InvestNow pick ‘n mix a value-add opp for advisers

InvestNow, the digital investment platform that enables DIY-style KiwiSaver schemes, has reported strong growth in 2022, particularly from members working with financial advisers.

Thursday, February 2nd 2023, 6:08AM

by Andrea Malcolm

Overall new clients brought a net $150 million into funds during the 12 months to the end of December, increasing membership to 26,000; while existing members stayed the course with regular contributions through tough market conditions. Term deposits on the platform were also popular on the rising interest rate environment of 2022 with inflow up more than 100% year-on-year.

The InvestNow KiwiSaver scheme, which offers members a choice of external fund managers as well as an in-house range of diversified funds, more than doubled in size during the 12 months to the end of December.

“In KiwiSaver we’ve had a stellar year of growth, particularly where advisers are involved,” says founder Anthony Edmonds. "The InvestNow platform allows them to combine managers like Milford, Mint Asset Management and Pathfinder into one client’s KiwiSaver account.”

Edmonds says around 50 per cent of 2022’s inflow came from members working with financial advisers. “It’s a great opportunity for advisers to add value by selecting different fund managers within a KiwiSaver portfolio in line with their clients’ personal goals and risk appetites. And they [the clients] are sticking with them.”

Edmonds says the average profile of an InvestNow member is someone who is interested in investing and happy to do their homework.

“Interestingly our members are wealthier than people often pick. The average portfolio size is more $50,000 plus and KiwiSaver would be higher again - particularly those working with advisers.”

InvestNow provides access to 35 managed KiwiSaver funds, and more than 150 regular funds from 28 fund managers and six banks. An own-build KiwiSaver scheme can include exposure to regular managed funds as well as KiwiSaver funds. Edmonds says almost all InvestNow members mix and match their own portfolios.

Edmonds says enabling this scope of diversification is the differentiating feature between InvestNow and other investment platforms.

“We’re really excited about that. We want to see people hold diversified portfolios made up of professionally managed funds, which can be active, passive, socially responsible - whatever fits their goals. We’re not encouraging people to buy and sell individual stocks. You see the damage that has come from that approach in the last 12 months with people having overweight exposures and lack of diversification.”

InvestNow members have heard the risk management message, he says, with the group’s KiwiSaver scheme, in particular, seeing large inflows into the in-house Foundation Series balanced and growth funds.

Adding to its KiwiSaver options this year, InvestNow will soon introduce two passive ETFs (currently in its Foundation Series) with transaction fees into its KiwiSaver scheme. The Foundation Series US 500 has an annual management of 0.03% per annum and a transaction fee of 0.5% on all buys and sells, and the Foundation Series Total World Fund has a management fee of 0.07% and 0.5% on all buys and sells. They invest into the Vanguard US 500 ETF and the Vanguard Total World 500 ETF.

“In some cases, we will have funds with transaction fees where the underlying fund also has those same transaction fees but I think they provide an interesting option in KiwiSaver because those people are long term savers rather than trading in and out of a fund. In that case those fees become incredibly compelling.”

Edmonds says InvestNow launched its in-house Foundation Series, which offers low-cost and tax-efficient exposure to global stock indices and fixed income assets, because Simplicity didn’t want to offer its similar products on a platform like InvestNow.

“We wanted to offer diversified low cost funds and the only way we could do that was to build our own. So we've built them to be low cost, but focused on making sure that they are tax efficient as well.”

The Foundation Series funds grew by 80 per cent over 2022 – and outperformed similar products offered by Simplicity by around 2 per cent.

Note: Performance Comparison as at 31/12/2022 on before tax and after fees basis:

	1 Month	3 Months	1 Year	2 Years (p.a.)
Foundation Series Balanced Fund	-1.66%	1.74%	-11.61%	-1.42%
Simplicity Balanced Fund	-3.04%	2.02%	-13.49%	-3.59%
Difference	+1.38%	-0.28%	+1.88%	+2.17%
	1 Month	3 Months	1 Year	2 Years (p.a.)
Foundation Series Growth Fund	-1.97%	2.20%	-12.05%	0.45%
Simplicity Growth Fund	-3.65%	2.52%	-14.75%	-2.22%
Difference	+1.68%	-0.32%	+2.70%	+2.67%