Early data from multi-choice KiwiSaver scheme, InvestNow, shows most members have diversified beyond a single manager while mixing active, passive and responsible investment options.
InvestNow founder, Anthony Edmonds, said over two-thirds of the firm’s KiwiSaver scheme members have selected more than one underlying fund among the 35 available options.
“On average our members have three funds in their KiwiSaver portfolios – almost half invest in more than three funds while 20 per cent have chosen at least five funds,” Edmonds said. “We built the InvestNow scheme to offer members greater investment choice and flexibility compared to traditional KiwiSaver providers – and, clearly, that’s hit a nerve.”
Launched just over a year ago, the InvestNow scheme features a mix of diversified and single-sector funds with growth-oriented options proving the most popular choice to date, he said.
Close to 80 per cent of members using growth funds have allocated to more than one manager in the risk category.
However, Edmonds said only 35 per cent of InvestNow KiwiSaver members have put all of their portfolios into growth funds, indicating many investors are looking for both manager and asset class diversification.
More than half of scheme members have invested in a diversified growth option, a choice topped by the in-house Foundation Series Growth Fund (formerly offered under the Hunter brand) followed by the Milford Active Growth fund.
“In fact, the Foundation Series Balanced and Growth funds have both been well-supported – with many switching into them from Simplicity,” Edmonds said. “We think this is probably because people who originally bought into the Simplicity story are concerned about its growing investment complexity through exposure to venture capital, community housing and home loans to members. The Foundation Series chimes with those just looking for a low-cost, tax-efficient broad market KiwiSaver portfolio.”
About a quarter of those invested in the Foundation Series Growth Fund – which is based around a passive global shares exposure – also invest in the Milford Active Growth Fund, suggesting many members want to mix index and active investing styles.
“Overall, our members have a strong tilt to passive – with the All Country Global Shares Index Fund the most common choice as well as a lot of support for the Foundation Series funds and Smartshares products – but many of them also allocate to active managers like Milford, Harbour, Mint and Fisher.”
Furthermore, the new InvestNow data shows while some members are keen to dabble in responsible investment strategies – including the Pathfinder and AMP Capital options – only a small minority have gone all-in for ethical.
“For example, just 5 per cent of members have put all of their KiwiSaver portfolio in the Pathfinder or AMP Capital ethical funds with most diversifying into broader growth funds as well,” he said. “Intuitively, you would have thought responsible fund investors would commit most – if not all – of their portfolio to strategies that align with their values. Perhaps many ethical fund investors are testing the water first before diving in.”
InvestNow has grown to about $75 million and 1,700 members since launch in late 2020.
“We’re now starting to see a surge in growth as many financial advisers are using the InvestNow KiwiSaver scheme for their clients,” Edmonds said.