) – invests in Vanguard’s Small-Cap ETF, which aims to track small-cap entities listed on the NYSE or NASDAQ markets

[bull....]

other etf's in there range have around .5 - .6% fee + brokerage and subscription fee of the top of my head.

cheaper than 1.5% and 15% of profits fees for sure from fund managers but still expensive compared to .05 - .2 available if you can access etf's overseas thru a broker.

the compounding of reduced fees has a dramatic effect on returns in the long run if returns are comparable

[Harvey Specter]

other etf's in there range have around .5 - .6% fee + brokerage and subscription fee of the top of my head.But I think they 'manage' the current ones themselves and given their size, the overheads probably justify the fees (though they should reduce to 'market' levels as a loss leader).

The new ones are leveraging off Vanguard so should in theory be cheaper. Also as funds under management increase, overheads should be spread wider also resulting in less fees.

I also wonder if we will see movement in their SmartKiwi product or maybe the Superlife product will just offer the new Smartshares which will again, increase the scale and hopefully reduce the fees.

[777]

They were advertising ETF's on zb this morning.

[Harvey Specter]

other etf's in there range have around .5 - .6% fee + brokerage and subscription fee of the top of my head.fees are .3% for the US500 and 0.45% for the others apparently.

Per comment in NBR article (not locked): http://www.nbr.co.nz/article/nzx-boosts-exchange-traded-funds-cs-175898

[blackcap]

Nothing new to see here... you can already invest in these ETF's via the ASX and Im sure the fees will be that much lower that way. I already have investments in VHY (vangaurd high yield) etc and for the Vanguard S&P 500 fund you only pay .07% whereas with Smartshares it will be .3%. (This adds up over time). THe good thing is though.... you can drip-feed monthly with Smartshares and if they add these to their Kiwisaver I will be in like Flynn.

[newtrader]

This is great news, exposure to coveted Vanguard funds without having to purchase from the ASX (and deal with FIF tax and FX fees). I assume these new funds are PIE compliant as well?

High fees would the most obvious deal-breaker for me. I'm happy with NZX/Smartshares adding a small margin on top of the low Vanguard fees but wouldn't be too happy to be paying exuberant fees.

[blackcap]

This is great news, (and deal with FIF tax and FX fees).

.

Good point.. had not thought of it from that angle yet. FX fees are irrelevant in the long run in my opinion but the FIF regime is at best a pain in the arse, at worst costly. Like you say, hope the NZX do not add too much on top of the Vanguard fee.....

[JonathanGiles]

Good point.. had not thought of it from that angle yet. FX fees are irrelevant in the long run in my opinion but the FIF regime is at best a pain in the arse, at worst costly. Like you say, hope the NZX do not add too much on top of the Vanguard fee.....

It's been many months since I reviewed the FIF tax rules, but my recollection is that FIF in a PIE fund is always charged at the 5% (using whichever method always does 5% out of CV or FDR), whereas investing directly (as I do), you get the choice. Of course, I have other hassles like tax accounting, etc - but my main point is that FIF still applies to the PIE, it just happens transparently (and in many cases in a worse way when returns are < 5% - and it still applies when you make a loss).

[Toulouse - Luzern]

I am also very interested in easier access to a range of Vanguard funds.
Good discussion many good points made.

I agree with most of it.

Advantages I see of the new development are lower $ entry points, potentially lower annual fees than other NZ managed funds, no FIF or FX compared with Australia, greater range of asset allocation without constant time consuming anti money laundering and anti terrorism authentication.

For me spreading smaller $ purchases over time are good options too.

Many of the specialised ASX based ETFs have low liquidity, if momentum changes, and at $29 buying in say $2000 or $3000 lumps the fees add up and off course there are broker charges to exit.

I also potentially like the Superlife option with lower fees and admin if any or all of these funds are available that way as well.

By comparison for example I see the new ETFs offering advantages over many of my existing managed funds eg Rabodirect entry is .75% and I think the annual fees there for each fund are higher.

Switching funds at Rabo may be more costlier as well if the momentum changes.

