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 Booster KiwiSaver Scheme’s own website, fund updates, and the product disclosure statement published as of July 2023.
Updated: 13th July, 2023
Reviewed by: Raymond Hu
Booster KiwiSaver Scheme review
The Booster KiwiSaver Scheme is one of the six default KiwiSaver providers.
They offer 17 KiwiSaver funds, ranging from a more conservative cash fund to a higher-risk growth fund. A unique offering to the scheme is its socially responsible funds, single-sector and speciality funds. Booster believes in effective diversification as a core investment risk management strategy and high-quality research and experienced investment management when developing portfolios.
Its investing approach consists of investing in directly-held securities where possible. This takes into account liquidity and diversification factors, which is more cost-effective. Booster integrates ESG (Environmental, Social, and Governance) factors into its investment selection.
Booster charges a membership fee of $3 every month for accounts with a balance of over $500 and a management fee that ranges between 0.35%-1.77% depending on which type of fund and your account balance. It is free to switch between different funds within the scheme and there are no joining fees but there is an account closure fee of $30 if you decide to switch providers. Some funds invest in Booster Tahi LP and Booster Innovation Fund, which are subject to a performance fee if their return is over a certain hurdle rate.
In general, the returns of Booster KiwiSaver funds in the last 5 years have been above the average KiwiSaver returns.
Changes within the Booster KiwiSaver Scheme
In Mar 2022, Booster launched the Booster Innovation Fund (BIF) on the NZX, which invests in early-stage companies.
In Oct 2021, Booster added six new exclusions to its socially responsible investment funds (animal testing, factory farming, livestock exports, palm oil, recreational cannabis and whaling)
Booster retains default provider status in 2021 as part of a larger overhaul of the Default KiwiSaver scheme by MBIE.
In closing
Based on past performance alone, over the past 5 years, Booster’s investing approach has led it to continuously perform above the average KiwiSaver fund after fees and taxes.
*Past performance is not necessarily indicative of future performance.
*List is of the highest 5-year returns A-rated funds as per our Investment Selection Process.
*All returns are after fees and tax (28% PIR) as of the quarter ended 30th June 2024.
*Source: National Capital Research August 2024
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Booster, founded in 1998 was set-up by a group of experienced industry experts, Booster (or, back then, Grosvenor Financial Services Group) knew there was a better way to help New Zealanders to save. They wanted to offer something unique to what the international conglomerates were offering.
Booster has been looking after New Zealanders’ money since 1998. And they are proudly Kiwi owned and operated. Booster is an independent financial services company, based in Wellington.
Booster Investment Management Limited currently manages 17 KiwiSaver funds. They have total Assets Under Management (AUM) in their KiwiSaver scheme of over $3.64 Billion and 171,751 KiwiSaver members.
Nic Craven – Chief Investment Officer
Nic leads Booster’s investment research team. His team ensures that client investments are managed with the care and discipline needed to deliver consistent results over the longer term. Nic originally joined Booster in 2004, returning to Booster in 2014 after an overseas stint.
“We don’t shy away from a challenge. We have a can-do mindset, which means we always focus our efforts on making a positive difference for our investors.”
Paul Foley – Executive Chairman
Paul is the Chairman of Booster Financial Services Limited. He is also on the board of directors for Booster Investment Management Limited.
A senior corporate/commercial lawyer, Paul is now a consultant with MinterEllisonRuddWatts, having been a partner there for more than 28 years. He has over 30 years of experience working with companies in the financial services, manufacturing and energy fields. He is a past director and chair of NZX and ASX-listed companies and a Chartered Fellow of the NZ Institute of Directors.
David Beattie – Principal
David has over 35 years of experience in investment management and portfolio research. He joined Booster in 2000 as Chief Investment Officer. David’s key areas of focus are strategy, investment stewardship and Financial Adviser relationships.
“We’ve always had a very strong client-focused culture, with a practical desire to think and collaborate innovatively. We’re not bogged down by bureaucracy.”
Allan Yeo – Managing Director
Allan formed Booster Financial Services in 1998, looking to give New Zealanders a financial services company that was locally owned and true to Kiwi values.
Allan’s overarching ambition for Booster is to be able to make a meaningful difference to how NZers live and work; providing customers with the necessary tools to be able to live within their means, protect and grow their financial resources and live the retirement they deserve.
The Scheme is managed by Booster Investment Management Limited (BIML, the Manager).
The responsible oversight body for approving and ensuring adherence to Booster’s Statement of Investment Policy and Objective (SIPO) is the manager and the managers Investment Committee. The Manager will review the investment strategy for each of the Scheme’s Fund’s, and the SIPO document, at least annually.
Booster acknowledges that judgments regarding the performance of fund managers and consultants should be made on a time frame that relates to the time horizon of each investment and not on short-term performance. Thus, in the short term, the following indicators should be monitored as indicators of continued prudent and professional management:
The performance of each of the Funds’ asset classes will be compared with the returns on an appropriate benchmark index which may change from time to time.
Furthermore, in making decisions on investment strategy for each Fund, the Manager will have regard to the overall circumstances of the Funds and will comply with the Schemes Trust Deed and rules, disclosure documents, and with all applicable legislation.
