NZ Fund Managers

[Snoopy]

Kiwiwealth don't seem to do a regular Q&A member session like Fishers and Milford.

I have managed to find a Kiwiwealth Webinar from June 2022 for those interested.

https://www.kiwiwealth.co.nz/learn/a...et-volatility/

Answers below Steffan Berridge, Chief Investment Officer, at KiwiWealth talk.


My Notes

Q/ Why is the marker volatile and why have KiwiWealth investments gone down in value?

A/ We have funds with significant diversification across many companies. But there are factors that can affect all companies like 'high inflation'. furthermore, the level of downturn in fixed interest funds recently is higher than we would normally expect.

Q/ What is KiwiWealth doing about it?

A/ Volatility is when market opportunities present themselves. We have recently increased our holdings in some cheap looking high technology and consumer companies, like Microsoft and Home Depot. We have been increasing our holdings in higher yielding corporate bonds.

We also invest in 'macro funds' that invest in such things as interest rates and commodities and the US dollar. These are included in all of our Kiwiwealth growth, balanced and conservative funds. These macrofunds are designed to pivot quickly to global trends in markets like this, and have worked very well this year, especially for commodities. But just because we are an active investor, adjusting portfolios, does not mean we always get it right.

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It is always refreshing to hear from fund managers when they state that they 'do not always get it right' These macrofunds that KiwiWealth talks about are what I would call hedge funds. They are invested in positions that turn out to be 'right' or 'wrong'. And the funds make a profit or not on their taken up positions accordingly. Taking a 'long term view', such transactions are a 'zero sum game'. But they do have the ability to smooth out returns over the short term.

Of particular interest, I thought, was the comment made on these hedge funds
"These are included in all of our KiwiWealth growth, balanced and conservative funds"

That is a stark point of difference between KiwiWealth as fund managers and the other protagonists that we have examined so far. It also means that the comparison that I went through in post 79, suggesting I had made an error of judgement, is likely less of an issue. Those absolute funds are still there in the managed KiwiWealth Growth Fund that is not a part of Kiwisaver, But they are there outside of the top ten holdings in the fund list. It is just that we outsiders cannot readily see them.

SNOOPY

[Snoopy]

https://fisherfunds.co.nz/assets/ann...March-2021.pdf

Fisher funds have been widely discussed on this forum for their listed exchange traded funds, Kingfish (NZX), Barramundi (ASX) and Marlin (Rest of World). But this is a discussion of the unlisted versions of those funds. The funds under scrutiny here are:

1/ The New Zealand Growth Fund:

Investment Theme	Stock picking on the NZX
Fund Size	@31-12-2021 was $320.0m
Principal holdings	@31-12-2021 were: Mainfreight, Fisher & Paykel Healthcare, Xero Limited, Infratil Limited, Summerset Group Holdings Ltd, Auckland International Airport Limited, A2 Milk Company Limited, Vista Group International Limited and Ryman Healthcare Limited.
Distribution over FY2022	None
Total Management Annual Charge	= 1.40%
Fund risk rating	'5'

2/ The Australian Growth Fund:

Investment Theme	Stock picking on the ASX
Fund size	@31-12-2021 was $109.8m
Principal holdings	@31-12-2021 were: CSLLimited, Wisetech Global Limited (software for freight and customs management), Carsales.com Ltd, CBA, Seek Limited, NextDC Limited (data centre operator), NAB, ANZ, AUB Group Limited (insurance brokers and underwriting agencies), Brambles Ltd (freight).
Currency Hedging Policy	Target 70% to NZD
Distribution over FY2022	None
Total management annual charge	= 1.42%
Risk rating	'6'

3/ The International Growth Fund:

Investment Theme	Stock picking outside of Australia and New Zealand
Fund size	@31-12-2021 was $142.9m.
Principal holdings	@31-12-2021 were: Meta (was Facebook), Alphabet (was Google), Signature Bank (US based full service commercial bank), Tencent Holdings Ltd (Chinese multinational technology and entertainment conglomerate and holding company headquartered in Shenzhen, Hong Kong listed), Dollar General Corporation (American variety stores), Paypal Holdings, Gartner Inc (consulting company doing technical research), ICON plc (clinical research organization doing research outsourced by pharmaceutical, biotechnology and medical device companies), Mastercard.
Currency Hedging Policy	Target 50% (In practice between 0% and 110%)
Distribution over FY2022	None
Total management and annual charge	= 1.42%
Risk rating	''5'

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Fisher funds claims to be the fifth largest investment manager in New Zealand, managing over $13.2 billion for more than 280,000 clients (AR2021 page 4). They have a 20 strong investment team (AR2021 p6). Fisher Funds have a 'concentrated approach' to their investments. A fund will typically hold just 15-20 different shares at any one time. This is consistent with a non-index tracking approach.

