Kōura has a different process to other KiwiSaver providers – we believe that everyone should get advice before they sign up to a KiwiSaver scheme.
We ask you a few questions so that we can understand your risk profile and objectives. This allows us to make a recommendation which is suited to your circumstances.
Are you the same as everyone else? Why should you be lumped into a generic category for your KiwiSaver plan when you can have a personalised portfolio built for you?
There are very few things in life where you fit nicely into one of three categories – but when it comes to KiwiSaver account you’re lumped into a Growth, Balanced or Conservative fund.
We have over 200 different portfolios, so we can always match a portfolio to your goals and risk profile. This gives you the best chance to make the most out of your KiwiSaver plan.
If your situation changes, we recommend that you should revisit your portfolio if it needs to reflect new circumstances. Changing portfolios is free and easy to do using the Kōura portal.
Kōura is designed to deal with changes in your situation. Your circumstances and objectives will change as you get older. We recommend that you log into the Kōura portal at least annually to review your objectives and make sure that your KiwiSaver portfolio still works for you. If we believe your portfolio should change, we will recommend this to you. However, you can update the portfolio at any time you want.
Changing your portfolio is free and you can do it at any time you want.
We’ll send you a reminder email each year to remind you to check your portfolio.
Kōura recommends a mix of growth and income assets which is appropriate to your objectives, age and risk profile at the time you sign up.
As you get older or closer to the time when you are able to access your KiwiSaver savings for a house purchase, we will recommend that you change the risk profile of your portfolio by increasing the proportion of less risky income assets relative to the riskier growth assets. This is so that you are less exposed to a prolonged market slump close to the time when you may need the money.
Our recommended strategy is similar to the US target retirement funds which are very popular to savers who do not wish to manage their retirements savings themselves.
For more info on this, see our blog post – Understanding Risk.
Yes, you can change funds or move to a new portfolio at any point after you have signed up. Simply log in to your Kōura portal and go to the account sign up page.
Your KiwiSaver will be invested in a range of highly liquid financial products.
Our investment policies are described in our Statement of Investment Policies and Objectives (SIPO).
Our philosophy is to invest in index funds which follow markets. We do not believe that taking views on market cycles or individual shares will provide superior returns in the long run, once fees have been taken into account. We observe that the majority of discretionary funds do not match their index benchmarks after fees over long periods of time, even though they might do better in certain years. To learn more about the index or passive investing and the Kōura investment strategy, please read our blog on passive investing here.
Kōura invests in three types of assets:
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Growth assets – Kōura invests in New Zealand and international shares as follows:
New Zealand Shares: 25% of your growth assets are invested in a portfolio of New Zealand shares. We buy the shares which are part of the Morningstar NZ Equities Index. This index is made of the 40 largest listed NZ companies weighted by their free-float capitalisation. We limit the weight of any single company to 7% of the total in order to cap the impact of large individual moves on the value of the portfolio. Our portfolio is broadly similar to the funds which track the NZX 50 Portfolio Index.
International Shares: the remaining 75% of your growth assets are invested in three Exchange Traded Funds (ETFs) managed by Blackrock, the world's largest fund manager. The funds cover pretty much the universe of available international shares and the % invested in each fund reflects its weight in the global equity market capitalisation as measured by MSCI, the leading provider of equity indices. The shares in these three funds are screened for ESG factors.
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We currently invest 58% of the available balance in US shares, buying the iShares ESG MSCI USA Leaders ETF. You can find more information on this fund here.
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We currently invest 30% in developed market shares of the rest of the world, buying the iShares ESG MSCI EAFE ETF. You can find more information on this fund here.
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We currently invest 12% in emerging market shares, buying the iShares MSCI EM IMI ESG Screened UCITS ETF. You can find more information on this fund here.
These weights may change as share markets move in relation to each other and we will rebalance your portfolio periodically to reflect this.
We may add more funds over time if appropriate, for instance, to provide a more granular investment in certain sectors of the equity market whilst maintaining our philosophy of investing in very diversified portfolios.
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Income assets – Kōura purchases investment grade New Zealand bonds that are part of the S&P/NZ Investment Grade Fixed Income index.
Our guidelines require us to purchase bonds which have an investment-grade rating from an independent rating agency (Standard and Poor's or Moody's) ranging from AAA (the highest rating) to BBB- (the lowest investment grade quality). We do not buy sub-investment grade bonds because their higher risk of default is in our view not appropriate for a retirement account. While some unrated bonds in New Zealand are as safe as rated investment-grade bonds, it is not efficient for us to devote resources to monitoring them on a continuing basis. Because the majority of funds require rated bonds, unrated bonds are also less liquid and would be more difficult to sell in the event of a financial crisis.
Over time, we will add international bonds to the Fixed Income Fund in order to provide additional diversification and liquidity.
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Cash – If you have indicated that you wanted to use your KiwiSaver fund to buy a house, Kōura will invest a part of your funds in cash assets, e.g. call accounts and term deposits.
All investments are made in line with the Kōura responsible investing policy. For more information on our responsible investing policy here.
An Exchange Traded Fund (ETF) is a fund that tracks a market index (like the NZX 50 in New Zealand or the S&P 500 in the US).
ETFs own shares in a proportion that matches the index they are tracking. They can be traded exactly like individual shares but because they are based on an underlying index, they offer more diversification than individual shares. ETFs charge lower costs than traditional investment funds as they don’t involve active management. The ETFs we will be buying are traded in New York (NASDAQ) and in London (London Stock Exchange).
Much like when you invest with Kōura, the assets of an Exchange Traded Fund are held by a separate custodian and not by the manager. In the unlikely event that an ETF provider goes into administration, the ETF will be transferred to another manager or liquidated with Kōura getting back its share. An ETF is the same as a managed investment fund in this respect.
However, all investments involve market risk. An ETF will lose money if the index it is tracking falls because it means share prices are lower. Because you will be invested in literally thousands of companies across the world, you are not exposed to the bankruptcy of a single company to any significant degree.
We invest in ETFs for three reasons: they provide exposure to a broad range of asset classes; have lower costs than actively managed funds, and offer more predictable performance than an actively managed fund. Managing risk is at the core of our philosophy. ETFs allow us to manage the risk in our share portfolios by broad diversification across geographies and asset classes. A diversified portfolio is better insulated against downside risk and evidence suggests that it’s difficult for active stock pickers to consistently outperform the market over time.
We have selected our ETFs based on several criteria:
- the prominence and reputation of the ETF manager in the industry: Blackrock, our chosen ETF provider, is the world’s largest fund manager with US$6.84 trillion under management.
- the ETF’s adherence to ESG principles.
- to provide a broad geographical and sector coverage which provides diversification across all industrial sectors and geographies.
ETFs are a popular low-cost way of investing and is one reason why kōura’s fees are low in relation to many other KiwiSaver schemes. The fees charged by the ETF manager are included in kōura’s fee of 0.63% so you are not paying an additional hidden fee.
Environmental, Social and Governance (ESG) considerations are taken into account in all of our investment decisions.
We apply the New Zealand Super Fund exclusions list to our portfolios where possible, and will also be vocal on ESG issues when they come up in the companies we invest in.
We invest the overseas share of our KiwiSaver scheme in international funds managed by BlackRock, one of the largest fund managers in the world. While we have chosen funds which are managed with ESG considerations and are the best in the class of indexed funds, there may be differences between the exclusion criteria of these funds and our exclusions policy.
You can find more details on our responsible investing policy here.