Portfolio-building has limited appeal

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A KiwiSaver provider offering members the ability to pick the assets their retirement savings are invested in says only a small percentage of investors want to take such a hands-on approach.

Wednesday, March 2nd 2016, 6:00AM 1 Comment

NZX-owned Superlife gives investors more control of their KiwiSaver accounts, if they want it.

As well as funds that will be familiar to most KiwiSaver members, such as a life stages option that de-risks the investment as the saver gets closer to retirement, and a fund designed for those saving for a first-home deposit, Superlife also offers investors a more active option.

Those who want to create their own investment strategy can use 14 sector funds to do so.

Investors who want to get to a more detailed level can use 23 exchange-traded funds to create their own portfolios,  the same range on offer from Smartshares,which is also owned by NZX.

Superlife founder Michael Chamberlain said: "Superlife is a vehicle that allows you to implement what you want to do in a cost-effective and efficient way. We are not trying to sell you a product, we are just providing a vehicle and equipping people with education and information."

But he said the appeal of the option would probably always be limited.

Only about a third of KiwiSaver investors would want something that was not mainstream, he said.

"Out of 100 people, 85 aren't going to be interested, don't have the confidence and want to be told what to do, to be able to opt out and leave it to someone else. Of the remaining 15 I would expect two or three to really want to build a portfolio. Ten might want to put together their own strategy , the others don't know what they want, they just know it's not standard."

But he said there would be growth.

"Not necessarily because of investor education improving because generally across New Zealand I don't think it does improve but within New Zealand people are coming into the workforce, others are retiring. As balances get bigger people tend to take more notice. Many people still won't be interested because they prefer to leave it, to trust the experts."

Self-managed super funds have been an area of growth in Australia. 

Chamberlain said there was always a risk that investors would do something ill-advised with their investments, such as cementing losses by moving out of equities during periods of market volatility.

But he said Superlife had a clear philosophy communicated to its members that if they were investing money in the sharemarket it should be money they did not plan to spend within the next 10 years.

Chamberlain said Superlife dealt with advisers who catered for clients on a fee-only basis but because it did not pay commission, was not marketing widely to them.

Tags: KiwiSaver NZX Superlife

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