Finally indexed funds are great as long as the trend is up. If there is a clear trend change then maybe it's time to look at your options. I have been in FNZ and MZY when the trends were up for many months/years and exited when they they turned.

[blackcap]

It's been many months since I reviewed the FIF tax rules, but my recollection is that FIF in a PIE fund is always charged at the 5% (using whichever method always does 5% out of CV or FDR), whereas investing directly (as I do), you get the choice. Of course, I have other hassles like tax accounting, etc - but my main point is that FIF still applies to the PIE, it just happens transparently (and in many cases in a worse way when returns are < 5% - and it still applies when you make a loss).

Hi JonathanGiles, are you saying that the operator NZX will pay the FIF because they have bought the foreign share (Vanguard) even though the NZ investor does not have to having bought the NZ stock "smartshare x"? So the actual performance of the stock "smartshare x" will suffer by the 5% because it has to pay FIF on its investment? Just trying to get my head around how this will work...

[JonathanGiles]

Hi JonathanGiles, are you saying that the operator NZX will pay the FIF because they have bought the foreign share (Vanguard) even though the NZ investor does not have to having bought the NZ stock "smartshare x"? So the actual performance of the stock "smartshare x" will suffer by the 5% because it has to pay FIF on its investment? Just trying to get my head around how this will work...

That is my recollection. There are a number of articles online about this very topic that I read when I was researching my options. It turned out that direct investment almost always made sense (in my personal circumstances).

[huxley]

That is my recollection. There are a number of articles online about this very topic that I read when I was researching my options. It turned out that direct investment almost always made sense (in my personal circumstances).


This is from Superlife where they explain the tax on overseas shares:



Overseas shares & emerging markets shares
Tax is payable throughout the year. It is based on taxable income equal to 5% of the market value, under the FDR regime. In the case of overseas shares currency hedged, tax is also payable on the currency hedging gains/losses throughout the year as they arise. Because tax is paid on notional income of 5% of the market value, there will be years when the market value goes down and the return is negative, but tax is still payable.




http://superlife.co.nz/allocation-of-investment-returns.html'

[ShadowBlue]

Interesting article by Elizabeth Kerr today: http://www.interest.co.nz/personal-finance/76749/elizabeth-kerr-super-excited-about-nzx-providing-kiwis-access-international

[trader_jackson]

I think the ASF (Australia financials), one which is quite new (not the newest ones just announced but recently announced this year). I think it will be quite good long term... thoughts?

[kiwichick]

From Smartshares' website:

* The Smartshares management fee is charged in addition to fees and expenses paid out of the underlying Vanguard fund that USF invests into. These will also affect the return your receive. For example, the annual operating expense (expense ratio) charged to the Vanguard S&P 500 ETF (VOO) as at 20 July 2015 is 0.05%. For more information on fees and charges that apply to an investment in a Smartshares fund, please read the Investment Statement.

So in actuality, you're paying more than 0.3% fees. Though still probably the best option if you want to drip-feed monthly.

[Harvey Specter]

So in actuality, you're paying more than 0.3% fees. Which makes you wonder why the different funds have different fee levels. Admin should be the same for all (though anticipated to be spread over more investment in teh fund with lower fees?).

I would be more comfortable if they also provided a market maker as part of their service (and included in their fees) to give comfort that you will be able to exit when you want. Sure it's easy to drip feed in but you normally want to withdraw in bulk.

[newtrader]

From Smartshares' website:

* The Smartshares management fee is charged in addition to fees and expenses paid out of the underlying Vanguard fund that USF invests into. These will also affect the return your receive. For example, the annual operating expense (expense ratio) charged to the Vanguard S&P 500 ETF (VOO) as at 20 July 2015 is 0.05%. For more information on fees and charges that apply to an investment in a Smartshares fund, please read the Investment Statement.

So in actuality, you're paying more than 0.3% fees. Though still probably the best option if you want to drip-feed monthly.

The 'in addition' to the Vanguard fees is a bit of a surprise. How can they justify slapping on a 600% fee on top of the Vanguard fee given Vanguard is doing most of the work involved in indexing and managing the underlying fund?