The above post is from 28th April 2022, reviewing data from 31-03-2021. Since that time there has been no fundamental change in the nature of these funds. However, one thing that has changed is the risk profiles on two of these funds. As at 28th December 2022, the risk profiles for these three funds is as follows:

The New Zealand Growth Fund:

Fund risk rating

'6'

The Australian Growth Fund:

Fund risk rating

'6'

The International Growth Fund:

Fund risk rating

''6'

At EOCY2021 Australia was an outlier for risk. Come EOCY2022, NZ and Global investments have joined Australia with a high '6' risk profile. So what happened to change these risk ratings?

Australia is a market with a very high concentration of resource shares. Commodity prices tend not to correlate well with sharemarkets in general. (Think of what has happened to the global price of oil since the start of 2022, +then think what has happened to share prices over that same period). Over time, this has resulted in more volatility in Australian share prices. And volatility - we are told- is equivalent to risk.

Over 2022, the severe reversal in the fortunes of the NZX and the "NYSE and NASDAQ " (which is where most international funds from kiwi fund holders end up being invested) has increased the medium term volatility profile of shares in those markets. Therefore because the volatility increased, that means the 'risk' (as measured by the NZ Investment scale of risk) has consummately increased.

So all of a sudden with the market taking a big hit, the risk of investing in shares has gone up? With a more everyday understanding of the word 'risk' , this is clearly not true. In fact the opposite is true. The deeper the discount you can get on your share purchases, clearly the risk of getting a poor return going forwards is lower. In my view this is a serious problem with the mandated comparison standard of linking risk with volatility. Put simply, I can fully understand why putting your money in an investment which declines in value by 20% per year is, with hindsight., risky. Yet take these same investors and put their money on a bull market run, where their investments gain 20% are they equally likely to be under severe mental stress? I would say not. My argument here is that the downside 'risk' is a problem, but the upside 'risk' is not. Therefore it makes little sense to rate the risk of a particular investment fund by measuring its volatility.

Using Fishers here as an example (but I don't want to single out Fishers as all other NZ fund managers face the same issue), suddenly they are being forced, by government standards, to tell us that the risk of putting your money in NZ markets and International markets, after the end of a bull run, has gone up. Yes the volatility as measured by share price movements has gone up. But investing funds today will very likely earn a far better return going forwards, than if you had taken that same money and invested it a year ago. So what signals are we giving to our less financially literate brethren when we rubber stamp an 'Investment Rating Scale' that directs inexperienced investors to put their money into markets at the wrong time?

SNOOPY

[Snoopy]

https://fisherfunds.co.nz/news-and-i...eing-for-women

New Zealand women have savings balances that are, on average, 20% less than men. How to level up the sexes in terms of savings? Below are my notes from the webinar.


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Unique challenges faced by women when it comes to retirement planning:

1/ Statistically women do earn less than men. In 2021, the gender pay gap was 9.1%, which in terms of saving resources compounds year on year on year.
2/ Women have less time in the workforce to save. Women tend to take more maternity and family leave and make more of an unpaid contribution to family life.
3/ Women's life expectancy is longer (83.5yrs verses 80 years in NZ). So whatever savings you have, on average, have to last for longer.



Overcoming the Challenges


Early adulthood

1/ You get your first real job and maybe think about going overseas for the big 'OE'. But you may have a large student loan to pay down. And that first job might not be as lucrative as you were hoping. At this time you should look to:
1i/ Master basic budgeting skills. Goal should be 1/3 on rent, 1/3 on living expenses and 1/3 on saving. OR
1ii/ The 50/30/20 rule. 50% on living expenses, 30% on going out and having fun and 20% on savings.

2/ What do we mean by savings?
2i/ Paying down debt is included.
2ii/ Key is to choose your method, and stick with it.
2iii/ You must contribute to kiwisaver, at least to the level to get to get the minimum 1:0.5 government equivalent top up contribution of $1,042.86 per year. This allows you to get the $521.43 annual top up from the government.

