What do you know about the different people managing your KiwiSaver money?
We have over seven billion people living on planet Earth and each one of us is completely unique. Therefore, each person managing your money will be different too. They bring their individual talents, experiences and expertise to the table when managing your money. And because their skills and experience matter a lot in your final outcome, it is important to know a bit more about them.
Let’s talk about funds with portfolio managers
Some schemes will clearly tell you who their portfolio managers are.
KiwiSaver schemes can hire portfolio managers to help manage your KiwiSaver funds. They are there to actively choose investments, to pick where your money goes and to look out for your best interests.
Assuming a scheme has a portfolio manager, they may list their information clearly on their website. A few examples of companies that do this are:
Let’s dig a bit deeper into the first example, Milford Asset Management (or simply Milford). Milford actively manages its funds and has hired portfolio managers in order to do so. As of writing, their portfolio managers include William Curtayne, David Lewis and Jonathan Windust.
William Curtayne joined Milford in 2010 and has worked at their Sydney office since 2014. Besides being portfolio manager of a few of Milford’s funds, part of William’s job is to talk to companies and do detailed financial analysis to find great investment ideas.
David Lewis is a Deputy Chief Investment Officer who has been with Milford since 2013. He worked previously in Sydney and London with Merrill Lynch, and holds a Master of Commerce degree in Finance.
And Jonathan Windust is a CFA charterholder who joined Milford in 2008. He is also a Deputy Chief Investment Officer at Milford, the portfolio manager for the Milford Active Growth Funds, and co-manager of their KiwiSaver Aggressive Fund.
We know this because Milford tells you who works for them by displaying pictures and names of the various people on their website. Additionally, if you’d like to read more about a specific person, you have an opportunity to do exactly that.
However, some KiwiSaver providers don’t invest your money in the way you think…
You may think that employees at your KiwiSaver provider are the ones choosing your investments and how your money is being allocated. After all, they’re the ones holding your money, right?
In reality, however, this isn’t always the case because some providers use underlying fund managers or underlying investment managers to manage your money.
These managers are the people or organisations that do the actual investing of your money, and who choose what or what not to buy. If your provider themselves chooses which investments they want to invest in, they are the underlying manager.
However, if your provider invests your money into another fund (e.g. Vanguard) and they choose what to invest into, then they are the underlying fund manager. In other words, your scheme is giving your money to someone else to manage. This by itself is not a bad thing, as there are some benefits to this approach.
There is also the possibility that schemes will do both of these. They might invest part of the money themselves, and the remainder with another fund.
Let’s talk about funds that use underlying managers
As mentioned earlier, some providers use underlying fund managers or underlying investment managers to look after some or all your KiwiSaver money. In other words, some other person or organisation is given a portion of your money. And with this money, they pick investments for you. Quite a few KiwiSaver funds fall under this umbrella.
For example, let’s take BNZ. As of the time of writing, BNZ had six different underlying investment managers for the five asset classes they invest into.
It’s a similar story with Aon’s KiwiSaver Scheme. They’ve partnered with four different underlying fund managers who are used for their various funds.
One of these underlying fund managers is Russell Investment Group Limited. Many of the funds have the phrase “Russell LifePoints” in them, which clearly identifies them as the underlying fund manager.
Take the Russell LifePoints Growth Fund. For this fund, Russell Investment Group Limited can be considered the underlying fund manager. This is because 100 percent of the money in this fund is invested into Russell Investment Group Limited funds.
Another scheme that uses external underlying investment managers is ASB, a passively managed fund. And on a related note, InvestNow is a KiwiSaver provider that currently gives you the opportunity to invest with up to nine different fund managers. The scheme began offering this service in late 2020.
Why would KiwiSaver schemes give your money to someone else to invest?
Good question.
The thing is, there is no simple answer to this. There are rather a variety of reasons why this might be the case, because each provider will have different reasons for doing so.
KiwiSaver schemes may have an investment approach that they believe is best suited for this strategy. For example, Simplicity invests a lot of its money into Vanguard funds because they believe that using index funds will result in higher returns for investors in the long run.
This is in contrast to an active management strategy, where providers will invest your money themselves to try and beat the market.
What about your KiwiSaver provider?
Do you know who is really the underlying manager of your money? Is it your KiwiSaver provider, or someone else?
This is something National Capital looks at through our research. We have a team of people trained in Finance that look into different providers to analyse the nitty gritty. Using this analysis, we are then able to recommend the best providers for each person.
If you wish to find out which provider is best for you, you should fill out our KiwiSaver HealthCheck. This will ask you various questions to help us understand which provider is best suited for your needs. It’s a simple exercise and won’t take long for you to do.
Once you do this, you’ll get the opportunity to talk to a real person about your financial circumstances. If you’re interested in finding a bit more information about the people managing your KiwiSaver fund, this call can help you get the answers you want.
And did I mention that this is all for free?
So, if you’re interested in learning more about the right KiwiSaver provider for you, take a few moments to fill out our KiwiSaver HealthCheck. Your future self will thank you for it.