KiwiSaver

First NZ Capital Investment Management (FNZC) has decided to exit the KiwiSaver market and transfer its business to Fisher Funds.

After securing approval from the government actuary FNZC is to transfer all scheme members into the Fisher Funds KiwiSaver Growth Fund.

“Fisher Funds offers what we consider to be a well resourced and experienced investment management team that will continue to manage your investment according to materially corresponding investment initiatives,” said FNZC director Malcolm Davie.

In a letter to members outlining the move Davie said FNZC believed the transfer would provide a “favourable outcome” for members.

“Fisher Funds is one of the ten largest NZ retail fund managers, managing more than $850 million for more than 35,000 investors, and a number of its products have been independently rated by Morningstar – giving you comfort that their controls and investment processes are of a high standard and have been externally examined.”

Davie said that if the transfer receives government approval members will be automatically transferred into to the Fisher Funds Growth scheme in late November and once complete, the FNZC scheme will be wound up.

Members were also informed they were free to transfer to any other KiwiSaver scheme and in the event the government failed to approve the move members who had not transferred to another fund would be placed in the Inland Revenue Department default scheme.

 

The September quarter saw KiwiSaver funds rebound, with all types of funds producing positive returns as fears of a double-dip recession eased, according to the latest Mercer KiwiSaver survey.

KiwiSaver returns received a boost as global share markets, which took a battering in the June quarter, bounced back.

KiwiSaver growth funds – which have the greatest weighting towards shares – performed best with a median return of 5.8% for the quarter ending September 30, a significant turnaround from the previous quarter’s negative median return of -6.1%.

“Global share markets have bounced back over the past quarter, as fears of the European debt crisis reduced. All asset classes produced positive returns, including property and commodities, which is great for KiwiSaver funds,” said Mercer New Zealand head Martin Lewington.

However, Lewington cautioned that the economic outlook remained uncertain with weak consumer spending and high unemployment in the US.

“The bumpy ride for KiwiSaver investors may not be over yet, but long term investors should not be overly concerned with short term movements. As the contrast between the June and September quarter shows, it is possible to regain monies notionally lost and over the long term the result should be quite positive.”

According to the survey the best performing fund for the September quarter was the Fisher Funds Growth Fund, which returned 10.5% and 31.2% for the year to September 30.

Over the three years KiwiSaver has been running the survey found funds with the highest weighting towards bonds and cash had been the best performers, reflecting the volatile share market conditions over recent years.

Default schemes were the strongest performers over the three year period, recording a median return of 4.6% per annum compared to -3.1% per annum for growth funds.

The Real Property KiwiSaver Scheme (RPKS) was closed down in May and the funds of members are now to be distributed to other providers.

RPKS director Lindsay Hay says a bulk cheque from the funds has been given to Prince Partners to distribute.

He says about 90% of RPKS members have chosen a new KiwiSaver provider with a lot changing over to Fisher Funds and a few to Gareth Morgan.

The RPKS was set up for investors who were not confident about investing in assets like shares, however the scheme never really got off the ground without a property to its name.

Hay says a few properties were looked at, but several million dollars were needed to get somewhere and the fund wound up with just under $1 million and only 70 people signed up.

“If we had $5 million or $6 million we’d have been away but it wasn’t forthcoming and we were up against the big boys which wasn’t easy.”

He says the timing of starting the scheme up was a shame with the recession keeping people’s hands in their pockets.

“We had great support and a lot of people are disappointed, but we pulled the pin because we didn’t have enough money to get traction and as a result we were going to struggle.”

In March last year RPKS’ annual financial statement showed it had just $405,998 funds under management.

 

 

 

Making KiwiSaver a compulsory savings isn’t the silver bullet to address New Zealand’s dismal savings record, with the evidence across the Tasman unclear, according to the Savings Working Group.

The group’s chairman, Kerry McDonald, told a media briefing in Wellington the group was using Australia as a “laboratory” to draw on the experience across the Tasman. Though Australia’s had compulsory superannuation since 1992, McDonald said the data was unclear as to whether it had boosted that nation’s overall level of savings.

“The data I’ve seen at this stage is pretty equivocal on whether it increases national savings or not – I need to be pretty clear that’s work in progress,” McDonald said.

The group won’t be looking at the household sector, which includes KiwiSaver, until later this year, he said. 

The group has been tasked with finding ways to lift the level of New Zealanders’ savings across the board, and was asked to focus on government saving, tax on capital income and the role of KiwiSaver. Finance Minister Bill English excluded New Zealand superannuation from the terms of reference.

The group won’t offer recommendations on issues outside the terms of reference, McDonald said they may make wider comments on issues such as superannuation, and recommend the government revisit some of the taboo topics.

The group has met twice so far and has taken a wide macro-economic look at the issues facing New Zealand, putting much of the blame on the poor performance of the tradeable export sector over the past decade, he said.

This has encouraged foreign investment and local reliance offshore debt, which in turn lifted interest rates and the strength of the kiwi dollar, which fed the imbalance further, he said. The group estimates interest rates are 1.5 to 2.5 percentage points more than they should be.

The group meets tomorrow and will focus on the government sector, with spending cuts likely to be on the agenda.

McDonald said the group’s recommendations don’t have to be fiscally neutral, but any proposals to take money from the government coffers and put it into another part of the economy have to be for the wider good of the nation.