3/ Be in the right savings strategy. Unless you are twelve months out from purchasing a house, you should be in a growth strategy.

Your 30s

Buying property for the first time, career progression and starting a family

4/ Optimizing your kiwisaver remains your core opportunity.
4i/ Buying a home in the near term? Switch your kiwisaver to a more conservative kind of fund.

5/ Start utilizing managed funds as an adjunct to kiwisaver if you want to turbocharge your savings and have access to that money before you turn 65.

Mission Retire

You hit 50 and realize that retirement is not that far away.

6/ 15 years is still a long timeframe as far as investing is concerned. So maintain a growth strategy..

7/ Increase your kiwisaver contributions if you are nearing the pinnacle of your earning capability, gain an inheritance or sell down the family home to release capital.

8/ Take the chance to diversify your assets away from being heavily weighted to property into shares and bonds.

Retirement

Aged 65+

9/ Consider working part time for longer to stretch out those retirement funds.

10/ Balance leaving a legacy for your children with enjoying your retirement as long as possible.

11/ You can now consolidate your kiwisaver with any managed funds you have into one investment portfolio, as the government and employer top up incentives cease. But this is optional. There is no tax disadvantage to retaining your kiwisaver as is, and you now have access to the balance at any time.

12/ Look at investing your nest egg in a way that can keep up its purchasing power for as long as possible.

Audience Questions

Q1/ How much money do I need to have to retire and leave comfortably?

A1/ See retirement calculator on Fisher funds website:
https://retirement.fisherfunds.co.nz/

No one answer for all because your specific needs are going to have to be gone through and thought about.

Q2/ What does 'investing in shares' mean, and how does the Fisher investment team invest?

A2/ Kiwisaver funds are diversified funds across all the different asset classes: NZ shares, Australian shares, International shares (predominantly UK and US), Property and Infrastructure, and cash, cash like assets, and treasury (government) or corporate bonds.

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SNOOPY

[Snoopy]

The ANZ bank is New Zealand's largest trading bank, and offers their own in house funds for investors. If you go through ANZ's own website, then you end up here:

https://www.anz.co.nz/personal/inves...compare-funds/

In the investment funds section, investors have a choice of investing in five different funds. The funds all appear to be 'under the same management team' and the risk categories are reflected in what portion of funds are invested in 'growth assets' (equities, listed property and listed infrastructure) and 'income assets' (cash and cash equivalents and fixed interest). The funds may also invest in alternative assets (hedging positions). The composition of listed assets in the five funds offered are listed below.

	Growth Fund	Balanced Growth Fund	Balanced Fund	Conservative Balanced Fund	Conservative Fund
Growth Assets	80%	65%	50%	35%	20%
Income Assets	20%	35%	50%	65%	80%
Annual Fund Charge	1.12%	1.07%	1.02%	0.82%	0.68%

If we look at the investment team roles:

https://www.anz.co.nz/personal/inves...vestment-team/

we can see that the team is very much focused on Australia and New Zealand. Expertise in other markets is 'bought in' via wholesale arrangements with overseas fund managers.

Rather curiously, ANZ offer a second investment platform called 'OneAnswer investment funds'.

https://www.anz.co.nz/comms/investme...estment-funds/

OneAnswer offers the multi-class asset funds as tabulated above, but in addition to that, individual single class asset funds as follows:

a/ New Zealand Fixed Interest Fund (Run by ANZ). Risk rating '3'. Management fee 0.47%.
b/ International Fixed Interest Fund (Run by external managers Northern Trust and Pimco Australia). Risk rating '4'. Management fee 0.63%.
c/ Property Securities Fund (Run by ANZ) Risk rating '6'. Management fee 1.16%.
d/ International Property Fund (Run by external managers Resolution Capital). Risk rating '6'. Management fee 1.14%.
e/ New Zealand Share Fund (Run by ANZ). Risk rating '5'. Management fee 1.16%.
f/ Equity Selection Fund (70% NZ based and 30% Aus based) (Run by ANZ). Risk rating '5'. Management fee 1.29%.
g/ Australian Share Fund (Run by external managers Tyndall Asset Management). Risk rating '6'. Management fee 1.15%.
h/ International Share Fund (Run by external managers: Franklin Equity Group, MFS Institutional Advisors, LSV Asset Management and Vontobel Asset Management). Risk rating '5'. Management fee 1.16%.
i/ International Listed Infrastructure Fund (Run by external managers Maple-Brown Abbott). Risk rating '5'. Management fee 0.95%.

