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Generate cuts fees, launches new KiwiSaver funds

Generate Investment Management will next week launch five new funds, including three more KiwiSaver options.

Wednesday, May 11th 2022, 7:59AM

by Jenni McManus

The new KiwiSaver funds are skewed towards the conservative end of the spectrum and include a defensive fund which, says Generate CEO Henry Tongue, will be particularly suitable for those building up a first-home deposit or approaching retirement. This fund will have no growth investments; its target asset allocation will be 100% income, meaning a very low exposure to market volatility.

Generate currently offers three KiwiSaver funds: Conservative (32.5% growth assets), Growth (82% growth assets) and Focused Growth (95% growth assets).

From 16 May, the current Conservative fund will be renamed the Moderate fund and its target allocation of growth assets will rise from 32.5% to 40%, slightly lifting its risk profile.

In addition, three new funds will be launched: the Balanced fund (60% growth assets), a new Conservative fund (20% growth assets) and the Defensive fund (zero growth assets).

At the same time, two new non-KiwiSaver managed funds will be added to the mix: a Conservative managed fund and a Balanced managed fund. At present, the only managed fund Generate offers is Focused Growth.

Generate is cutting fees for three funds: Focused Growth (from 1.37% to 1.33%), Growth (1.32% to 1.30%) and Moderate (1.19% to 1.14%). Each fund also attracts an annual administration fee of $36.

Tongue says Generate is introducing the new funds at the conservative end of the market to give members more choice and better cater for their needs.

“We have always been strong in the growth end of the market. We’re very proud of our track record for long-term performance and the fact that 84% of our KiwiSaver members’ funds are invested in growth funds versus the industry average of 40%. I believe Generate has a higher percentage in growth funds than any other provider.

“This is the result of our focus on service and empowering our members. More than 95% of our members joined through an adviser which allowed them to get the information they need to make a smart decision with their KiwiSaver savings. Over time, these members will be materially better off at retirement for talking to an adviser and getting into a growth fund,” he says.

Members and advisers have also been asking for a full range of non-KiwiSaver managed funds. When Generate began planning for these new funds about a year ago, it decided to review its KiwiSaver range as well.

“Our membership is skewed to the working age group, 25-55, who are naturally suited to growth funds and buying first homes,” Tongue says. “We wanted to offer members looking to buy their first home more certainty and protection from market volatility with our defensive fund. We also wanted to look after members who are over 55 and moving towards and into retirement … We are here for the long-term and are planning ahead.”

If members decide to switch funds, this will trigger a tax payment. Tax for KiwiSaver funds is normally calculated daily,  accrued into the daily fund price and paid at the end of the tax year. But if investors change funds during the tax year or switch providers, tax is payable at the time of the move.

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Last updated: 19 May 2022 10:42am

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