InvestNow to expand term deposits, KiwiSaver ETFs

InvestNow is looking to add three more banks to those offering term deposits through its online investing platform.

Wednesday, June 14th 2023, 1:52PM

by Andrea Malcolm

InvestNow managing director Mike Heath says term deposits make up around 10% of the platform’s total $1.4 billion book, having tripled in value to around $150 million in the past 12 months.

“Term deposits have grown rapidly and growth remains steady. We are progressing discussions with three other banks about coming onto the platform to round out the customer proposition.”

That would see Westpac, ASB and TSB joining current offerings from ANZ, BNZ, Heartland, SBS, the Bank of China and China Construction Bank.

“It’s not a big part of the business but it is growing and we have seen a lot of growth from within the customer base and new people joining to take advantage of having one account, and being able to move money between banks without having to open accounts with each.”

While InvestNow doesn’t offer term funds, they have been discussed off and on, says Heath. “I’d never say never.

“We know we can build them. Looking at the proposed tax changes for family trusts next year, a family trust could invest in PIE funds and it would be sensible to look at offering a PIE product to give those tax benefits.

“When interest rates and deposit rates are high, the materiality of that top RWT and PIR rate becomes very real.”

In the KiwiSaver space, InvestNow’s PIE-wrapped Vanguard products, the Foundation US 500 and Foundation Total World have been popular since they were added in March, says Heath. Prior to being added to KiwiSaver, Vanguard ETF PIE funds were also available as managed funds.

“People know Vanguard as a brand. Many who have joined our KiwiSaver scheme since March have done it to access those parts of the KiwiSaver scheme.”

In response to ongoing demand by KiwiSaver members for high growth diversified funds, InvestNow senior portfolio manager Jason Choy is building a new portfolio which should be out in the next two months, says Heath.

On the back of success with the two Vanguard ETF PIE funds, InvestNow is also looking to build similar ETF backed-PIE funds to access the likes of the NASDAQ and other foreign exchanges.

“We’ve alway had a lot of interest in commodity funds. We’re looking at trading volumes to see which are the most popular ETFs, coupled with past feedback from customers and then we’ll be going out and asking them what they’re interested in.”
InvestNow has 3500 KiwiSaver customers, most of whom also invest in managed funds.

“They are serious about investing. They’re engaged in investing. They are not your set and forget people. Particularly with KiwiSaver, they have latched onto the idea of not having their eggs in one basket.

“We are seeing growth in demand from advisers. Advisers like the ease and convenience for their customers and they can build a KiwiSaver portfolio for their clients across more than one manager.”

Tags: InvestNow