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[The Wrap] KiwiSaver for free who would have thought of that?

And who would have thought the first manager to come out with a zero fee balanced fund would be NZ Funds?

Sunday, September 5th 2021, 10:51AM 5 Comments

by Philip Macalister

NZ Funds has been considered an expensive manager previously. So to go to zero fees was not something anyone expected.

Earlier this year eyes opened wide when Smartshares won default KiwiSaver status with a fund charging 20 basis points, even beating out the loudest fee manager Simplicity. (They too won default status with a fund charging 30 basis points).

NZ Funds is one of those firms which has flown under the radar for most of its existence. Only recently has it hit the headlines, and not for all the right reasons.

The manager was invested into cryptocurrency, got the timing spot on and pocketed some big fees. (Investors did well too).

Before that it was wrapped over the knuckle for advertising returns of 100% in a year. (See this earlier Wrap).

NZ Funds has always been a bit different and innovated in its own ways. Under its leadership now the market will see it trying different things.

It is being innovative and that can’t be a bad thing. Why just have another me-too manager? The market place has plenty of those already.

When we talked to NZ Funds this week it was impressive how open they were, and they provided substantial information to Good Returns about their zero-fee fund. If only other managers and insurers were so open

No doubt some advisers won’t like the latest move, but they should not be worried as NZ Funds is trying to get people to join KiwiSaver, and these potential members are unlikely to be advised clients for quite some time.

It’s well worth re-reading our story earlier this week as NZ Funds chief executive Michael Lang talked extensively about making Auckland a global financial hub.

It’s not a new idea – years ago Craig Stobo (ex BT) talked about this concept too. Lang says there is a small group working on this idea at the moment.
New Zealand, and Auckland in particular, could well be suited to becoming a global financial hub.

It’s the subject for a future Wrap piece from me – so stay tuned.

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Comments from our readers

On 5 September 2021 at 5:58 pm xlink_nz said:
"When we talked to NZ Funds this week it was impressive how open they were"

Note NZ Funds no longer provide information to Morningstar Quarterly Kiwisaver Report
On 6 September 2021 at 8:30 am Pragmatic said:
Really looking forward to hearing more about NZ Funds chief executive Michael Lang's efforts in making Auckland a global financial hub. From my experience, there are useful conversations to be had with:
MAS - Singapore
HKMA - Hong Kong
TIC - Taiwan
KIC - South Korea
SAFE - China
...all of these entities have been pursuing making their own regional financial hub aspirations for at least 2 decades... with none really winning the first-prize at this stage.
On 7 September 2021 at 7:39 pm Graeme33 said:
How can there be a Hub in NZ??...we dont even have a Futures exchange/ Market ?? Graeme Adams...we have a nice time Zone though!
On 7 September 2021 at 7:50 pm Graeme33 said:
maybe the FMA poked their nose in , because the whole industry is so reticent to adopt/Push a more uniform standard 24 Month rolling Performance figures.No one is interested in 1 month...or 10 years.24 months should be the norm nowdays .Graeme Adams
On 8 September 2021 at 7:44 am Pragmatic said:
@Graeme33 raises a very interesting point - what is the appropriate timespan to measure investment performance.
For what it's worth, I agree that monthly performance assessments are both misleading & dangerous.
At best, an annual performance appraisal can indicate potential issues - although are heavily distorted through monthly swings
I note that institutional investors tend to place more weight on 3 & 5 year performance figures, along with style profiling (ie: avoiding style drift), and attribution analysis (ie: what contributed / detracted from performance).

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