Last week’s decision by the Reserve Bank of New Zealand to reduce the Official Cash Rate (OCR) to a new all-time low of 1.5% has certainly triggered much debate. The call has been made that further monetary stimulation is needed to support certain sectors of the local economy and to take account of a degree of uncertainty in the global economy. The wisdom or otherwise of the rate cut will only be judged in hindsight, but it is certainly fascinating to see a situation where our rate is now a full 1% below the United States Federal Reserve interest rate. I remember a time not too long ago when NZ’s cash rate was always higher than the United States. This was based on the belief that we were a small economy with a high level of external debt, and that higher local interest rates had to reflect the increased risk. Apparently, the world is now different. With the OCR at this level, the returns from cash and some bank term deposits are now negative, i.e., the after-tax return ...

Humans don’t tend to make good investors. We’re prone to panic and irrational decision making. So, anything that increases the odds in our favour should be grabbed. Know thyself therefore becomes a key investment skill. Which led me to wonder, inspired by a work colleague, what might be the differences between men and woman as investors? It’s not a topic I had researched. But I have observed over time that the male is often the more aggressive investor. They are return-seeking and less concerned with risk. That can be a negative. Many of these male investors were very good at chasing opportunities but less successful at earning returns. We should expect to be rewarded for taking more risk. But if those risks are not well thought through or managed then our outcomes are at risk. A slow and steady, more conservative approach can have merit. Recognising the entrepreneurial spirit inherent in many of these investors (or perhaps that they are simply men) my job became to encourage...

By now many New Zealanders have successfully navigated their way out of the default scheme they were randomly allocated to, into more growth-orientated schemes. The move has been a good one, with investors accumulating at least an additional $800 million over the past three years, based on NZ Funds’ estimates. But will it be a case of out of the frying pan and into the fire? Growth-orientated schemes can be a double edged sword; while their returns are higher than income-orientated schemes over the long-run, they can deliver significant losses over the short term. In some cases shares, the primary driver of growth schemes, can take more than a decade to recover from a slump. And the recovery times assume investors do not panic and switch to cash, and do not make any withdrawals from their scheme until it has fully recovered. This is bad news for New Zealanders approaching retirement. To get the most out of their scheme, most New Zealanders will need to make at least two KiwiSave...

To eager purchasers of the Model T Ford, Henry Ford reputedly said, “you can have any colour you like as long as it's black”. He knew that the introduction of low-cost motoring was a revolutionary development and that offering a selection of colours just added cost and was functionally irrelevant. When making investment choices it is very easy to be distracted by matters which may attract a lot of debate, but functionally don’t create a better outcome in the longer term. Financial advice is much like other professional services; if clients put their mind to it they could probably do a lot of it themselves. However, a little knowledge can be a dangerous thing and sometimes our intuition can be unhelpful when it comes to investment decisions. A recent piece of research 1 , which looked at the various determinants of investment outcomes, revealed five central elements that drive investment results. The research went on to rank the importance of those elements. Altho...

NZ Funds Media Release 1 May 2019 Auckland, New Zealand – NZ Funds announced today that its plan writing technology is now writing 71 plans a month and its myWealth technology was used by around 11,000 clients with over $800 million of assets. NZ Funds says its mission, to be the leader in wealth technology in New Zealand by 2020, is “well on track” according to Damon Murfitt, Chief Technology Officer at NZ Funds. To substantiate his claim, Murfitt pointed to two areas in which he believes NZ Funds leads. “Six years ago we designed New Zealand’s first robo adviser. However, we found that, as is often the case, technology and innovation had outpaced the law. The regulation in New Zealand at that time did not contemplate the provision of electronic advice so we could not launch it, so we pivoted and launched myWealth as freeware instead” says Murfitt. In March, NZ Funds’ myWealth software was used by 11,000 clients with over $800 million of assets. Murfitt says clients a...