Kiwisaver is Kiwisaver right- it’s simple. It doesn’t really matter which provider you are with right? Well that’s not really true. For the majority of Kiwis, KiwiSaver is going to be vital for our retirement! And getting your KiwiSaver right should be high on your agenda- as it will make a huge different for your retirement.
And because Kiwisaver is so important to my retirement, and to yours, I like to learn about other KiwiSaver providers out there. Both because I find it interesting, and to make sure that I am in the right KiwiSaver scheme. So recently, I’ve had a look into what kōura is offering.
Who is kōura
A low fee sustainable passive index fund Kiwisaver provider- that’s what kōura is. They work with Hobson Wealth and iShares from Blackrock to give you access to several passive index funds that don’t invest in weapons, gambling or tobacco, at a fee rate that is about half the average KiwiSaver growth fund fee. kōura’s is also a Kiwi owned and operated, and started in late 2019.
kōura believes that most Kiwis have not set up their KiwiSaver properly, either they don’t have the right fund type or have not properly considered whether or not their contribution rate is high enough to give them what they expect in retirement. I tend to agree- but I also haven’t looked into whether or not my contribution rate is high enough- so I’m in that camp too.
On the topic of not having the right Kiwisaver scheme, I’ve had conversions with friends who don’t even know who their Kiwisaver is with, or what fund type they are in. They tend to think that they will be fine as long as they are in Kiwisaver. KiwiSaver is Kiwisaver, right.
But that’s not entirely how Kiwisaver works- you do need to make an active decision about yours. And I get it- it’s not easy figuring all this Kiwisaver stuff out- it’s just easier to let it tick over. But, being in the wrong fund can potentially cost you hundreds of thousands of dollars over your lifetime. Hundreds of thousands of dollars that you need for your retirement! I believe that one of the easiest ways to improve your long term performance is to go with a provider with low fees.
kōura KiwiSaver Fee Structure
kōura KiwiSaver fees are similar in structure to other Kiwisaver funds such as Simplicity and Superlife. There is a flat annual fee for every member of $30, and then there is a fund fee of 0.63%. Now, you might think 0.63% seems a bit high- but it’s only high when you compare it to Simplicity or Kernel at 0.31% and 0.39%. When you compare it to the entire KiwiSaver market the fee is very good- the current average for growth KiwiSaver fund is 1.41%, and for balanced KiwiSaver fund, it is 1.32%.
So kōura’s fees are more than half the average KiwiSaver fee. And a 0.7% fee decrease in fees to the average will make a huge difference to your KiwiSaver balance over the decades to come. Most likely in the 10’s of thousands of dollars indifference. So it’s well worth having a look into kōura if are with a high fee KiwiSaver fund provider.
|Membership Fees:||$0 per year for under 18|
$30 per year for over 18
|Fund Fees||0.63% ($6.30 for every $1000 invested)|
|What’s on Offer:||6 Passive funds|
|Suitable for:||All Kiwis who are participating in Kiwisaver|
The one thing to remember is that kōura’s fee might look great compared to the average- but the average fee does contains active fund managers. And active fund managers tend to charge more to pay all their active fund managers and analysts. When you compare to other passive kiwisaver managers like Superlife and Simplicity they are on par with fees. And just like Simplicity and Superlife, kōura’s has no exit or entry fees.
Funds on offer
So what is on offer with kōura? Well, kōura offers you six different funds to choose from. You can mix and match them to develop your own personalised Kiwisaver- similar to what Superlife and Investnow are offering- more on that later.
They do not offer the traditional growth balance or conservative fund- rather they blend their 6 funds together to personalise a Kiwisaver portfolio for you. And all the funds are passive funds- many of which are funds run by iShares by BlackRock – which are the main competition to the more well-known Vanguard funds.
The six funds are below;
kōura’s US Equities Fund
kōura’s US Equities fund invests in iShares ESG MSCI USA Leaders ETF which is an index that invests in US Large and mid-size shares including all the well known US companies like Microsoft, Alphabet, Tesla, ext. There are about 290 holdings in this fund- and its heavily weighted towards tech shares.
kōura’s Emerging Market Equities Fund
kōura’s Emerging Market Equities Fund invests in iShares MSCI EM IMI ESG SCRN which invests in financial emerging markets including Eastern Europe, the Middle East, South America, Africa and Asia including China. This index fund has around 1700 different holdings, mostly in companies I haven’t heard about before- but also ones that are more well known like the Alibaba group, and Samsung.
kōura’s New Zealand Equities Fund
kōura’s NZ Equitide fund invests in the New Zealand share market which is managed directly by kōura and Hobson Wealth Partners. The fund invests in about 40 New Zealand companies, including F&P healthcare, A2 Milk, Spark, Chorus, and Mainfreight. It’s very similar to investing in the NZX50.
kōura’s Rest of World Equities Fund
kōura’s Rest of World Equities Fund invests mainly in iShares ESG MSCI EAFE ETF which invests in large and mid-size shares in developed economies around the world excluding the US and Canada. There are about 500 different holdings in this fund including Nestle and Toyota. 25% of the fund’s exposure is in Japan, 13% in the UK, 10% in France, 10% in Switzerland, 10% in Germany- and the remainder in Australia, The Netherlands, Sweden, Hong Kong, Denmark, Spain and Italy.
kōura’s New Zealand Fixed Interest Fund
kōura’s New Zealand Fixed interest fund provides exposure to New Zealand Government and Corporate bonds and is run by Hobson Wealth Partners. There are some big names in this fund including Auckland city council, Christchurch Airport, Chorus and Meridian Energy.
kōura’s Cash Fund
kōura’s cash fund is exactly that- 100% cash with the Bank of New Zealand. The fund does try to gain some return by putting the cash is in term deposits and things- but we all know that the rates are very low these days. It’s mainly there to provide certainty for Kiwis who want to use their Kiwisaver as a house deposit.
