KiwiSaver overtakes managed funds and shares

KiwiSaver has jumped ahead of managed funds and shares as the investment option offering the best returns, and an increasing number of people see the scheme as their primary means of retirement.

The findings have been revealed in the latest ASB Investor Confidence Survey which found KiwiSaver the third most favoured investment option behind term deposits and rental property.

“For the first time KiwiSaver jumped ahead of managed investments and shares as the investment offering the best returns,” said ASB head of private banking and wealth management Jonathan Beale.

“In addition a record 61% of respondents indicated that KiwiSaver would be their primary means of retirement, a percentage which has steadily increased in recent quarters.”

The survey revealed the  expectation that KiwiSaver would be enough to retire on was strongest among  those under 50, with 22% aged between 18-49 believing KiwiSaver would be enough for retirement, up 5% from the last quarter.

In the over 50 age group, 12% believed KiwiSaver alone would be adequate for retirement provision, also up 5%.

“It’s very encouraging to see those aged under 50 being so positive about their prospects with KiwiSaver, as this age group needs to start now to ensure they build up a sufficient nest egg for their retirement,” Beale said.

“KiwiSaver will be an important contributor to the future wealth of our country, so it is heartening to see this positive attitude.”

The survey found that overall investor confidence has begun to rise, with the three months to December 31 seeing the number of investors expecting to see their returns improve climb 4% to 19%.

Term deposits retained their top spot as most favoured investment choice, up 1% on the previous quarter to 21%.

While Beale said term deposits had returned to their highest level of popularity since the 2008 third quarter, he said the data indicated a dip in sentiment in December.

“Investors are likely to have been influenced by the December Reserve Bank announcement cautioning a slowdown on interest rates, which they again repeated in January.”

Rental property was the second most favoured investment option with 14% followed by KiwiSaver, managed funds (9%) and shares (6%).

Mike Pero gives Huljich the heave-ho

Mike Pero Mortgages has ended its KiwiSaver distribution deal with Huljich Wealth Management, though the company has been tight lipped on the reasons for the move.

“All I can say is there are commercial reasons for us not distributing that product and that’s as far as I’d like to go on that,” said Shaun Riley, the Mike Pero Mortgages chief executive.

“At this time I don’t want to expand on this at all.”

Speculation for the move has centred on new regulations under the Financial Advisers Act and the admission from Huljich’s former managing director, Peter Huljich, that he used his own money to prop up Huljich funds – thus distorting their returns.

Under the Act, distribution of KiwiSaver through mortgage brokers may become uneconomic as only Authorised Financial Advisers can advise on KiwiSaver products, while mortgage brokers don’t require AFA authorisation.

However, this argument was dismissed by one of the Mike Pero brokers Good Returns spoke to.

The broker – who like several others spoke on the condition of anonymity – said they were studying for Level 5 authorisation and that to qualify to give KiwiSaver advice would be “no more cost than what we’re doing now.”

Other brokers were keen to stress that no official explanation had been forthcoming, but several believed Huljich’s improper use of funds was behind the decision.

Huljich is currently facing criminal charges from the Securities Commission over allegations related party payments he made significantly impacted on the funds performance figures.

One said Mike Pero was a good brand and he believed the company would “hate to see that damaged” by association.

The Huljich KiwiSaver scheme was distributed through the Mike Pero Saver brand which was closed on January 16, with membership reverting to the Huljich brand.