There’s a lot more to selecting a KiwiSaver fund than just checking past returns and fees. If your hard-earned money is invested in KiwiSaver, you need to ask the important questions to understand where and how that money is invested.
Note: The following information is taken from AE Kiwisaver Scheme’s own website, fund updates, and the product disclosure statement published in June 2023.
Updated: 28th Aug 2023
Reviewed by: Daniel O’Brien
AE is different from many of the other KiwiSaver providers as they follow a strict ethical mandate, which requires all investments to comply with permitted business activities and defined financial requirements as set by the AAOIFI Shari’ah standards. This means that Amanah Ethical’s investment approach involves actively choosing which stocks are in the fund.
The AE KiwiSaver plan invests in the AE Growth Fund and is unique in that it only invests in United States (US) listed companies that have low debt with strong balance sheets and meet strict financial ratios. It has exposure to most sectors, excluding the Financials and Utilities sectors, due to the non-compliance with the AAOIFI standards.
Amanah Ethical employs a fixed management fee of 1.39% per annum, calculated quarterly by the registry date for their Strict Ethical Mandate fund. The fund does not charge a performance fee, however, it does include a member administration fee of $3.40 per year.
*Past performance is not necessarily indicative of future performance.
*All returns are per annum after fees and tax (28% PIR) as of the quarter ended 30th September 2024.
*Source: National Capital Research
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The Always-Ethical group currently consists of two companies, Amanah Trust Management (NZ) Limited and AE KiwiSaver Limited, which are licensed under the Financial Markets Conduct Act 2013 to manage Always-Ethical Investor and AE KiwiSaver Plan respectively.
Always-Ethical is a boutique fund management group based in Auckland, New Zealand. They specialise in providing ethical investment solutions to New Zealand and international investors.
The AE KiwiSaver Scheme manages one fund and has total KiwiSaver Assets Under Management (AUM) of over $NZ 51.4 million and 2,479 KiwiSaver clients.
Brian Henry – Founder of Amanah
Brian Henry, a Barrister with 45+ years of experience, directs Always-Ethical Limited and AE KiwiSaver Limited, a boutique fund management group prioritizing ethical investments in good business and real estate. The group offers investment solutions to both New Zealand and international investors. AE manages AE Investor and AE KiwiSaver Plan under the Financial Markets Conduct Act 2013. Brian’s dedication ensures the future viability of AE.
Gregory Fortuin – Chairman
Gregory is a highly experienced business and governance expert who has served as Chairman of Amanah Trust Management (NZ) Limited and Amanah NZ KiwiSaver Limited. He has also been a director on several boards including NZ Post, Kiwibank, and Accident Compensation Corporation. Gregory has held public office as the Race Relations Commissioner of New Zealand and was appointed Honorary Counsel by Nelson Mandela in 1998. He is currently a Strategic Community Adviser to the NZ Police Commissioner and Chairman of Quotable Value Limited.
Dennis Gates – Director
Dennis Gates is the founder of Real Law, providing marketing solutions to small and medium-sized law firms. With over 30 years of experience as a lawyer, he brings expertise in electronic marketing, governance, and compliance to the Board. Dennis is committed to helping those in need in his community.
Sandra Clark – Chief Executive Officer
Sandra’s background in ethical operations management is extensive, having served as the operations manager at both Amanah-Ethical and Always-Ethical for a period of three years before being appointed as CEO of Always-Ethical. Her experience and expertise in the field have undoubtedly contributed to the company’s commitment to maintaining ethical standards and practices.
The AE KiwiSaver Plan operates under the auspices of a trust deed between AE KiwiSaver Limited (the Manager) and Trustees Executors Limited (TE, the Supervisor). Investments are held in the Custodial Division of the Supervisor. The Investment Committee has been delegated the authority to make investment decisions by the Board of Directors of the Manager.
The Investment Committee’s responsibilities include:
The Investment Committee and the Executive Committee manage the analytical team whose responsibilities include monitoring the investments, research, providing investment recommendations and reporting to the Investment Committee, as required by the Investment Committee.
All assets of the Scheme are held by the Supervisor via its Custodial company, TEA Custodians (Always-Ethical) Limited.
The Manager has a management agreement with Amanah Trust Management (NZ) Limited, the parent company of the Manager. All staff are employed by Amanah Trust Management (NZ) Limited, and all investment management and administrative services for the Scheme are undertaken by the same, except where these functions are outsourced to external service providers. Amanah Trust Management (NZ) Limited receives reimbursement for these duties under the management agreement, which is derived from the management fee for the Scheme outlined in its governing documents.
The Boards of Directors for Always-Ethical Limited and Amanah Trust Management (NZ) Limited consist of the same persons.
