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 QuayStreet Kiwisaver Scheme’s own website, fund updates, and the product disclosure statement published in August 2023.
Updated: 15th August 2023
Reviewed by: Daniel O’Brien
QuayStreet KiwiSaver Scheme review
The QuayStreet KiwiSaver Scheme is one of the smaller KiwiSaver schemes in New Zealand.
They offer ten different KiwiSaver Funds, split into three types, which are diversified, sector and speciality. The funds range from a lower-risk fixed interest fund to higher-risk equity funds.
QuayStreet uses active investment management across its funds and believes that actively managing investments with a concentrated selection can provide investors with better returns than benchmarks. QuayStreet adopts a sustainable business model, investing long-term and focusing on the underlying value and quality of its investments. The provider is also committed to socially responsible investments (SRI) and has a stringent process and criteria to evaluate investments.
QuayStreet charges annual fund fees that range between 0.76%-1.52% in addition to a $30 annual membership for those over the age of 18 and an approximate annual charge of $5 in scheme expenses. 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 except its Altum Fund, where a 15% performance fee is charged.
In closing
QuayStreet charges amongst the highest fund fees as a result of its active investing approach. Based on past performance alone, for the past five years, QuayStreet has continuously performed below 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 31st December 2023.
*Source: National Capital Research February 2024
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QuayStreet Asset Management Limited (QuayStreet) is a specialist funds management firm with a team located in Auckland, New Zealand. QuayStreet offers a range of diversified and sector specific investment funds for investors. Their specialists seek to deliver investment returns for clients by actively managing the funds. QuayStreet was a wholly owned subsidiary of Craigs Investment Partners Limited, but in February of 2023, it was acquired by New Zealand’s Exchange (NZX).
As of 2023, QuayStreet KiwiSaver Scheme has total Assets Under Management (AUM) of $271 million, with a total of 6,050 KiwiSaver members.
Stuart Miller – Chief Investment Officer
Stuart boasts over two decades of experience in financial investments. He served as Head of Portfolio Management at ANZ for seven years prior to joining QuayStreet. Pior to that Stuart was work at ING for over 11 years moving from Investment Analyst to Investment Manger.
Ross Hunt – Head of Fixed Interest & Cash
Ross has gained a significant amount of experience in the finance industry, specifically in fixed-interest and cash sectors, over a period of five years at ANZ going from an analyst to a portfolio manager. Then moving on to executive director at S&P Global. He brings a wealth of knowledge and expertise to the team at QuayStreet.
Stefan Stevanovic – Head of International Equities
Stefan has considerable investment experience with more than a decade in the New Zealand market. Prior to QuayStreet, Stefan was a Senior Analyst at Brook Asset Management where he commenced his career in 2007.
Xavier Waterstone – Head of Australasian Equities
Xavier joined QuayStreet in September 2018. Previously, Xavier was a Managing Director at Waterstone Acquisitions, where his main role was managing equity and bond portfolios and identifying and analysis of special investment situations.
Xavier’s primary responsibility is research and analysis of Australasian equities.
The Scheme offers investments in the ten QuayStreet Funds and, as a result, the Scheme’s funds reflect the investment process undertaken by QuayStreet in relation to the QuayStreet Funds.
Stuart Miller assumes the role of Chief Investment Officer and heads the investment team as its primary leader. Miller is accompanied by a team of experienced portfolio managers who provide assistance in the analysis and management of funds.
Craigs Investment Partners, as the owner of the Manager operates a Conflicts of Interest Policy which is adhered to by QuayStreet Asset Management Limited. It is designed to identify potential conflicts that may exist and then ensure any actual or perceived conflict is managed in an appropriate manner. This is typically done by disclosing details of any potential conflict to affected parties. The Policy is constructed to ensure at all times portfolio managers place the interests of the investors above their own interests or those of CIP or QuayStreet Asset Management Limited.
QuayStreet Asset Management Limited has compliance procedures in place to minimise risks associated with trading.
While specific portfolio management responsibilities for funds have been allocated to individual portfolio managers, the entire investment team has full visibility of all trades and is authorised to transact on behalf of all the QuayStreet Funds. This ensures deal flows are monitored and minimises the risk of trading errors or aberrant behaviour.
The Compliance team, who are independent of the trading function, undertakes a daily review of portfolio positions and trades to ensure that QuayStreet Asset Management Limited is complying with the QuayStreet Funds’ investment guidelines.
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 supervisor is a licensed entity independent of a KiwiSaver scheme provider. They supervise 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.
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.
QuayStreet’s supervisor and custodian is The New Zealand Guardian Trust Company Limited (NZGT).
