Where will my KiwiSaver be invested?
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:
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.
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.
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.
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.
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.
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.