Sure 0.30/0.45% is still comparatively low when you compare it against actively managed Kiwisaver funds. What are everyone's thoughts on this?

[JonathanGiles]

The 'in addition' to the Vanguard fees is a bit of a surprise. How can they justify slapping on a 600% fee on top of the Vanguard fee given Vanguard is doing most of the work involved in indexing and managing the underlying fund?

Sure 0.30/0.45% is still comparatively low when you compare it against actively managed Kiwisaver funds. What are everyone's thoughts on this?

I'm invested directly into vanguard ETFs, and whilst the convenience of regular deposits into SmartShares would be nice, the increased fees, the way FIF taxes are applied to PIE funds, and the decreased liquidity will mean that I sadly remain invested overseas instead. I do think their fees are cheeky considering the costs.

[kiwidollabill]

I had researched the option of buying Vanguard on the ASX and was going to pull the trigger prior to this coming out (had been semi-index investing via superlife previously). For the smaller investor (like myself) the NZX option is the easiest and so will be buying in via there. I imagine in the future when the portfolio gets to a critical mass I'll move back to buying offshore.

Not surprised at the fees (I thought they would be higher), they're compared to managed funds, and have no other NZ competition.

[Onion]

had been semi-index investing via superlife previously..... the NZX option is the easiest

kiwidollabill,

I have looked briefly at Superlife and thought their range of options was pretty good.

Is it the simplicity of being able to directly buy and sell on the NZX that you like about Smartshares?

How do the the fees compare?

[newtrader]

For the smaller investor (like myself) the NZX option is the easiest and so will be buying in via there. I imagine in the future when the portfolio gets to a critical mass I'll move back to buying offshore.

What is your threshold for when your portfolio has reached critical mass and such that it makes sense to buy offshore?

[kiwidollabill]

kiwidollabill,

I have looked briefly at Superlife and thought their range of options was pretty good.

Is it the simplicity of being able to directly buy and sell on the NZX that you like about Smartshares?

How do the the fees compare?

So I'm thinking a critical mass for me to invest directly will be $50-80k (I'm currently in the 30s).

The big appeal to me is the dividend reinvestment and the automatic payments to buy more with each pay cycle

I think superlifes fees for the global shares fund was ~0.6% pa. You can buy the original NZX ETFs via your superlife portfollo, the pricing schemes were different but think it was only a dollar or two each way.

I think we really need to look at the fees issue in comparison to the managed funds. I looked at the ANZ KS growth fund a while back, largest holding was the Vanguard S+P500, the ANZ and the Vanguard performance essentially overlay each other over the last 5yrs and the fee on that is ~1%.

The target customer for these NZX funds is either people not currently involved in stocks, or with managed funds. Most users on here would be outside the 'ideal customer profile'. Or you could buy NZX:NZX so the divy on that cancels out your ETF fund cost....

[voltage]

You can buy these vanguard ETFs on the ASX with no extra fee. Basically you are paying an extra .3 to .45% fee on the NZX. I do, however, like VU total world, this contains emerging and small companies with just over 50% in the US. This is really the only global stock you need to have a diversified fund.

[bmrm]

Or you could buy NZX:NZX so the divy on that cancels out your ETF fund cost....

I love the idea of buying NZX to cancel out the fees. Their dividend yield is actually pretty high, so wouldn't take much. Very elegant.

[Harvey Specter]

Most users on here would be outside the 'ideal customer profile'. NOt necessarily. People on here a e more likely to be active investors not passive, but you cant be active in the global markets - its just too much to cover.

So if they want a bit of global diversity, a extremely low cost EFT makes sense.

[ShadowBlue]

The conclusions appear to be the fees are too high, but a good option if you are looking to drip-feed monthly to build up.

So (hypothetically (or not, if you are actually considering)), if you were looking to go with Smartshares, what funds would you be seriously considering? Which ones do you predict will offer the best long-term options?

[smpl]

What we need a International Equities ETF hedged back into NZD.

[kiwichick]

The conclusions appear to be the fees are too high, but a good option if you are looking to drip-feed monthly to build up.

