Is your KiwiSaver building Trump’s wall?
Investments in companies set to benefit from the US President’s controversial pet project could present a dilemma for New Zealand’s savers.
‘‘Build that wall! Build that wall!’’
Donald Trump supporters chanted at his pre-election rallies, and it looks certain now he will.
It could be good news for KiwiSavers, as some of their money is invested in private contractors currently running security on the 3200 kilometre US border with Mexico.
And at least one US-listed company that appears in some KiwiSaver funds has thrown its hat into the ring for contracts to build Trump’s permanent wall.
The border security relationship between the US government and private enterprise is dubbed the US ‘‘industrial border complex’’, and involves many large, multinational companies listed on stock exchanges in New York and London.
KiwiSaver funds invest in the shares of giant global companies, and inevitably, that exposes KiwiSaver investors to the prospect of profiting from the building, and policing of Trump’s ‘‘great’’ wall.
More than 220 companies have begun pitching for contracts to build Trump’s wall, including Raytheon, a giant US construction company, whose shares were in the Westpac Growth KiwiSaver fund when it published its annual investment list.
Raytheon shares are also in the Vanguard International Share fund, which provides ASB and Simplicity KiwiSavers with their international share investments.
US-listed Vulcan Materials, which is also in Vanguard funds, is also thought to be bidding for contracts.
ABC News and the Wall Street Journal have both sought to highlight which are earning most from helping keep Mexicans out of the US. Most KiwiSaver funds own some shares in one or more of those companies they identified.
These include well-known companies like Unisys, Lockheed Martin, and Boeing, as well London-listed G4S group and USlisted Israeli company Elbit, all of which are found in the Vanguard fund.
Simplicity founder Sam Stubbs said: ‘‘With large multi-national companies, if you dig hard enough, you will find something.’’
While some ethical investment questions attract broad agreement, such as New Zealanders demanding KiwiSaver funds be free of cluster bombs, anti-personnel mines and nuclear weapons, others are not so black and white.
Deriving KiwiSaver profits from Trump’s policies may not please everyone, but Stubbs said: ‘‘I’m not sure our clients would find it interesting enough to want to purge their KiwiSaver of anything to do with Donald Trump.’’
Trump’s plans include cutting company taxes, and reducing environmental regulations.
Anticipating higher profits as a result, jubilant investors had driven share prices higher, resulting in higher KiwiSaver fund returns.
Little short of excluding all companies doing business in the US would avoid profiting from Trump policies.
‘‘You wouldn’t be invested in very many companies at all,’’ Stubbs said.
Ethical investment expert Roger Spiller from Money Matters said KiwiSavers who wanted to minimise their exposure to some of Trump’s policies should opt a socially-responsible KiwiSaver fund, which do not invest in weapons makers.
‘‘If you hear Donald Trump announcing a huge increase in military spending, you know you are not going to be supporting that, or profiting from it,’’ Spiller said.
Ethical funds are also often more heavily invested in more environmentally friendly companies, and some like Booster’s socially responsible fund have gone fossil fuel-free.
Investing in an ethical fund was ‘‘a vote for a more progressive policy agenda’’ than Trump was offering, Spiller said.
A 2016 poll showed the majority of KiwiSavers did not think ethical and environmental considerations were important when choosing a fund, the Responsible Investment Association said.
Knowing what your KiwiSaver fund was invested in was important, said the association’s Simon O’Connor, as was investors and media challenging fund managers when they invested in businesses involved in unethical activities.
O’Connor said investor outcry led Australian super scheme managers to exclude G4S from their funds several years ago because it was the contractor operating the Manus Island offshore refugee detention centre for the Australian government. G4S provides services to secure the US-Mexico border, including running the ‘‘bus no one wants to catch’’ which returns illegal immigrants back to Mexico.
One of the companies profiting from the beefing up of the US-Mexico border security is Elbit, whose security systems are used on the Arizona-Mexico border already, the Financial Times reported. In 2014 it won a Homeland Security contract to install , which ‘‘automatically detect and track items of interest’’ in the borderlands.