Launching a bitcoin fund amid a crypto-crash might seem like a case of bad timing but Kōura Wealth KiwiSaver founder, Rupert Carlyon, is unfazed.
“I would feel far more comfortable buying bitcoin at $30,000 than when it’s $60,000,” Carlyon said.
Bitcoin slumped to a low of about US$25,000 last week during a broad market sell-off. While bitcoin has since recovered a little to above US$30,000, the latest slump has left cracks in the crypto infrastructure following the collapse of a so-called ‘stablecoin’ used to back transactions.
But the Kōura KiwiSaver cryptocurrency option, which invests into an underlying Canada-listed Fidelity bitcoin exchange-traded fund (ETF), may find support among the true-believers.
“The biggest gripe we had [from a survey of potential investors] was that we only allow members to allocate 10 per cent of their KiwiSaver portfolios to the bitcoin fund,” Carlyon said. “Some of them wanted to put 100 per cent in.”
Kōura set a 10 per cent exposure cap on all three of the new ‘speciality’ funds inserted into its KiwiSaver scheme earlier this month with clean energy global equities and NZ listed property index options joining bitcoin in the mix.
“Given the very high risk profile, a Specialty Fund is typically given a small allocation in a broader portfolio,” the Kōura KiwiSaver product disclosure statement says. “You will be limited to investing a maximum of 10% of your investment in a single Specialty Fund.”
Volatility may see actual member exposure to the Kōura speciality funds stray above 10 per cent over time but the scheme will rebalance portfolios twice a year in line with the restrictions.
Priced at annual 1.1 per cent fee (plus a $30 yearly member charge), the new Kōura funds cost almost double the flat 0.63 per cent of the scheme’s existing suite of six products. Kōura invests via BlackRock ETFs for most its global shares exposure with specialist provider First Trust appointed for the clean energy exposure.
The scheme manages NZ shares, fixed income, cash and the new listed property fund in-house (with advice from equity partner, Hobson Wealth).
Despite the crypto pizazz, however, Carlyon said the Kōura survey suggests KiwiSaver members are more interested in down-to-earth assets.
“When we asked investors what they wanted, property was overwhelmingly everyone’s favourite,” he said.
The Kōura property fund will invest only in NZ-listed real estate investment trusts and retirement village operators – a portfolio of between 12 to 14 stocks.
But the bigger question for Kōura is whether the new funds can drive growth in a scheme that has struggled for relevance since going live in August 2019.
As at the end of March this year the scheme reported 800 or so members and just over $30 million, about steady compared to the end of last year following a rough quarter for the environmental, social and governance (ESG) style stocks that dominate the Kōura portfolio.
(An earlier version of this story used Morningstar figures that erroneously puts the Kōura KiwiSaver December 31 FUM at about $38 million.)
Carlyon said the scheme has strong support from backers Hobson and Select Investment Services (a partnership between adviser aggregator firm NZ Financial Services Group – or NZFSG – and Crest Holdings).
Select bought half of Kōura last year (the remainder spilt between Carlyon and Hobson) triggering a new distribution strategy centred on incentivising advisers with a 0.3 per cent ‘facilitation’ fee that is charged on an individualised basis.
The ‘facilitator’ program – which is not quite full financial advice – is “starting to gain some traction”, Carlyon said.
And incentivised adviser distribution of KiwiSaver products, which may face a shake-up under fee-charging changes currently under review by the Financial Markets Authority, remains effective.
Youthful advisory network, Aurora, for example, has accrued over $50 million and perhaps 3,000 plus members since launching its home-brand KiwiSaver scheme last August. Like Kōura, Aurora promotes its KiwiSaver funds as ESG-friendly but with an army of about 70 advisers operating under its licence and a fleet of branded Teslas to boot.