All fees and reimbursements for expenses to the Manager or other parties must be approved by two Directors and the Supervisor before processing. All payments from the Scheme’s assets are processed by the Custodian. Always-Ethical Growth Fund’s fees and expenses reimbursements to the Manager may be deducted by redemption of Always-Ethical Growth Fund’s units in Always-Ethical Limited.
The Board of Directors and staff are required to disclose any potential conflicts of interest they may have prior to appointment and on an ongoing basis. Where it is deemed that a Director has a conflict of interest with the business, further action may be required, including removal of the concerned person in serious circumstances. Always-Ethical also maintains an internal compliance framework that addresses identifying, declaring and managing conflicts of interest.
All KiwiSaver Scheme Providers must ensure they meet regulatory standards and act with customer interests in mind.
KiwiSaver Scheme Managers must exercise care, diligence, and skill in the investment of scheme assets, and act in accordance with the stated investment policy and objectives. The FMA monitors that KiwiSaver Schemes are compliant with their obligations. Additionally, KiwiSaver Scheme Trustees also have a responsibility as front-line supervisors for monitoring the management and administration of these schemes.
The custodian plays a key role in protecting your investments. They hold your money and investments (i.e. keep custody of them) on your behalf. So they are the legal holder of your assets while you are the beneficial and ultimate owner.
A supervisor is a licensed entity independent of a KiwiSaver scheme provider that supervises the provider’s management of the scheme. KiwiSaver schemes are trusts, and (except for restricted KiwiSaver schemes) the terms of the trust deed states that the supervisor (or another custodian) must hold all contributions and investments in trust for the investors.
Always-Ethical’s supervisor and custodian is Trustees Executors Limited.
Appello Services Limited provides asset registry services to the Manager via its “Sandpit” service. Examples of asset information included in the Sandpit are:
The analytical team monitors the performance of the portfolio on a daily basis using the Sandpit. The analytical team also uses the data in the Sandpit regularly for both internal and external reporting purposes.
Amanah-Ethical has a strict Ethical Mandate that governs all of their investing activities.
The Ethical Mandate:
The primary goals of investment reporting/monitoring are to:
The purchase and/or sale of Units by Always-Ethical Fund is at the discretion of the Investment Committee.
Although Amanah-Ethical Limited follows strict Islamic guidelines regarding its investments, the stocks it invests in may receive insignificant income from interest and other Prohibited Business Activities. The financial ratios required by AAOIFI ensure that any stocks in the portfolio have low debt with strong balance sheets (a requirement of Shari’ah compliance) and strict financial ratios. The intention is that all stocks in the portfolio are making or doing something that is working towards the good of mankind.
Standard & Poors has eleven key industrial sectors, namely Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Information Technology, Telecommunication Services, Utilities and Real Estate. Always Ethical Limited is unable to invest in Financials and Utilities due to the equities in those sectors being noncompliant with the AAOIFI standards.
The application of AAOIFI’s financial ratios dominates the selection and sale of stock. The predominant reason that a stock in the portfolio is sold is due to the company taking on debt and thereby exceeding the conservative debt ratios the Manager applies under the Ethical Mandate. The financial ratios are monitored on a daily basis.
In most circumstances, cash held by Always-Ethical Growth Fund will only be held for processing reasons (i.e. to accumulate funds for the purchase of Units). However, from time to time the Manager may decide to use cash (in NZD dollars) as a cushion against high volatility, as a buffer in times of uncertainty and to preserve the value of the Scheme in times of unusual market events. Cash is held in interest-free bank accounts to ensure compliance with the Scheme’s Ethical Mandate.
Socially responsible investing (SRI) or Environmental, Social and Governance investing (ESG), also known as sustainable, socially conscious, “green” or ethical investing, is any investment strategy which seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by society.
Basically, SRI investing is investing in companies that have a positive impact on society, based on a number of factors.
The AE KiwiSaver Plan follows an Ethical Mandate outlined in the Trust Deed and Statements of Investment Policy and Objectives. Relevant references are provided below. The Ethical Mandate states the types of investing activities allowed and the ethical screening criteria applied in the selection and monitoring of investments.
They believe that applying an Ethical Mandate to their investing approach provides transparency for investors, and allows investors to take responsibility for how their investing affects society.
The Ethical Mandate prohibits investment in companies that source significant income (defined as more than 5% of their total income) from the following business activities:
AE also applies the following investment principles:
Always-Ethical Limited has the obligation under its SIPO to maintain an Ethical Mandate which is identical to the Ethical Mandate that applies to this SIPO. The daily review of the investments by IdealRatings certifying that all stocks meet the AAOIFI standard is shared with the Manager. The Islamic Advisory Board requires Always-Ethical to hold a current Shari’ah compliant report on all investments.