So (hypothetically (or not, if you are actually considering)), if you were looking to go with Smartshares, what funds would you be seriously considering? Which ones do you predict will offer the best long-term options?

I've just invested in the US 500 and Europe ETFs. But I'm a newbie, and only invested the minimum. I invested in the US 500 fund, as it's a pretty solid performer. I don't have any idea what the European stock market is like, but with the turmoil Europe is in right now, stocks there are low so I'm betting they will rebound in a few years. BUT! I'm just learning. Really I'm just dipping my toe in the water and waiting to see what happens.

[Traderx]

I've just invested in the US 500 and Europe ETFs. But I'm a newbie, and only invested the minimum. I invested in the US 500 fund, as it's a pretty solid performer. I don't have any idea what the European stock market is like, but with the turmoil Europe is in right now, stocks there are low so I'm betting they will rebound in a few years. BUT! I'm just learning. Really I'm just dipping my toe in the water and waiting to see what happens.


One key thing you and others investing in these new international funds needs to be aware of is the impact of currency.
If the NZD declines, your holdings will increase by that same percent and vice versa.

i.e currnecy movements will be a large driver of performance (positive and negative), especially in the short term.

[Traderx]

You can buy these vanguard ETFs on the ASX with no extra fee. Basically you are paying an extra .3 to .45% fee on the NZX. I do, however, like VU total world, this contains emerging and small companies with just over 50% in the US. This is really the only global stock you need to have a diversified fund.

Hi - you are ignoring the benefit of PIE status. i.e reducing your tax rate from 33% to 28% fo high income earners Lets say returns are 5%. That covers 0.25% pa right there. In addition your alternative of buying on the NZX would incur transactions fees, and administration costs for managing your tax affairs etc that an NZX listed PIE avoid totally.

I think they look pretty good, except for the fact there are no currency hedged options.

[Harvey Specter]

One key thing you and others investing in these new international funds needs to be aware of is the impact of currency.
If the NZD declines, your holdings will increase by that same percent and vice versa.

i.e currency movements will be a large driver of performance (positive and negative), especially in the short term.But this is equally so should you invest in EFT in Australia or the US. Unlikely an individual investor would hedge, though it is unfortunate that the NZX doesn't offer this (at this stage??).

[kiwidollabill]

NOt necessarily. People on here a e more likely to be active investors not passive, but you cant be active in the global markets - its just too much to cover.

So if they want a bit of global diversity, a extremely low cost EFT makes sense.

Sorry, meant that the users on here already have alot of ETF/sharemarket knowledge so are likely to invest directly (and have already done so) than via NZX

[kiwichick]

One key thing you and others investing in these new international funds needs to be aware of is the impact of currency.
If the NZD declines, your holdings will increase by that same percent and vice versa.

i.e currnecy movements will be a large driver of performance (positive and negative), especially in the short term.

Yes, that's true. Too bad these ETFs didn't launch a few months ago - could have taken advantage of the large drop in the NZD. The lack of currency hedging is part of the reason I'm only investing a small amount. But ultimately, I'm not after short term gains. When investing long-term, the moves in currency shouldn't matter too much.

[bmrm]

Yes, that's true. Too bad these ETFs didn't launch a few months ago - could have taken advantage of the large drop in the NZD. The lack of currency hedging is part of the reason I'm only investing a small amount. But ultimately, I'm not after short term gains. When investing long-term, the moves in currency shouldn't matter too much.

It may well be the case that NZX saw the dollar fall and put off developing any hedged funds for now, tbh I'd rather buy in directly at this exchange rate and have my cake with a hedged fund at ~80cents if and when we return to that level.

[cheda213]

Anyone think there might be liquidity issues for those nzx etfs?

[newtrader]

Anyone think there might be liquidity issues for those nzx etfs?

Just like the previous ETFs, there are market makers but the spread isn't too favourable. It's about 0.5-1% either way.

[nextbigthing]

http://www.stuff.co.nz/business/money/71105603/your-money-new-zealand-joins-the-passive-investment-revolution