NZ Fund Managers

[Snoopy]

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

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Withdrawal fee 5% (plus any GST) of the amount withdrawn.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!

Fishers have reported for their own label 'growth' and 'balanced' managed funds, they will be dropping performance fees from July.

https://fisherfunds.co.nz/investment...-managed-funds

"From 1 July 2023 the Growth Fund and Balanced Strategy will no longer incur a performance fee."

Recently acquired Kiwiwealth have a 'growth' and 'balanced' strategy with no performance fees. So it looks like bringing the two into line has resulted in Fishers losing their performance fee rather than Kiwiwealth gaining such fees.

The historical Fisher Balanced Fund fee including GST (with zero performance fees) was 1.21% + 0.19% = 1.40%
The historical Fisher Growth Fund fee including GST (with zero performance fees) was 1.27% + 0.18% = 1.45%

Those fees look to be less than the 3.165% fees charged by the now sister fund at Kiwiwealth. But further investigation suggests that I may have been wrong about GST being imposed at 15% at Kiwiwealth. From https://www.taxpolicy.ird.govt.nz/-/...aged-funds.pdf

"Treating 90% of their services as exempt and effectively charging 1.5% GST on their fees (15% GST on 10% of their fees). This practice is applied by most retail managed funds and wholesale funds that other funds such as retirement schemes invest into."
"(because they consider their services are mostly “arranging” the buying and selling of investment products and so should qualify for the GST exemption for financial services)."

If this is true then the annual Kiwiwealth Growth Fund fee is projected to be (2% + 0.075%) x 1.015 (GST) = 2.106%, an overall fee that is nevertheless higher than the Fisher Funds branded sister funds.

Reading the fine print, it looks like the more specialised growth funds, Fishers Property & Infrastructure Fund, New Zealand Growth Fund, Australian Growth Fund, and International Growth Fund are NOT going to be exempt from future performance fees (albeit such fees will be capped at a maximum of 2% of the value of each fund per year).

This is contrary to the report here:
https://www.goodreturns.co.nz/articl...ison-fees.html

which, (erroneously?) suggests all Fisher Funds performance fees will be jettisoned.

SNOOPY