How do you choose?
As mentioned earlier, kōura has six funds to choose from, and you can combine different weightings of these funds to personalise your KiwiSaver in up to 200 different ways. But, how do you know how to allocate your contributions? Well, kōura wants to help you. You don’t have to be familiar with asset allocation theory either.
kōura provides a tool to help you decided on the allocation of your Kiwisaver. Answer several questions about what your age, your balance and contribution rates, what you are using your KiwiSaver for (house deposit or retirement), and your investment style- they recommend a portfolio for you.
They recommended a 90:10 portfolio for me- which I totally agree with at this stage of my life- I still have 35 years until my retirement and I am quite an aggressive investor at the moment.
And that’s the real difference between kōura and all the other KiwiSaver providers out there- kōura doesn’t lump you into one of 3 or 4 groups of people (Conservative, Balanced, Growth, etc), they want to give you the tools and advice to create a Kiwisaver scheme that is right for you.
One other neat aspect of their tool is the projected value of your balance at retirement. It works out how much weekly income your balance would give you in retirement- I know that Kiwisaver providers are now required to give you this information. kōura’s calculation lets you adjusted all the parameters at the top so you can see how it affects the overall balance and get a
What else does kōura KiwiSaver offer
kōura is committed to ESG investing. ESG investing takes into account the environmental, social, and governance issues when investing on your behalf. There is a growing body of research that shows this strategy is no worse off than traditional investing. And in some cases, it has been shown to be better than non ESG investing.
And it makes anecdotal sense that is maybe better in the long term to invest this way. Just think about investing in oil companies- over the long term the world must decrease the use of fossil fuels to curve climate change- and so the companies providing these services will have decrease profits over the coming decades. So does it make sense to invest in a company that in the long term has a potential decrease in profits? Sure these companies can pivot out of fossil fuels into green energy or something else.
kōura KiwiSaver Insights Study
When kōura got into the Kiwisaver game they undertook a survey of 1000 Kiwis. Asking them about their Kiwisaver. From this survey- they found that;
- 68% of Kiwis know that Kiwisaver is important to their retirement
- The average contribution to Kiwisaver is 3%
- Less than 50% of Kiwis are in the correct type of fund given their risk tolerance and objective
- Most Kiwis don’t have access to a personal finance advisor.
It’s quite scary to me that potentially 50% of KiwiSaver members are in the wrong fund. But just like political opinion polls, there is a margin of error on these survey results- of around 3%. And I can probably state without a doubt- that if you are reading this you are most likely in the 50% who have correctly chosen your Kiwisaver fund.
kōura KiwiSaver has decided that digital advice is a critical tool in helping you make active decisions about your KiwiSaver. This digital advice platform is designed to mimic a traditional financial advisor and provides advice tailored to your situation. It does, however- require you to engage with it, whereas a traditional advisor might be more engaging with you.
And the best thing is- you don’t have to be a kōura KiwiSaver member to use the digital advice tools. Simply go to their Kiwisaver advisor– answer a few questions about your age, current balance, risk tolerance etc. and it will spit out projected KiwiSaver balance at your retirement age and what that will mean in terms of weekly income in your retirement- you do have to enter your email address though.
Then you can play around with the different inputs to see how it will affect your outcome. The tool will even let you know how your forecasted weekly income compares to your current income. The tool currently thinks that I will have $219 less per week than my current income. Which is probably something I should look into!
Want to learn More about kōura?
Rupert Carlyon, co-founder of Kōura Wealth has been on both the NZ Everyday Investors and Cooking the books podcasts- both podcast I really enjoy- along with the Happy Saver. I know these appearances are kinda a long-form of marketing- but you do get to learn a bit more about kōura and their philosophy.
- Broken KiwiSaver / Rupert Carlyon– the NZ Everyday Investor Podcast
- Why is the sharemarket strangely positive?– Cooking the Books
- kōura Review– MoneyHub
I really like the idea of being able to customise my KiwiSaver- and that is exactly why I went with Superlife rather than Simplicity. Now along with Superlife, kōura, and Investnow offer customisable Kiwisaver schemes (I think theirs another big name that provides this option as well- Craig’s investment partners comes to mind).
The one thing that Superlife doesn’t offer is any sort of tools to try and work out your allocation- so who knows I could be worse off following my own understanding of asset allocation- its good to know that kōura’ advice tool recommends a similar asset allocation to my current KiwiSaver setup.
In the next few weeks I am going to have a look at InvestNows new KiwiSaver offering.
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