Consilium has released in its new KiwiSaver scheme investment line-up with most well-known local managers (bar bank-based operators) granted access alongside an extensive list of offshore managers, exchange-traded funds (ETFs) and direct securities.
The cache of scheme documents published last Friday show NZ-based managers including AMP Capital, Castle Point, Clarity, Devon, Fisher, Harbour, Hunter, Kernel, Mint, Milford, Nikko, Pathfinder, Salt, Simplicity and SuperLife all have products available on the Consilium KiwiWRAP approved list (APL).
As well as the roll-call of local managers, a raft of offshore-based funds feature on the scheme APL with a weight to Consilium favourite, Dimensional Fund Advisors. But the international guest list also extends to other index-based managers such as Vanguard and many active options across most asset classes.
At launch, KiwiWRAP excludes direct Australian and NZ shares with the exception of ASX-listed ETFs and listed investment companies (or trusts). Scheme members can select from a range of direct global equities, although the majority currently on offer are ETFs or other listed investment funds with a smattering of mostly big-name companies such as Apple or Coke.
According to the KiwiWRAP product disclosure statement (PDS), the scheme also screens out investments likely to have margin calls, redemption times longer than eight business days, charge a management fee above 1.25 per cent (excluding performance fees) or for “any other reason that Consilium deems appropriate”.
The new KiwiSaver scheme, as reported previously, is structured as a superannuation product rather than a portfolio investment entity (PIE), which enables members to construct bespoke investment strategies from the wide APL with the downside of a flat tax-rate of 28 per cent.
However, given KiwiWRAP has set a minimum opening balance of $50,000, most prospective members likely fall into the higher tax bracket anyway. Under the scheme rules, members can only join through an approved financial adviser, who helps construct a ‘personal plan’.
“Unless you are an eligible investor, your Adviser must have given you personalised financial advice and a statement of advice containing your Investment Direction,” the PDS says.
Consilium will regularly monitor advisers to ensure they are providing advice as specified as well as setting general portfolio construction limits (for example, a single investment representing 50 per cent or more of a member’s holdings would trigger a red flag).
Scheme documents show Consilium has set a flat annual management fee of 0.29 per cent (covering custody, supervisor fees etc) while underlying investment costs range from 0 to 1.25 per cent. Advisers can also charge annual fees of up to 0.75 per cent plus a one-off ‘establishment fee’ of 0.2 per cent.
KiwiWRAP marks the first foray into KiwiSaver for investment administration firm, FNZ, which also backs the wider Consilium wrap product. For its part, FNZ – as administrator and custodian – will take a cut from the interest rate negotiated with the scheme bank (ANZ) earned on KiwiWRAP cash.
Scheme members receive interest on the cash management account (CMA) calculated at the NZ official cash rate minus 0.25 per cent (effectively zero at the current rates).
“The Custodian will retain the difference between the CMA interest rate you receive and the negotiated interest rate, as a cash administration fee (cash administration fee = negotiated interest rate – CMA interest rate), up to a maximum of 0.85% per annum,” the scheme document says.
KiwiWRAP has named Trustees Executors as supervisor.
The Christchurch-headquartered Consilium, headed by Scott Alman, has more than $4 billion in funds under administration.