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  1. #51
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    Quote Originally Posted by stoploss View Post
    This will show you over the last 5 years who has a good track record. Past performance is no guarantee of future performance. However the guys/girls in the top 3 on the active growth must be doing something right when you compare them to some of the lower performing funds ..... Don't get too caught up in the free fees .. I'd rather be making 14 % PA and paying a reasonable fee, than paying nothing and only getting 6 % .
    Think of your fund manager as a sports team ...who would you back to win the World Cup , NZ or Tonga .
    I won't pretend to have done a full literature search, but everything I've read on the subject agrees that past performance really is no guarantee of future performance (example http://papers.ssrn.com/sol3/papers.c...act_id=1578808) and that on average actively managed funds perform worse than index investing (due essentially to increased costs, UK centred example https://www.institutional.vanguard.c...vesting-uk.pdf). So the average active fund does badly, and you can't tell which the above average funds will be.

    I don't have a kiwisaver just yet (not a full resident yet), but when I do I'm planning to build a Superlife index portfolio, mostly of overseas shares, as they're cheapest. Higher fees are the only thing I can be absolutely sure about that will impact on my returns. 1% versus 0.5% doesn't sound like a lot, but if you made 5% returns one year, the difference is 10% of your profit, which winds up being a huge amount of money over time. It's also worth pointing out I'm a huge hypocrite as I actively manage my own portfolio outside of kiwisaver but I only have myself to blame for what happens there, and although trading costs are significant I don't have to pay a %age just to hold what I already own.

    The Mercer example looks like it's a gremlin in the sorted system, they definitely quote fees on their website https://secure.superfacts.com/web/IW...tionsFlyer.pdf

  2. #52
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    Quote Originally Posted by stoploss View Post
    very difficult to give advice these days and stay within the law without the right qualifications , disclosures , and research on client .
    Have a look at http://www.morningstar.com.au/s/docu...rvey2015Q4.pdf

    This will show you over the last 5 years who has a good track record. Past performance is no guarantee of future performance. However the guys/girls in the top 3 on the active growth must be doing something right when you compare them to some of the lower performing funds ..... Don't get too caught up in the free fees .. I'd rather be making 14 % PA and paying a reasonable fee, than paying nothing and only getting 6 % .
    Think of your fund manager as a sports team ...who would you back to win the World Cup , NZ or Tonga .

    thanks .. love this site for info appreciate it.. @stoploss & @mfd

    seems like ill be changing over to superlife and bringing my partners super over from Australia

  3. #53
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    Superlife NZ and to some extent Aus shares, property is the most tax efficient as not paying tax on capital gains and getting imputation credits. That makes a difference too.

    Also thinking of trying to change my life insurance to them as they are NZ based, no commission and no broker hard sell.

  4. #54
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    Simplicity - the new low-cost, not-for-profit Kiwisaver provider (from Sam Stubbs) - 0.3% fund management fee for all funds (growth, balanced, conservative) + $30/year.
    All investments hedged to NZ dollar - hedging fee is extra but wont be much I think.

    I will consider switching!

  5. #55
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    Quote Originally Posted by RRR View Post
    Simplicity - the new low-cost, not-for-profit Kiwisaver provider (from Sam Stubbs) - 0.3% fund management fee for all funds (growth, balanced, conservative) + $30/year.
    All investments hedged to NZ dollar - hedging fee is extra but wont be much I think.

    I will consider switching!
    Unless you are in conservative , this does not make sense to me .
    Surely the overall performance is of more importance . So I am happy to pay A bit more to get better performance .
    Compare the 5 year return of the top Growth funds vs the bottom ones . I have been happy with my Milford returns .