The Manager will manage all aspects of risk in relation to the Funds assets, including:
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 Supervisor and Custodian of the Scheme are the Public Trust (PT). The PT is responsible for the supervision of the Scheme and the performance of Booster’s duties as manager of the Scheme. The PT is independent of Booster and is regulated by the Financial Markets Authority.
A 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.
Investment Committee
The Manager recognises that the development of investment objectives and the implementation of appropriate investment strategies is one of its key responsibilities to investors. Due to the specialised nature of investment markets, the Manager utilises its Investment Committee to oversee the investment process, including performance monitoring.
The role and powers of the Investment Committee are set out in the Investment Committee Charter. In general, the Committee’s role is to review all aspects of investment recommendations, decisions, and processes and to approve the SIPO.
External Experts
The Manager engages experts to assist in running the Portfolio and its investment functions. These may include:
In determining the appropriate investment strategy and investments for the Funds’ assets, the Manager applies the following investment principles:
Effective diversification is a core investment risk management strategy: Spreading members’ investments across a number of different types of relatively uncorrelated securities within asset classes (and across less correlated asset classes within multi-sector options) is fundamental to smoothing returns and reducing volatility. The Manager therefore defines minimum diversification standards in the mandates for each of the specific asset class options offered, and requires comprehensive asset class correlation analysis to be included in the annual strategic asset allocation reviews.
Risk and return are positively correlated: Over the long term, higher risk will generally be rewarded with higher returns, all other things being equal. Conversely, those investments with higher expected return usually involve more risk. All investments involve some form of risk. The Manager has defined and addressed the key risks relevant for the Funds by stipulating either minimum investment requirements or specific constraints within the mandates.
Time horizon is important when investing: At any one point in time, investment principles that apply generally in the long term may not necessarily appear to hold in the short term. Individual members need to consider their time horizon to ensure it matches that of their chosen investment option.
High-quality research and experienced investment management are essential: Developing sound investment portfolios involves in-depth research and analysis of available investments and selecting those according to a consistently applied and disciplined decision-making framework.
Markets operate in cycles: These cycles can vary in length and intensity. With experience and analysis, favouring certain asset classes and investments during different cyclical phases can potentially enhance returns and reduce risk.
Environmental, social and corporate governance (ESG): More consistent long-term return outcomes are likely to be achieved if investments are undertaken in companies and funds that recognise the environmental and social impact of their commercial activities and operate with sound governance frameworks.
Liquidity: Liquidity is the essence of soundly operating financial markets. A statement regarding the Manager’s liquidity policy is provided in Section 8 of Booster’s SIPO. Constraints and/or minimum requirements are included which specifically address the management of liquidity on behalf of members.
The Manager also takes into account the following investment philosophies in determining the most appropriate investment strategy for each Fund:
Benefits of Direct Securities:
Managed funds on the other hand are limited to implement the core strategy to only those investment vehicles suited to New Zealand-based longer-term investors. Therefore, part of the due diligence undertaken in selecting the managers of these vehicles will be focused on ensuring they have an appropriately documented approach to optimising tax outcomes resulting from their underlying investment philosophy and process.
Here the investment objectives and return objectives the Manager has set for the Funds are outlined below, obtained from their SIPO document. For fund-specific figures, please refer to their SIPO linked in the references section.
Investment Objective
Return objective
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.
Booster considers environmental, social and governance risks when they assess investments across all of their core KiwiSaver and Investment funds. Booster integrates ESG (Environmental, Social, Governance) factors into their investment selection.
They make the most of the in-depth analysis provided by several global ESG data providers to apply their approach as broadly as possible while taking care in how Booster apply their conclusions. Instead of using aggregate investment scores as which are often used by investment managers as overall ESG scores can be inconsistent between providers and are often not transparent on a standalone basis they use a shortlist of factors which are most applicable to clients’ share investments and which fairly represent relevant ESG issues.
Across all funds and before positively including ESG considerations, Booster excludes direct investments in any companies involved in the following controversial activities:
Booster also offers a range of dedicated socially responsible investment funds.
In addition to following their ESG integration process and applying the controversial exclusions as outlined above, these funds also exclude investments in directly held companies and managed fund investments that generate more than an incidental proportion of revenue from the following activities:
These funds also exclude directly held investments that generate more than an incidental proportion of revenue from the following activities:
Investors in equity markets quite literally own the companies in which they purchase shares. One of the rights of an owner is the right to determine how the company is run by voting for the board of directors and on various resolutions at the Annual General Meeting (AGM). This is a privilege of ownership and one that Booster takes seriously on your behalf for all shares held in the Managed Investment and Income Focus Accounts.
Often, it is not practical to attend the AGM of a company in person. Using proxy votes, Booster can instruct the chairman of the meeting on how to vote the shares in their absence. By using proxies, Booster can cast votes on investors’ behalf with the ultimate goal of having better-run companies, which should lead to stronger returns.
Booster KiwiSaver Scheme Product Disclosure Statement (All Funds)
Booster KiwiSaver Scheme Statement of Investment Policy and Objectives (SIPO)
Booster KiwiSaver Scheme Other Material Information (OMI)
Booster KiwiSaver Scheme Additional Other Material Information
Booster KiwiSaver Scheme Responsible Investment Policy Statement
Booster KiwiSaver Scheme Annual Report