Notes

1/ All fees listed above are the maximum investors will pay. There are no bonus fees payable for fund outperformance of a benchmark

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Some information on these funds may be found here:
https://www.anz.co.nz/content/dam/an...ASAC-Guide.pdf

My brief summary of investment style is that both ANZ and their investing agent price fall under the category of GARP (Growth at a Reasonable Price) except for LSV which looks for 'out of favour' beaten down in price 'value assets'.

Disclosure of what is in these individual asset class funds is very poor, to the extent that it hard to find and only the top ten holdings are disclosed. Single year performance data for these funds is available here:
https://www.anz.co.nz/content/dam/an...-single-AR.pdf

And historical quarterly reports are here:
https://www.anz.co.nz/comms/investme...-fund-updates/

Fund risk ratings and management fees may be found here:
https://www.anz.co.nz/content/dam/an.../OASAC-PDS.pdf

SNOOPY

P.S. To get more of a feel for 'investment style', I always find it useful to look at the top ten NZX holdings under management.

[Snoopy]

P.S. To get more of a feel for 'investment style', I always find it useful to look at the top ten NZX holdings under management.

One thing you can't fault the 'ANZ NZ growth fund' for is 'full disclosure'. All 4,410 of the investments held are listed!
https://www.anz.co.nz/content/dam/an...ent-Growth.pdf

The ANZ Oneanswer NZ Shares Fund is a bit less forthcoming, with only the top ten holdings disclosed.
https://www.anz.co.nz/content/dam/an...922-Growth.pdf

NZ Equities Top Ten Holdings

	Oneanswer NZ share Top Ten holding fund percentage (30/09/2022)	Oneanswer NZ share Top Ten relative percentage (30/09/2022)	ANZ Growth Fund, Top ten NZ holdings percentage (30/09/2022)	ANZ Growth Top Ten NZ holdings relative percentage	NZX50 capitalisation (30-09-2022)	NZX50 Top Ten relative percentage (30-09-2022)
Fisher & Paykel Healthcare	9.83%	15.3%	0.99%	16.0%	$10.72b	13.8%
Spark	7.95%	12.3%	0.80%	12.9%	$9.37b	12.0%
Auckland International Airport	7.12%	11.1%	0.69%	11.1%	$10.60b	13.6%
Mainfreight Limited	7.98%	12.4%	0.65%	10.5%	$6.79b	8.7%
Contact Energy	6.14%	9.5%	0.61%	9.8%	$5.86b	7.5%
Meridian Energy	6.41%	10.0%	0.59%	9.5%	$12.39b	15.9%
Ebos	6.34%	9.8%	0.55%	8.9%	$7.17b	9.2%
Infratil	4.41%	6.8%	0.54%	8.7%	$6.26b	8.0%
A2 Milk Company	3.94%	6.1%	0.39%	6.3%	$4.47b	5.7%
Ryman Healthcare	n.a.	n.a.	0.39%	6.3%	$4.31b	5.5%
Chorus	4.24%.	6.6%.	n.a.	n.a.	$3.31b	n.a
Total	64.4%	100%	6.2%	100%	n.a.	100%
Mercury Energy	n.a.	n.a.	0.23%	n.a.	$7.90b	n.a.

Lots of numbers, so what is the best way to make sense of them? The figures to look at are those in every second column (the ones that add up to 100%). These give a normalised view of the proportion of shares held. I would expect the first two such columns to be very similar, because these two funds are managed by the same managers. This is broadly true, but the Oneanswer fund has noticeably higher 'relative holdings' in Mainfreight, and notably less in Infratil. The 30-09-2022 update report for Oneanswer is 'matter of fact' and offers no commentary on the thinking behind any of the holdings.

There is a phenomena among 'active fund managers' that I term 'Index Plus' management. Such funds are not index funds. But the fund managers get timid and don't want to diverge too far away from those index fund returns they are trying to beat. The larger the total dollar amount of funds under management, the more these active funds gravitate toward becoming 'Index Plus'. That is partly because making 'side bets' on lesser known shares becomes impossible for liquidity reasons, and also insignificant in the overall context of the fund.

