The fog surrounding your KiwiSaver
Despite controversies over holdings in weapons, obtaining investment information is now harder, writes Rob Stock.
Simplicity KiwiSaver is nearing completion of its ‘‘Where in the World’’ project. It’s building an online world map, where investors can zero in on where their money has been invested.
‘‘They will click on a country, and it will tell them the stocks their money has been invested in,’’ says Simplicity founder Sam Stubbs.
Arguably only Kiwi Wealth is more transparent.
When its savers log on to Kiwi Wealth’s website, they can see a list of every stock their fund is invested in, including the proportion of their money that is in each.
‘‘Transparency has always been a key principle for Kiwi Wealth right back to the days of Gareth Morgan,’’ says Kiwi Wealth’s Ramesh Naran.
When KiwiSavers know where money is invested, they can start taking an interest, and playing their part in keeping their fund managers honest, and ethical.
It also opens their eyes to the giant New Zealand companies they are exposed to.
KiwiSaver has been billed as a means of lifting New Zealanders’ investment knowledge and skills.
But for that to work, KiwiSavers have to get interested in where their money is invested, including the New Zealand companies listed in the NZX.
The sharemarket annual shareholder meeting season is drawing to an end.
Investors use these meetings to quiz company chief executive and boards about their performance, and in some cases to protest, for example at Spark’s recent shareholder meeting in Auckland, where directors asked for, and got, a large pay rise.
It’s actually become more difficult, not easier, to find out how your KiwiSaver is invested.
Once, all the KiwiSaver managers were required by law to post on their websites a complete list of the shares and bonds they were invested in.
It was these annual lists, showing the shares and bonds held, and the proportion of people’s money invested in them, which led to the first articles revealing many were invested in companies involved in controversial weapons like land mines and cluster bombs, as well as nuclear weapons.
None of this information is now on the big KiwiSaver providers’ websites.
The information has migrated onto the online Disclose Register run by the Companies Office.
Even though it is free to search the Disclose register, it is universally acknowledged to be distinctly user-unfriendly.
But a search under ‘‘Offers’’ with the name of your KiwiSaver scheme, followed by clicking on the ‘‘Investment Options’’ tab, followed by clicking on ‘‘Full Portfolio Holdings’’ will bring up your fund’s full holdings list.
Investors in these funds have the largest part of their money in volatile shares, hoping that over time they will get a high return, even if they have to put up with a few bumps along the way.
The ASB Growth fund provides a guide to the kind of exposures growth funds have in the large New Zealand companies, though some KiwiSaver schemes such as Kiwi Wealth make a virtue of investing more of your money offshore, in part as a way of diversifying KiwiSavers’ financial risk away from these tiny, shaky islands.
For every $100 invested, ASB Growth fund had $1.97 in Fisher & Paykel Healthcare.
It had $1.81 in Spark, $1.61 in Auckland International Airport, $1.51 in Fletcher Building, and $1.29 in A2 Milk.
Other shares in which the fund had more than $1 in every $100 invested were retirement village developer and operator Ryman Healthcare, Contact Energy, and Westpac, though strictly speaking that is now an Australian company listed on the ASX.
Because of KiwiSaver’s local focus, giant international companies are a smaller portion of the portfolio than comparatively tiny Kiwi companies.
The first international share listed is Apple, at 75 cents per $100 invested. That was 1 cent behind Xero, in which 76 cents per $100 was invested.
Investors in these funds have a lower proportion of their money in shares, but individual investments in Kiwi companies can still be large.
Westpac’s KiwiSaver balanced fund, for example, had $1.69 in Fisher & Paykel Healthcare for every $100 invested.
Other large holdings were: Auckland International Airport ($1.34), Auckland-focused commercial property investor Kiwi Property Group ($1.23), Spark ($1.05), Contact Energy ($1.03) and Fletcher Building ($1.03).
KiwiSavers who cannot decide where to put their money are bumped into a default fund.
These are conservative funds with a lot of money in cash and bonds. They are safe, but unlikely to produce high returns over an investing lifetime.
Their largest holdings are bonds and cash deposits.
Just 7.02 per cent of AMP’s default money was in Australasian shares, including New Zealand shares.
Bond and deposit investors care less about share prices than their money being secure, and their interest getting paid on time.
For every $100 invested at the end of September, $16.28 was deposited with Westpac, its largest position.
Investors pay KiwiSaver managers to look after their money.
That saves them having to worry about it themselves, other than making the three key decisions every KiwiSaver must make: How much they need to be saving from their salary, what kind of fund they should be saving into (conservative, balanced, growth, etc), and which KiwiSaver provider they choose to be with.
This is sometimes dubbed ‘‘secondhand capitalism’’, where investors’ money ends up being sunk into companies individual KiwiSavers don’t approve of.
Individual investors also have no voice.
Their fund manager is the one to decide how it will vote the shares their KiwiSaver funds hold, if they vote them at all.
Spark directors, for example, got their 8.7 per cent pay rise thanks to support from ‘‘institutional’’ shareholders, including KiwiSaver managers.
Some KiwiSaver providers are making an effort to clear the mist around investments.