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 Nikko Kiwisaver Scheme’s own website, fund updates, and the product disclosure statement published in March 2023.
Updated: 28th Aug 2023
Reviewed by: Erica Rodrigues
Niko KiwiSaver Scheme review
The Nikko KiwiSaver Scheme is managed by Niko Asset Management, one of Asia’s largest asset managers. It is, however, one of the smallest KiwiSaver schemes in New Zealand.
They offer eight different KiwiSaver Funds, split into three categories: Growth, Income and Diversified. A useful feature of the scheme is the ability to customise your portfolio by choosing a combination of any of its funds.
Nikko actively chooses which investments to include in its funds. Its approach consists of fundamental analysis, which it uses to identify mispriced companies that offer a blend of value, sustainability and growth. ESF factors form an important element in Nikko’s approach to understanding investments.
Nikko charges annual fund fees that range between 0.45%-1.15% in addition to an annual membership fee of $30. It is free to switch between different funds within the scheme and there are no joining or exit fees if you decide to switch providers. The provider does not charge any performance fees for any of its funds.
Changes within the Nikko KiwiSaver Scheme
In Sep 2019, Nikko included the ARK Invest funds as part of its offering to its KiwiSaver members.
In Mar 2019, Nikko launched a financial ‘Robo-advice’ service to its offering.
In closing
The Nikko KiwiSaver scheme has only been around since 2018 and so it does not yet have performance data for the last 5 years. However, its inclusion of ARK funds and its Robo-advice certainly set it apart from many of the other KiwiSaver schemes.
*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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Nikko actively manages over NZD$7.9 billion of investments. They manage domestic assets through Auckland-based investment teams and employ carefully selected offshore managers to manage global assets. Their history dates back to 1994 when Norwich Union Fund Management was founded in New Zealand.
Nikko Asset Management (parent company) is one of Asia’s largest asset managers, providing high-conviction, active fund management across a range of Equity, Fixed Income and Multi-Asset strategies. In addition, their complementary range of passive strategies covers more than 20 indices and includes some of Asia’s largest exchange-traded funds (ETFs).
The Nikko AM KiwiSaver Scheme manages eight funds and has a total KiwiSaver Assets Under Management (AUM) of over $44.5 million and 1,404 KiwiSaver members.
Yutaka Nishida – Executive Chairman
Yutaka Nishida joined Nikko Asset Management in April 2020 as a Non-Executive Director, before becoming a Director and Executive Vice Chairman in June 2021, and Executive Chairman since April 2022. He works closely with the President in the supervision and execution of all aspects of the business.
Nishida graduated from the School of Law at Kyoto University.
Hiroshi Yoh – Executive Corporate Officer, Chief Investment Officer and Global Head of Investment
Hiroshi Yoh joined Nikko Asset Management in November 2022 as Executive Corporate Officer, Chief Investment Officer and Global Head of Investment. He is responsible for directing all of the firm’s investment management activities globally.
He earned a Master of Economics, with a major in International Trade and Finance from the Graduate School of Business Administration and Political Science at Tsukuba University in 1989, and completed the Advanced Management Program at Harvard Business School in 2010. He is also a Chartered Member of the Securities Analysts Association of Japan (CMA).
Stuart Williams- Managing Director, Co-head of NZ Equities, Nikko Asset Management New Zealand Limited
Stuart joined Nikko AM in 2014 and is responsible for managing the NZ business, he has over 20 years’ experience across all aspects of investment management.
Stuart has extensive experience in conducting detailed research and developing investment recommendations on listed companies in both New Zealand and Australia he previously worked at ANZ Investments and its predecessors. He holds a Bachelor of Commerce degree from the University of Auckland and is a Chartered Accountant.
Kunihiro Asai – Cheif Risk Management Office, Global Head of Investment Risk Management
Kunihiro Asai is a Senior Corporate Officer at Nikko Asset Management with over 20 years of experience in the financial industry. He has worked in risk management, global operations, and technology. From April 2023, he will be responsible for the firm’s global risk management. Asai holds a Master of Science in computational finance from Carnegie Mellon University and a Bachelor’s degree in engineering from the University of Tokyo.
Nikko provides investment management services for domestic assets through their Auckland-based investment team. As Manager of the Wholesale Funds they have contracted an external investment manager to manage the underlying assets for the Nikko AM Wholesale Global Bond Fund. They appointed the external investment manager after a market search and selection process.
