Which Kiwisavers do you rate?

[FarmerGeorge]

I think any provider offering international equities exposure at low cost is on the right track. The website is fresh and I hope they do well.

From their Product Disclosure Statement:



This is the only thing missing however. Save yourselves money and offer clients the higher reward/higher risk option of no hedging - unhedged portfolios will outperform any of the other current Kiwisaver portfolios long term.



You're already superior to Smartshares with your international equities/low cost offering. Now you could beat KiwiWealth/Gareth Morgan (who benchmark 50% hedged/50% unhedged of their 85% international equity exposure) by offering 0% hedged.

Even better would be a service that let the client choose level of hedging...

Nothing to add to the KS debate - but the comment above about unhedged global portfolios outperforming is incorrect on an historic basis. Over any meaningful timeframe hedged has outperformed unhedged, for NZ investors. This can be verified very easily by comparing global providers where those providers offer the same underlying product on a hedged and unhedged basis. No comment on future returns but the historic data is there for anyone to see.

[huxley]

Nothing to add to the KS debate - but the comment above about unhedged global portfolios outperforming is incorrect on an historic basis. Over any meaningful timeframe hedged has outperformed unhedged, for NZ investors. This can be verified very easily by comparing global providers where those providers offer the same underlying product on a hedged and unhedged basis. No comment on future returns but the historic data is there for anyone to see.

You don't mention it, but the reason for this historic outperformance is caused by the higher short term interest rates in NZ capital markets when compared to overseas markets - this is known as the hedge premium or carry.

In order to gain from this trend the trade off is exposure to increased short term volatility caused by the positive correlation with NZD and equity markets.

I talked to a couple of KiwiSaver providers and most took a high conviction view that the short term downside risk was worth the hedge premium over the longer term.