How much independent thinking is evident in these ANZ funds? For that we need to look at those first two '100% sum' columns in the table and compare them with the last, which represents the share proportions represented in the index. Fisher and Paykel Healthcare may be one of the top two shares on the NZX, but ANZ want even more of this pie than an index holding would give them. This is consistent with the idea of buying great companies and never selling them, with little regard for value for money. Auckland International Airport in an underweight position, even if 'takeover talk' with the Auckland Councils shareholding likely coming onto the block has subsequently seen the share price rise above any sensible earnings valuation. Takeover talk can lift a share above fair value, so I don't disparage ANZ management for holding an underweight position in what was, IMO, a very fully priced asset. Mainfreight is in an overweight position at ANZ, as is A2 milk. 'Long term Ryman' that can do no wrong (sic) is overweight. I am reminded very much of Fisher Funds when I look at the NZ shares portfolio, except that Fishers did fall out of love with Ryman.

The after fees but before tax performance for the year ended 31-03-2022 was -4.36%, with the comparable figure at Fishers being -7.4%.. Fees were startlingly higher at Fishers for the year at 3.52% (much of that being a 2.12% bonus earned in the previous year, base fee is 1.40%), alongside ANZ charges of just 1.07%. So most of ANZ's relative out-performance can be put down to lower fees.

One area where ANZ (and many other active fund managers it must be said) appear to have made some poor decisions over CY2022, is in relation to their holdings in the gentailers. I say this with a tinge of arrogance as the NZ power system is something I have put a great deal of time into understanding over the last few years. Mercury is well underweight in the ANZ holdings compared to its index rating. This is a decision a fund manager might make on a dividend yield basis, if they didn't understand the powerful synergies available from combining the old Trustpower windfarm portfolio with Mercury's Waikato river hydro system. I personally took advantage of this 'market mispricing' in the middle of last year betting against the prevailing view on Mercury (not just held by ANZ) that other gentailers were better value. Contact was widely touted as the best value at the time and has risen in price since. But Mercury has gone up much more. That little 'power misplay', while occurring largely after the 31-03-2022 balance date, is evidence of ANZ not understanding the subtleties of NZ's power system market. I am putting 1% of their fund outperformance down to that, while noting that Fishers have long underweighted the power gentailers (makes sense, do not go headlong into an investment universe that you do not understand).

Conclusion time: The ten year performance of the "ANZ Oneanswer NZ Shares Fund" is a claimed annualised 13.11% per year over 10 years. Meanwhile the NZX50 index went from about 3488 to 12089 over the same period.

3488(1+i)^10=12089 => i = (12089/3488)^0.1 - 1= => i=13.2% (no fees deducted)

This means that despite the Oneanswer NZ Shares Fund being credible, they have really only slightly under-performed the index over the ten year time-frame, after fees. I am calling the Oneanswer NZ Shares Fund, an 'index+' fund. Fees are commendably low at 1.07%. But the Smartshares NZ Top 50 ETF (FNZ) index fund has even lower fees at just 0.5%. It is not clear that the 'good active calls' have outweighed the 'bad active calls' in any meaningful way.

SNOOPY

[Snoopy]

One thing you can't fault the 'ANZ NZ growth fund' for is 'full disclosure'. All 4,410 of the investments held are listed!
https://www.anz.co.nz/content/dam/an...ent-Growth.pdf

The ANZ Oneanswer Properties Securities Fund is a bit less forthcoming, with only the top ten holdings disclosed. However these top ten holdings do make up 94% of the total value of the fund.
https://www.anz.co.nz/content/dam/an...Securities.pdf


