No one wants to turn away prospective clients.
With the historic lack of suitable financial products, it is inevitable that a portion of would-be Kiwi investors are finding themselves locked out of countless investment options. There’s a cost (both in time and money) associated with setting up and maintaining traditional wealth investment options. That’s why many firms will have a minimum contribution of $250K (and that’s the lower end) before setting up a wealth portfolio.
This is fine if your client has that capital available, but many everyday Kiwis do not. As a direct response to this situation – we wanted to create an investment product which could be utilised by all Kiwis, regardless of where they are in their wealth journey.
Financial services industry professionals will likely have noticed the gap between investment options in New Zealand. Current products occupy two main categories:-
- Clients can invest in a premium product and create a robust portfolio which is tailored to their goals and timeframe. These typically start with a minimum contribution of $250,000 as outlined above.
- For those below the minimal contribution, the alternative wealth building tool is KiwiSaver funds. This is an excellent product, great for its purpose – but there is a lack of accessibility beyond the specified parameters (e.g. withdrawals are limited to first home purchasing, retirement over the age of 65, bankruptcy, serious illness). This means it is easy for clients to pay into, but nigh on impossible to access unless you fall into one of the very specific criteria.
We thought that there is room for a third option… something tax-efficient, with a low minimum entry, which clients could access as they would be able to with traditional wealth investment? So we decided to build one.
Our founding principles for ACI Funds is to provide tax efficient, evidence based, accessible investment options for all Kiwis, at the very low entry price of $50.
ACI Funds is a win-win for advisors. Advisors can use ACI Funds’ investment options to grow clients’ wealth – and to tap into a new pool of prospects.
If a client has $50 to start investing with, they can invest it in one of the ACI Funds options.
This means a whole new world of possibility. ACI Funds does not offer financial advice, so it would still fall to financial advisers to guide their clients around the option best suited to their goals and lifestyle. This means advisors will not lose the potential relationship with a client, nor will they take on undue burden as the investment options are already constructed and need no customisation beyond the client’s contribution schedule.
Advisors can recommend between the three investment options available:-
- ACI Conservative Fund, with a minimum suggested timeframe of 4 years.
- ACI Growth Fund, with a minimum suggested timeframe of 10 years.
- ACI Balance Strategy, which offers a 50/50 combination of Conservative and Growth funds. The minimum suggested timeframe for this is 5 years.
ACI Funds adheres to global best practice, meaning that to protect the interests of investors, ACI’s investments are held by an independent custodian, and our operations are supervised by an independent supervisor.
The funds feature smart diversification across markets, asset classes, countries, and sectors, and implements proven investment strategies to target returns. The minimum investment opens it up to a much wider audience than traditional wealth investment – providing a potentially huge client pool for advisors. For investors they can withdraw whenever they need, without restrictions as per KiwiSaver schemes.
This creates an opportunity for advisors who have clients in KiwiSaver, as it has the same investment approach and will feel familiar – but being unlocked, adds an additional cornerstone offering in meeting clients’ needs and planning requirements.
There’s also the issue of tax to consider. With traditional wealth portfolios, the tax rate can be up to 39%. Investors may also need to engage an accountant to help them with the taxable income from their portfolio returns. Again, this costs time and money. As a PIE, ACI Funds has a maximum tax rate of 28% and tax filing is handled by the scheme issuer, FundRock NZ.
The ACI Funds options have been created with consideration to the Fama-French Model, focusing on target drivers of high expected return during portfolio construction and asset allocation. Through our fund manager, Stewart Group Asset Management (SGAM), we offer fully managed funds utilising best-in-market research and modelling.
To this end, ACI Funds (via SGAM) leverages Dimensional Fund Advisors’ patented investment methodology to not only start from a robust investment framework, but also incorporate sustainability options. In this way ACI Funds is able to offer everyday Kiwis evidence based investment options which align with their own environmental, sustainability and governance (ESG) values.
As an advisor-driven product, ACI Funds aims to close the gap between quality and accessibility in New Zealand investment options – both for investors and advisors.
If you want to start offering evidence based, tax-efficient, accessible investments and build your book of clients – contact us via support@acifunds.co.nz or visit us online at www.acifunds.co.nz for more information on ACI Funds options including our disclosure statement.