Kiwi Wealth has announced details of a new investment solution for its KiwiSaver scheme that seeks to optimise financial returns and incorporate New Zealanders’ attitudes toward responsible investment.
All of the Kiwi Wealth KiwiSaver Scheme’s funds are now using a new fund designed, built and directed by the in-house investment management division for implementing their global share index allocations.
The new fund is an enhanced index fund which resolves long-standing problems with low-cost ‘passive’ index trackers such as Exchange Traded Funds (ETFs) used by many KiwiSaver providers. It provides greater flexibility to generate better market returns, improves tax efficiency and allows Kiwi Wealth to actively address the responsible investment concerns of its members.
The new fund implements Kiwi Wealth’s responsible investing policy, which removes indirect investment exposure in controversial weapons, tobacco and whaling industries but goes a step further by embedding responsible investment at the security selection level. Initially Kiwi Wealth will also implement in full the New Zealand Super Fund’s current exclusion list and will also exclude additional companies with poor track records in environmental, social and governance (ESG) indicators.
Simon O’Grady, Chief Investment Officer, said the fund was tailored to meet the changing views of New Zealanders on responsible investing.
“This new fund gives us the best of both worlds. It retains the benefits of a typical index tracker – such as low cost, good liquidity, and broad diversification of investments – with the added benefits of being more tax efficient and providing greater flexibility and control over these investments.
“Our new fund has been built from the ground up by our investment management team and is tailored for the New Zealand market, with an expectation that the enhanced tracker will outperform passive index funds used by other KiwiSaver providers.
“In addition, we incorporate responsible investing throughout our process. Responsible investing involves identifying companies that are being irresponsible in the environmental, social and governance areas, and excluding them because poor behaviour in these areas tends to correlate with poor returns.
“It reflects Kiwis’ growing sophistication and financial awareness when it comes to investing – they recognise that there’s a duty to match investors' ethical and social concerns with good investment returns.”
Kiwi Wealth Limited is the issuer and manager of the Kiwi Wealth KiwiSaver Scheme.
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