Property Securities Top Ten Holdings

	Oneanswer Property Securities Top Ten holding fund percentage (30/09/2022)	Oneanswer Property Securities Top Ten relative percentage (30/09/2022)	ANZ Property Securities Top ten percentage (30/09/2022)	ANZ Property Securities Top ten NZ holdings relative percentage (30/09/2022)	NZX50 capitalisation (30-09-2022)	NZX50 Top Eight relative percentage (30-09-2022)
Precinct Properties	15.59%	16.5%	0.38%	14.0%	$2,062m	17.7%
Stride Stapled Group	12.85%	13.6%	0.35%	12.9%	$902m	7.7%
Property for Industry	14.06%	14.9%	0.34%	12.5%	$1,225m	10.5%
Summerset Group Holdings	1.76%	1.9%	0.33%	12.2%	$2,502m (2)	n.a.
Kiwi Income Property Trust	14.22%	15.0%	0.33%	12.2%	$1,438m	12.3%
Goodman Property Trust	17.00%	18.0%	0.30%	11.1%	$2,779m	23.8%
Charter Hall Group (Aus)	1.65%	1.7%	0.28%	10.3%	$18,469m (1)	n.a.
Vital Healthcare Property Trust	9.21%	9.7%	0.23%	8.5%	$1,677m	14.4%
Investore Propwerty	5.64%	6.0%	0.17%	6.3%	$558.6m	4.8%
Argosy Property	2.61%	2.8%	0.00%	0%	$1,016m	8.7%
Total	94.59%	100%	2.71%	100%	n.a.	100%

Notes

1/ Charter Hall Group(CHC.ASX) is an Australian listed property company. On 30th September 2022, the exchange rate was NZD1.13379 = AUD1. This is the exchange rate that i have used when converting the market capitalisation of CHC to New Zealand dollars on the date of analysis. However Charter Hall is such a large entity it is worth as much as the entire New Zealand property sector combined. Given it is not even a New Zealand company, it is hard to justify its inclusion as part of any New Zealand Property sector investment analysis. Consequently I believe it would be an artificial construct to include Charter Hall Group in any asset allocation analysis for this fund.

2/ Summerset Group is a New Zealand retirement village operator. Traditionally, such operators have accumulated capital via the asset appreciation of properties within their villages to help fund their care model. However, they are not property owning companies in the conventional sense. And if we include Summerset in a property sector analysis, are we not obliged to include the other listed retirement village operators as well? Consequently I have decided to omit Summerset from any property sector proportional analysis.

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Lots of numbers, so what is the best way to make sense of them? The figures to look at are those in every second column (the ones that add up to 100%). These give a normalised view of the proportion of shares held. I would expect the first two such columns to be very similar, because these two funds are managed by the same managers. In practice, the picture has become distorted by the inclusion of Summerset and Charter Hall, which are not normally on the list for those seeking investment in the NZ property sector. Token holdings representing 1.9% (SUM) and 1.7% (CHC.ASX) have been included in the NZ property fund, in a much smaller proportion to those that exist in the much more widely invested growth fund. ANZ do not comment on these inclusions, so we are forced to speculate on why this might be. My guess is that it is liquidity issues in the NZ property sector, which contains only eight significant players in the NZX50.

Leaving aside Summerset and Charter Hall, ANZ have elected to significantly underweight both the Goodman Property Trust (gross yield 3.2%) and Vital Healthcare Property Trust (Gross yield 4.4%). Having done my own research into the NZ listed property sector of late, I share the same concerns, not on the underlying investments but the market valuations of these two companies. Gross yield for both is well below what might be expected from a bank term deposit, which makes it hard to see value in either purchase. Argosy is also very much out of favour. Gross yield is good at 6.3%. So I can only speculate that the long shadow Kaikoura earthquake damage to 7 Waterloo key in Wellington, the general reduction in office space demand due to 'work from home' and maybe leasing issues for the recently completed 8-14 Willis Street are weighing on investors minds. I should add that these are worries I do not personally share.

On a more positive note ANZ seem very overweight on Stride Property, which is the parent company of Investore, the listed big box retailer with a heavy presence in the supermarket sector. I also like Investore, although I do note it is saddled with some rather onerous management contracts from parent company Stride. I guess having a share in Stride is a way to claw back some of the management contract overspending at Investore.

The low return for the year ended 31-03-2022 of just 0.49%, did not compare well with the market benchmark of 1.30%. But when you consider that management fees 1.06% have been stripped from the fund result, underlying performance was better than index.

In conclusion, I like the 'allocation skew' that ANZ has put on this property fund. But it isn't enough to overcome the tyranny of the extra level of management that being part of a managed fund imposes. In listed property, this does not disprove my thesis that simply buying a property index fund will likely lead to a better return over both shorter and longer time periods than an active manager can produce.

SNOOPY

[Snoopy]

https://www.kiwiwealth.co.nz/product...ed-funds/fees/

"There is one annual fee that applies for each of our Managed Funds. There are also some ‘Other costs’ that flow through to our funds which we’ve estimated in the table below (don’t worry – we don’t expect they’ll vary too much from the estimate)."