Nikko’s Investment Committee has responsibility for the delegation of investment management to specialist offshore managers. Appointment of an external manager will be noted in the investment strategy of each Fund.
The search and selection process of external managers involves an evaluation with emphasis on:
The Investment Committee monitors each delegated manager’s investment performance. This includes portfolio investment return and risk assessment relative to performance objectives and review of market commentary and portfolio activity.
Nikko operates within a strong governance framework and considers their fiduciary responsibilities of utmost importance. Nikko AM provides global resources, delivering systems, policies and procedures, while the New Zealand business is overseen by an experienced Board, Investment Committee and Compliance, Risk & Disclosure Committee.
They have created a compliance program to manage conflicts of interest and conduct which is continually updated to reflect the developing regulatory and compliance landscape.
In addition to their Compliance Programme, Nikko has adopted, and fully endorsed, the Nikko AM “Code of Ethics and Business Standards” (the “Code”). All Nikko AM NZ employees have signed acceptance of Nikko AM’s ethics and business standards as outlined in the Code and are required to reaffirm this acceptance annually.
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.
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.
Nikko’s supervisor is Public Trust. Corporate Trustee Services are part of Public Trust and are a leading specialist corporate trustee company in New Zealand, with more than NZ$90 billion under trusteeship and supervision. They are New Zealand’s sole Crown-owned trustee company.
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.
Nikko’s custodian is BNP Paribas Fund Services Australasia Pty Limited. Appointed by the Supervisor to hold all of the assets of the funds on trust on behalf of the members.
Performance is monitored daily by us and measured independently by BNP Paribas monthly.
Each Fund’s performance is summarised and tabled for discussion and comment at our Investment Committee meetings, held quarterly. Each measurement period (last three months, last year, last three years, last five years) includes the actual Fund performance, the agreed benchmark performance, and the excess return over benchmark, and volatility in the instance of the last five years measurement.
Investment performance objectives are set as an acceptable margin of absolute performance above recognised capital markets indices. Progress towards achieving investment performance objectives is generally measured over a rolling three year period before fees, expenses and taxes.
Each Fund has different parameters regarding the ability to hold assets denominated in foreign currency. Any requirement or permission to hedge foreign currency exposure back to New Zealand Dollars has been defined within the investment strategy for each of Nikko’s Funds.
The Currency Risk Management Policy sets out:
Nikko believes that they can deliver strong and repeatable risk-adjusted returns for their investors. This belief stems from their philosophy which is that:
The Statement of Investment Policy and Objectives (SIPO) is reviewed in full at least annually. Review, currency and adoption of the SIPO are the responsibility of the Investment Committee, which is governed by Nikko’s Investment Committee Charter.
When the SIPO is reviewed annually by the Investment Committee, the Investment Committee will take into account the investment strategy and objectives of each Fund and other matters including, but not limited to, relevant new standards or legislation and any material changes in market conditions. Significant changes may invoke an ad hoc review out of the annual cycle.
All amendments will be made in accordance with the Trust Deed and relevant law. The strategic asset allocations for all Funds are reviewed at least annually. Compliance with the SIPO is monitored both pre and post trade on a continuous basis, by automated systems (Bloomberg AIM). The Manager may amend or replace this SIPO only after having given reasonable prior written notice to and in consultation with the Supervisor.
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.
Nikko Asset Management, as an asset management company, acts as a fiduciary on behalf of its clients and is firmly committed to putting its clients’ best interest first. It places fiduciary and ESG principles at the highest guiding theme of its corporate value and actions.
Nikko AM strongly believes that investments by considering environmental, social and governance (“ESG”) are inherent to long-term corporate value creation, and contribute to the realization of sustainable economic growth. As such, Nikko AM views ESG issues as an integral part of its fiduciary duty and endeavors to incorporate ESG principles in all its investment processes.
Nikko AM, for the realization of high-quality financial services that truly meet clients’ needs, always endeavors to act in the spirit of the fiduciary and ESG principles, and continually makes effort toward further improvement with the ideas of innovation.
Where capital market securities are held by the Funds or the Wholesale Funds, Nikko may have the right to vote on shareholder resolutions. They exercise voting rights where available solely for the benefit of investors. Where they appoint an investment manager for a fund, they also outsource voting to that investment manager. They do not vote for the benefit of themselves or third parties. The Nikko AM Domestic Equities Corporate Governance Policy covers the requirements of the Nikko AM NZ Equity team to consider and vote on resolutions.