On a monthly basis, the investment team carefully monitors the QuayStreet Funds alongside their corresponding benchmarks. Performance evaluations are conducted across varying time periods and subsequently annualized for the past 3 years, 5 years, and since inception.
Monthly Fund Updates are comprehensive as they record returns to investors before fees and tax and include imputation credits where applicable, and additionally, they include a record of returns after the deduction of investment related fees expenses charged to the funds (including brokerage, supervisor fees, management fees and performance fees) and tax at 0%, 10.5%, 17.5%, and 28% Prescribed Investor Rates (“PIR”).
QuayStreet invests in accordance with their Responsible Investment policy, incorporating environmental, social and governance factors within their investment decision-making framework. They target investments which have good and sustainable underlying business models which are trading at an attractive valuation in relation to their “intrinsic value”. The “intrinsic value” is the valuation they derive after analysis that values the future cash flows of the investment at today’s prices. This basic philosophy applies to all security types and assets that QuayStreet invests in.
Following this investment philosophy, the QuayStreet Funds tend to be more concentrated than their respective market benchmarks. QuayStreet has a high level of conviction in their investment ideas which is reflected by larger investments in a smaller number of securities. However an appropriate level of diversification relative to the QuayStreet Funds’ risk profile is maintained at all times. QuayStreet believes in the benefit of being proactive, but not hyperactive in terms of managing the portfolios. They do not transact frequently and generally buy securities with the intention of holding them for the long term. However they do monitor investments closely and add to holdings that they believe are good value relative to their outlook and reduce those which they believe may be facing increasing risks.
The QuayStreet Funds are actively managed relative to their asset allocation targets. The exposure to asset classes will deviate from respective benchmarks in response to changing short term market conditions and the manager’s assessment of the risk and return outlook for the individual asset classes. The extent of Tactical Asset Allocation is based on the investment objectives of the relevant QuayStreet Fund and the allowable ranges for each asset class.
QuayStreet Asset Management Limited offers funds with different risk profiles to suit investor objectives. Each fund has a benchmark asset mix and investment range for growth and defensive asset classes. The Strategic Asset Allocation decision is based on the investment team’s assumptions of expected returns, standard deviation, and correlation between asset classes. The investment horizon is typically long term.
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.
QuayStreet defines responsible investing as an incorporation of environmental, social and governance (ESG) factors within its investment decision-making framework. It is their belief this helps improve risk management and generation of long-term returns. As an investment manager, QuayStreet has a duty to act in the best interests of the Fund or Scheme’s participants and recognises that integration of ESG principles within the investment process allows it to fulfil this duty more completely. The primary objective of incorporating ESG considerations is to assess and consider how much influence ESG factors may have on financial performance and overall portfolio risk. This is applied within the investment decision-making process that seeks to achieve strong financial outcomes for clients.
The Responsible Investment (RI) Policy statement applies to investment management services provided by QuayStreet across its entire suite of Funds except those that adhere and are managed according to the QuayStreet’s Socially Responsible Investment (SRI) Policy (i.e. the QuayStreet Socially Responsible Investment Fund).
QuayStreet Asset Management Limited manages a socially responsible investment mandate (QuayStreet Socially Responsible Investment Fund), that invests in companies which score highly in Environmental, Social and Governance (ESG) factors. They seek a balance between financial and ESG performance of an investment. QuayStreet Asset Management Limited believes ESG performance can have a significant impact on an asset’s long-term return and therefore are committed in applying ESG analysis when determining investment suitability.
For the Fund, they conduct negative and positive screening methods alongside their traditional investment decision-making process for all direct investments.
If the Fund were to invest in an external socially responsible investment fund QuayStreet would conduct due diligence on the external fund’s socially responsible investment process and criteria. Negative screening is applied to filter out unsuitable investments from the global investment universe, whereas positive screening is applied to assess and score individual ESG factors on a stand-alone company basis.
Consistent with their investment philosophy, QuayStreet may exclude investment in companies that severely affect the environment or society to the extent these risks could also detrimentally affect the performance of the Fund.
Negative screening excludes companies that derive significant revenue from business practices QuayStreet deem as not being socially responsible and establishes a subset of investments collectively known as the socially responsible investment universe.
The list of business activities they deem as not being socially responsible are:
QuayStreet KiwiSaver Annual Report
QuayStreet KiwiSaver Product Disclosure Statement
QuayStreet KiwiSaver Statement of Investment Policy & Objective
QuayStreet KiwiSaver Other Material Information
QuayStreet KiwiSaver Responsible Investment Policy
QuayStreet KiwiSaver Socially Responsible Investment Policy
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