"Unlike some other providers, we don’t charge performance fees on top of the return your investment makes, so you get to keep more of your returns."

When I click through the link above., I can no longer find the quoted text I have reproduced above. For more information on fees, I am directed here:

https://www.kiwiwealth.co.nz/product...key-documents/

Then when I click "Kiwiwealth Managed Funds - Other Material Information", i get sent to a pdf. That is a relatively new document issued in December 2022

Page 20 of that document contains the following information on fees

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Limits on fees and expenses

Under the Trust Deed the maximum fees that we can charge out of each Fund are:
Contribution fee 5% (plus any GST) of the consideration for meeting the issue price of units.
Annual Fees 2% (plus any GST) per annum of the net asset value of the Fund.
Performance fee To be set at the time any performance fee is introduced.
Withdrawal fee 5% (plus any GST) of the amount withdrawn.
Supervisor fee 0.075% (plus any GST) per annum of the net asset value of the Fund.

There are no limits on the Buy/Sell spreads that we can charge. Subject to the above limitations and the limitation set out under ‘Additional costs, charges, and expenses’ above, there is no limit to the amount of remuneration that we can be paid or on the amount of expenses we can recover

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While I note that these are 'maximum fees', they do seem high by industry standards. Annual management fees for the funds look to be:

(2% + 0.075%) x 1.15 (GST) = 3.1625%, with performance fees to be added to that.

I believe that this fee update is a direct result of Kiwiwealth being acquired by Fisher Funds. By way of comparison, the total Kiwiwealth Growth Fund annual fee for YE30-06-2022 (before the Fisher Funds takeover) was a mere 0.96%!

It does seem there is now a clear intent to introduce performance fees on top of management fees, something that was in the past a clear point of difference between Kiwiwealth and most other fund managers. Buy/Sell spreads are in effect another layer of fees on top of the standard contribution fees. Suddenly Kiwiwealth is looking very expensive indeed to be getting in and out of!

It would appear that in December 2022, the entire collective wisdom of the Kiwiwealth investment team was dispensed with:

https://www.newsroom.co.nz/fisher-fu...-bank-collapse

"Fisher Funds also acquired Kiwi Wealth and its 13 funds in December; Fisher laid off Kiwi Wealth’s senior investment managers and parachuted in its own people to make the key decisions. The Kiwi Wealth funds had no exposure to Signature or Silicon Valley banks, and have only small holdings in First Republic – investors in Kiwi Wealth may be thanking their stars Fisher’s managers haven’t had more time to “rebalance” their portfolios."

If Kiwiwealth is to become a Fisher Funds clone, then all the information I have posted on this thread previously on the distinguishing advantages of the Kiwiwealth platform have gone.

Going to the Facebook page

https://www.facebook.com/kiwiwealth.co.nz

the only updates for 2023 seem to be on stories by Children's author Suzy Cato on investing for kids. Not much investment wisdom to download from that source I would have thought.

SNOOPY

[Aaron]

Thanks Snoopy I have been with Kiwiwealth since it was Gareth Morgan because he hated how opaque the managed funds industry was and kept fees reasonably cheap. Only small contributions to this though $1,042 a year so have not given it much thought. Is there a page to compare Kiwisaver managers fees.

I think I will switch to whoever is reasonably sized and cheapest. Any suggestions

Was thinking about Fisher Funds this morning when I see in the herald they lost $50mill in a US bank (signature I think). One fund that got hit was their conservative fund. Funny how as borrowers have been bailed out over the years conservative investors are the ones taking the risk/hits with interest rates below inflation and bank runs.

[Snoopy]

Thanks Snoopy I have been with Kiwiwealth since it was Gareth Morgan because he hated how opaque the managed funds industry was and kept fees reasonably cheap. Only small contributions to this though $1,042 a year so have not given it much thought. Is there a page to compare Kiwisaver managers fees.

Here is a reasonably recent report on some of the performance of some of the leading managers by Morningstar.

https://cdn.morningstar.com.au/mca/s...ember-2022.pdf

If you look at the ''growth" fund section, you will see a column of 'asset based fees' (which I believe do not include performance fees). You will see that Fishers charge their customers 2.51%, the most of any provider. However, if you look across at the five and ten year performance which are generally listed as 'after all fees', you will see that Fishers are near the top of the pack (beaten only by Milford). So you could say that Fishers have 'earned their high fees'.

