Nikko AM disrupts KiwiSaver market with high performing ARK fund

The latest offering from Nikko AM provides exclusive KiwiSaver access to the ARK Disruptive Innovation Fund.

Thursday, November 26th 2020, 6:15AM

by Daniel Smith

Nikko AM has been involved with the American-based firm ARK Invest since September 2019. Managing director of Nikko AM, George Carter told Good Returns that making the ARK fund available to KiwiSaver customers has been a long-term goal.

“I think it is crucial to put different offerings to market so that people have choices with what they want to do with their KiwiSavers. Some people might just want to go into a conservative or a growth fund, and while the ARK strategy was already a part of the Nikko growth fund, this offering allows people to have more choice and flexibility in building their portfolios.”

The ARK fund focuses solely on the disruptive innovations that are changing the way the world works. These include products and services within the fields of robotics, automation, autonomous transport, artificial intelligence, energy storage and genomic sequencing; fields which have experienced significant gains through 2020.

When Nikko AM launched the disruptive innovation fund to retail investors here in New Zealand a year ago their aim was to provide a return of more than 10%. Since then, in the throes of a tumultuous year, the fund has returned just over 100%.

Carter is cautiously optimistic that the fund has the ability to go from strength to strength. “While we always want to be careful with past returns, what is relevant here is that during this period of disruption the fund has performed extraordinarily well.

“We thought that a good outcome might be that the fund could double every seven years. Now it just so happens that it doubled in its first year. All the things that are happening in the world are enabling all of those stocks and businesses that benefit from periods of disruption. It is easier to innovate in a period of disruption.”

ARK Invest has been in the headlines lately not just for their expectation defying fund results. Resolute Investment Managers are planning to take over ARK and founder Cathie Wood is not going down without a fight.

Wood’s confidence has helped turn ARK into one of the fastest-growing investment companies in the world.

The company’s hard hitting predictions in the tech space such as that Tesla’s shares would increase 20 times by 2023, have many investors questioning their strategy. Wood is happy to be criticised on her predictions “it almost makes me feel comfortable, to be honest because it means if we’re right, then the rewards will be pretty enormous.”

While Carter admits that the fund is not everyone's cup of tea, he does believe that there is a strong contender for a high-risk high-growth fund in the New Zealand KiwiSaver marketplace.

“If you don’t like volatility and risk, that is fine. On the other hand most people are going to have their money in their KiwiSaver accounts for decades, not years, but decades. In that environment, for many people it will be appropriate to take on some investment risk and seek some higher returns.

“If the world is changing, innovating and disrupting itself into a different world, do you want to be on that bandwagon, investing as a part of that? Or do you want to not be a part of that? KiwiSaver is about investing for the future, if disruption is going to be a part of our future then you could make the case that those two are very well aligned.”

Carter sees this latest offering as broadening the toolkit that the adviser has to service their clients' KiwiSavers. Nikko AM already has a robo-advice platform GoalsGetter, which is being utilised by advisers, the ARK fund deepens the capabilities of that technology.

“We want advisers to use our tools and our funds in a way that helps them help their clients. Different advisers have been using them in different ways. For some advisers the tool has helped service clients who don’t need a full suite of service offering. Some advisers are using it to access products in a cost efficient way. But for both of those it comes back to what does the client need and want and how do we service that?”

Tags: Ark Invest disruptive innovation George Carter investment KiwiSaver Nikko AM