The NZ Funds KiwiSaver Scheme Growth Strategy was one of top performing funds in New Zealand in the first quarter of 2019. 1 NZ Funds’ 0-55 year old KiwiSaver member asset allocation was close behind. Newly appointed Chief Investment Officer, James Grigor, says NZ Funds’ success was driven by the structural makeup of its KiwiSaver Scheme and NZ Funds’ partnership with a small number of world class investment managers. “On the advice of the global investment experts we partner with, we used the selloff last year to add to a number of positions which have paid off handsomely in 2019.” “In general, volatility benefits our clients because it gives us and the managers we work with more opportunity to add value on clients’ behalf.” Grigor says approximately two thirds of NZ Funds KiwiSaver Scheme Growth Strategy is passively invested and one third is actively invested. “We are style agnostic; we believe there are strengths and weaknesses to both active and passive management, so ...

It is disappointing that a decade after the global financial crisis, New Zealanders continue to remain vulnerable because of the rules around risk indicators. This is especially the case for bond investors, who are often conservative in nature and consider fixed interest a safe haven in times of volatility. Unfortunately, after a decade of low interest rates bond investors are also prone to ‘reaching’ for higher yields, sometimes without understanding the risk they are taking. This is when risk indicators play a vital role – by helping New Zealanders understand how risky their ‘income’ product is. Given this backdrop, should a portfolio whose largest investment, comprising approximately 1/5th of the fund, is an off market, related party, private loan to a portfolio of shares, be given the same risk indicator as a term deposit from a major Australasian bank? Sadly, this is what is happening. A portfolio 1 (which we’ve chosen not to name) contains in its top ten holdings, ...

I was reminded by a client’s recent questions of a time before I had studied financial planning and investment. How should I invest? What investments will make money? What about risk? Could I lose all my money? At the same time, I had someone wanting to sell me insurances. But how much did I really need and of what type? The financial world seemed to have many more questions than answers. It felt like a big black hole of unknowns where expensive missteps could easily take place. Many years have passed since then. In the interim I have studied, advised, written articles and, importantly, I have lived life. From these I have learned. I wrote an article recently on the lessons I would teach my children. Start investing early, compounding is the magic ingredient. Be disciplined. Invest into growth assets such as shares and property but diversify. Make the most of KiwiSaver. Pay your mortgage off as quickly as you can. And sell big risks to an insurance company – severe illness or acci...

In 1989, to keep me out of trouble, my parents sent me to school in Berlin. To their horror, shortly after I arrived the Berlin Wall fell. One of my more vivid memories is of visiting my first East German supermarket with only one brand of anything on the shelf. One brand of baked beans, one brand of soap, no shampoo. One of the great things about a free market, is choice. The choice of organic beans, budget beans, New Zealand beans or imported beans. Of course no one wants to eat poisoned beans, or expired beans, so rules and regulation are essential. The system breaks down when the choice and preferences of any one group are imposed on many. Many New Zealanders do not realise that they have a choice between two fundamentally different types of KiwiSaver schemes: those that come with advice and those that do not. In general, those that provide more charge more and those that provide less, well, charge less. Who can be an adviser? Anyone can call themselves an adviser,...

NZ Funds Media Release 25 February 2019 Auckland, New Zealand – NZ Funds today announced that it was the top rated KiwiSaver Scheme in New Zealand for service with a score of 99% as ranked by Sorted. Sorted is a website run by the Commission for Financial Capability and surveys KiwiSaver providers regularly to rank their commitment to service. “NZ Funds believes service will be an important ingredient over the long term in determining the New Zealanders who will meet their retirement objectives and those who will not, so we have set an internal objective to deliver a level of service which ‘wows’ both clients and advisers. Being the top ranked scheme in New Zealand for service is a consequence of that philosophy” say Geoff Motion, Principal & Head of Service at NZ Funds. “Most clients don’t realise what they are missing out on until they experience it. Many New Zealanders have not had their asset allocation optimised for their age and stage or had help determining wh...

Since the release of the Tax Working Group’s report last month the media has been rife with speculation on what the implications of a capital gains tax (CGT) might be. I am always reticent to comment on any proposal before we know what will actually be included in the final legislation that will come before Parliament. And, in a comment that I never thought I would make, it will be interesting to see what moderating effect Winston (NZ First) might have on the final wording of the proposed legislation. The key proposal put forward by the working group was the introduction of a comprehensive tax that would be applied to capital gains. Rather than a unique tax rate being applied just to capital gains, the recommendations propose that any gains on capital (generally at the time of asset realisation) will be returned as part of your income and taxed at your marginal tax rate. This will result in many capital gains being taxed at 33%. Although the proposal includes some exemption...

The last quarter of 2018 was negative for shares – particularly overseas markets. Occasional volatility is normal but as usual there were voices suggesting the end of the world had arrived and media reported that investors were ‘draining’ money from share funds in the US, with $46 billion being withdrawn in one week in early December. Were those withdrawals a reaction to falling markets? I suspect many were. And I wonder how much of that money was reinvested for the recovery in January. A relatively small portion I suspect. It is important to acknowledge that most of us suffer some level of frustration or concern during negative periods and that this is normal. Successful investment however is the ability to ride out those periods. If our reaction is to want to sell perfectly good investments simply because markets are down then we need to consider whether we should reduce the size of our share investments, which tend to be more volatile. The offset of course being that we als...