The alternative Fisher managed arm, dubbed Fisher TWO, came about with Fishers takeover of Tower's Investment product arm in 2013. That has a lower asset based fee structure, starting from 1.04%, and actually recorded a slightly better result than the 'original' Fisher Growth fund. Perhaps this gives hope that Fishers will not look to raise their asset management fees at KiwiWealth, once that acquisition is bedded down? I did note, as a disclaimer, that the fee structure I outlined for KiwiWealth going forwards was in the context of the 'maximum fees we can charge'.

After I made my 'big ramp up in fees' accusation for Kiwiwealth participants, I had a look at the latest December 2022 KiwiWealth Growth fund quarterly report.

https://www.kiwiwealth.co.nz/assets/...ember-2022.pdf

That shows annual asset based fees at just 0.96%. However although the performance fund figures were up to date, the accompanying fee information referenced was for the year ended 31st March 2022. Almost a year old! So although I can read between the lines and say what I think will happen to Kiwiwealth fees, Kiwiwealth investors are being kept 'fully in the dark'. The truth of what will happen is not yet out there.

I think I will switch to whoever is reasonably sized and cheapest. Any suggestions

I think there was always a twelve month timeframe for integration. So that equates to December 2023. I think that if Kiwi Wealth had served me well, I would wait to see what the new fee structure actually was before switching. Perhaps more important than that would be to see how the fund managers changed, and any new philosophy they might bring to the funds under management.

Was thinking about Fisher Funds this morning when I see in the herald they lost $50mill in a US bank (signature I think). One fund that got hit was their conservative fund. Funny how as borrowers have been bailed out over the years conservative investors are the ones taking the risk/hits with interest rates below inflation and bank runs.

Fisher funds investment philosophy seems to be to buy high conviction stocks in a relatively concentrated portfolio and hold them through thick and thin. Investing in banks is, I think, at the trickier end of the spectrum of businesses to understand from a risk perspective. So I think their losses at Signature Bank were to an extent unlucky (interest rates rose much faster than anyone expected, causing the implosion in bond values used to back depositors funds), and not just a question of 'poor stock selection'.

Personally my sole reason for investing in overseas markets is to gain exposure to a sector that I cannot get at home. There are plenty of banks you can invest in much closer to home than Signature bank was. In this way I am out of step with the 'Fisher Investment Philosophy'.

The hit on Fishers conservative funds was another outcome of rapidly rising interest rates, which were a core part of Fisher's conservatively managed funds.

SNOOPY

[Snoopy]

It would appear that in December 2022, the entire collective wisdom of the Kiwiwealth investment team was dispensed with:

https://www.newsroom.co.nz/fisher-fu...-bank-collapse

"Fisher Funds also acquired Kiwi Wealth and its 13 funds in December; Fisher laid off Kiwi Wealth’s senior investment managers and parachuted in its own people to make the key decisions. The Kiwi Wealth funds had no exposure to Signature or Silicon Valley banks, and have only small holdings in First Republic – investors in Kiwi Wealth may be thanking their stars Fisher’s managers haven’t had more time to “rebalance” their portfolios."

More information on the cull of Kiwiwealth staff is here:

https://www.goodreturns.co.nz/articl...wi-wealth.html

"Fisher Funds has begun its rationalisation of Kiwi Wealth with key executives losing their jobs."

"Those to go include former chief executive Rhiannon McKinnon, chief investment officer Steffan Berridge, chief technology officer Craig Ward and chief customer Officer Morne Redgard."

"One executive to survive the cull is general counsel Vanessa Simons. Kiwi Wealth chief operating officer Craig Holloway survives the initial cull and "will be staying on to support the integration for a period of 12 months from Wellington." "

"Berridge will be leaving the business after a four-month period assisting the integration."

" “Steffan will play an important role in supporting the integration of the businesses and ensuring our clients’ investment outcomes remain at the forefront throughout. His assistance will be invaluable as we continue to progress through this complex work and we are incredibly grateful for his ongoing support,” McLachlan says."

"Fisher Funds says it "wishes" to retain a significant number of the Kiwi Wealth team and "expects to continue to have a meaningful Wellington presence for the foreseeable future, enhancing the growth aspirations for a national footprint." "

SNOOPY