The just-launched robo KiwiSaver, Kōura Wealth, has established six underlying passively-managed funds with a big brand global manager to pick up most of the business.
According to the Kōura statement of investment policies and objectives (SIPO), the six funds cover three offshore equities sectors, NZ shares, local fixed income and cash.
“For our international exposures (US Equities, Rest of World Equities and Emerging Markets Equities), we will invest exclusively in funds managed by one of the large global passive fund managers,” the SIPO says.
Kōura founder, Rupert Carlyon, said the scheme would invest into offshore-listed BlackRock iShares exchange-traded funds.
“BlackRock has a great range of ESG [environmental, social and governance) ETFs too,” Carlyon said.
However, for local shares, fixed income and cash Kōura may “either invest directly in a portfolio of securities or alternatively may invest in an existing investment fund”, the SIPO says.
Carlyon said Kōura would run in-house NZ passive shares and fixed income funds, with part-owner Hobson Wealth helping out.
“It was better to build the [domestic] funds ourselves and avoid doubling up on the infrastructure and governance costs in an external product,” he said.
Kōura has no global fixed interest exposure but Carlyon said it may add the asset class as the scheme scales up.
Pricing would be “in the mid-range for passive funds”, he said.
The SIPO says the scheme would provide “investors with improved savings outcomes through advice”.
But the robo-advice process won’t be compulsory for Kōura members.
“Investors can make their own choice of investment funds to develop their own portfolio, or alternatively can choose to use the digital advice tool to invest in a Kōura Portfolio,” the disclosure document says.
Carlyon said the Kōura robo – built by a NZ-based technology firm – should go live within a couple of weeks.
“We’re in the second phase of testing now,” he said. “There’s a big opportunity to make a real difference to how people invest in KiwiSaver with robo advice.”
The Kōura system would “plug and play” directly into the scheme’s back-end administration platform, supplied by MMC.
“We needed to build the advice algorithms and front-end experience but not the whole system – we couldn’t have done this without MMC,” Carlyon said.
He said Kōura planned to offer “true customer-focused robo-advice” rather than “me-too” retirement planning calculators.
“We have to come up with something that delivers real financial advice to high standards but is also accessible,” Carlyon said.
Kōura has been granted a robo-advice exemption by the Financial Markets Authority, joining three other firms – Nikko Asset Management, Kiwi Wealth and National Capital – operating in KiwiSaver land.
The scheme also marks the second win in the licensed supervisor market for the now Australian-owned Heritage Trustees. As reported this week, Heritage also won the supervisor gig from another local passive scheme start-up, Kernel Wealth. Kernel lodged official documents just two days before Kōura.
Melbourne-headquartered business, Sargon, bought the loss-making Heritage last December, restructuring the business last month under a “technology-enabled” model that saw several senior staff exit.
The FMA licensed Heritage late in 2017, allowing the firm to compete for KiwiSaver and other retail investment fund supervisor business.
MMC is custodian and administrator for the Kōura scheme.
Hobson Wealth, headed by Warren Couillault, owns about 45 per cent of Kōura with Carlyon holding most of the remaining shares. In August, two new directors – David Moore, director of a Napier food retailer, and Hobson director, Anna Scott – joined Carlyon and Couillault on the Kōura board.