SBS-owned KiwiSaver scheme, Lifestages, has closed its $23 million growth portfolio while opening up two new investment options for members.
According to the latest Lifestages KiwiSaver prospectus, from October 1 this year the scheme began offering the new High Growth and Income funds in addition to the existing Capital Stable portfolio.
“The Lifestages Growth Portfolio previously offered as part of the scheme ceased to be available from 21 September 2015,” the prospectus said.
As at March 31 this year the Lifestages Growth portfolio reported funds under management of about $23 million compared to $105 million in the Capital Stable pool.
Graham Duston, head of SBS wealth management subsidiary Funds Administration NZ (FANZ), said the new investment structure enabled members to determine a growth/income mix that would be rebalanced annually
Previously, member’s who had split investments between the Capital Stable and Growth portfolios would’ve seen their asset allocations diverge over time as rebalancing was impossible to automate, Duston said.
However, he said new technology implemented by the scheme’s registrar, Trustees Executors, earlier this year meant auto-rebalancing to member-determined asset allocations was now achievable.
“Trustees introduced the Sonata system this year where you can push a button and reweight the two funds to whatever mix the member might have set,” Duston said. “That’s a huge advantage to investors.”
He said as well as allowing members to set, and adjust, asset allocations that would remain true to their original intentions over time, the Lifestages scheme now also offered an age-based automatic rebalancing option.
The ‘Lifestages Auto’ service rebalances member investments between the High Growth and Income funds every 10 years from age 35 to 55 “based on the predetermined exposures for the new age group”. Under 35s start at a 100 per cent allocation to growth, the prospectus says.
Rebalancing will occur on August 15 every year, Duston said.
He said the new method gives members the power to set an appropriate asset allocation rather than relying on pre-mixed ‘balanced’ funds, for example, which can have vastly different income/growth splits depending on the manager.
“It’s a crazy situation, and confusing for investors, where one fund might have 60 per cent in growth assets and another one might have 40 per cent but they’re both called balanced funds,” Duston said.
“We want to demystify and declutter the communication,” he said. “[The Lifestages changes] also allow us to start a new conversation with the members.”
The KiwiSaver scheme invests primarily into a range of Lifestages unit trusts with underlying managers including BlackRock, Magellan, Harbour, Russell, and PIMCO. The scheme’s NZ fixed interest and cash allocations are invested into SBS securities.
FANZ was still exploring options to merge Lifestages KiwiSaver with the Staples Rodway scheme, Duston said. The group took over management of the $55 million Staples Rodway scheme this March.
The Staples Rodway scheme has three underlying funds: conservative, balanced and growth.
FANZ also signed a new ‘securities distribution agreement’ with its SBS parent this September, clarifying the responsibilities of both parties.