  6. #56
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    Quote Originally Posted by stoploss View Post
    Unless you are in conservative , this does not make sense to me .
    Surely the overall performance is of more importance . So I am happy to pay A bit more to get better performance .
    Compare the 5 year return of the top Growth funds vs the bottom ones . I have been happy with my Milford returns .
    I'd be interested to see the evidence that recent good performance predicts future performance. I know it's intuitive but that doesn't mean it's true. Here's some suggesting low fees are the best predictor of future performance

    http://news.morningstar.com/articlen...aspx?id=347327

    "Expense ratios are strong predictors of performance. In every asset class over every time period, the cheapest quintile produced higher total returns than the most expensive quintile"

    Here's another interesting article:

    http://www.obliviousinvestor.com/choosing-funds-low-costs-or-high-past-performance/

    "picking funds based on superior past performance proved to be less successful than picking randomly"

  7. #57
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    Quote Originally Posted by mfd View Post
    I'd be interested to see the evidence that recent good performance predicts future performance. I know it's intuitive but that doesn't mean it's true. Here's some suggesting low fees are the best predictor of future performance

    http://news.morningstar.com/articlen...aspx?id=347327

    "Expense ratios are strong predictors of performance. In every asset class over every time period, the cheapest quintile produced higher total returns than the most expensive quintile"

    Here's another interesting article:

    http://www.obliviousinvestor.com/choosing-funds-low-costs-or-high-past-performance/

    "picking funds based on superior past performance proved to be less successful than picking randomly"
    I should have put that disclaimer in there about past performance . I look at it in a sporting way maybe Milford have the financial equivalent of the All Blacks working for them and some of the bottom ranked funds ( comparing like funds) the Wellington Lions ....
    I note that article is 2010 , say I have 100 K in my Kiwisaver, what would the opportunity cost have been with some of the cheaper providers over the past 6 years .

    https://milfordasset.com/milford-top...isaver-survey/

  8. #58
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    Quote Originally Posted by stoploss View Post
    I should have put that disclaimer in there about past performance . I look at it in a sporting way maybe Milford have the financial equivalent of the All Blacks working for them and some of the bottom ranked funds ( comparing like funds) the Wellington Lions ....
    I note that article is 2010 , say I have 100 K in my Kiwisaver, what would the opportunity cost have been with some of the cheaper providers over the past 6 years .

    https://milfordasset.com/milford-top...isaver-survey/
    No argument, the best fund to have been in for the last 5 years is the fund that performed the best. The trouble is there doesn't seem to be any actual evidence to be able to extrapolate that into the future. It's a leap of faith. The second article I posted had an interesting section that really poor performance probably predicts future poor performance, but once you get out of the dross I think they're all essentially monkeys throwing darts at a list of stocks.

    We all make our own decisions, I'll be taking a close look at simplicity as it's looking cheaper than my current superlife mix and ends up invested in the same Vanguard funds at the end of the day. Of course as they're index funds they'll never be top of the tables, but they also won't be able to drop any major clangers, and on average can be expected to perform better than the average actively managed fund (due to lower fees).

  9. #59
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    Low cost index fund would surely beat the majority of managed funds especially in developed (discovered) markets. Active management is costly. The difference would be profound esp in bear markets - you lose 1-2% (active management fees) vs 0.3-0.5 for index fund.

    Fiona McKenzie of NZ super fund is also a big fan of index funds - according to her keep the expense as low a possible and that would make a big difference in the long term. Only a small proportion of NZ super fund is actively managed.

  10. #60
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    Quote Originally Posted by RRR View Post
    Simplicity - the new low-cost, not-for-profit Kiwisaver provider (from Sam Stubbs) - 0.3% fund management fee for all funds (growth, balanced, conservative) + $30/year.
    All investments hedged to NZ dollar - hedging fee is extra but wont be much I think.

    I will consider switching!
    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:

    While we have a policy of hedging overseas investments 100% to the NZ dollar, on a before tax basis,
    there may be fluctuations in value, and the actual percentage may vary. There may also be additional
    requirements to pay for the cost of hedging if the NZD is more volatile than predicted.
    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.

    The annual fund charges exclude transaction costs incurred by the funds in which the Scheme invests, and any hedging costs.
    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...

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