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What is a benchmark?

A benchmark is a standard against which the performance of your investments can be measured. To be meaningful, the benchmark must be appropriate to the market you’re investing in. There’s no point in comparing a global share fund against the performance of a term deposit, or a bond fund against a property trust

Why are benchmarks important?

Benchmarks are a useful tool for investors to judge whether or not their investment manager is adding value; that is, are returns higher than the benchmark and, therefore, is the manager adding value or not? There are real dangers in focusing on short-term comparisons of investment performance; even the very best investment managers fail to deliver benchmark performance in some years.

Kiwi Wealth Super Scheme benchmarks 

Conservative benchmark

The Conservative benchmark is designed to measure a ‘conservative’ fund of fixed interest and equities and constitutes 42.5% S&P/NZX 90-Day Bank Bill Index, 42.5% S&P/NZX Government Bond Index,10% MSCI All Country World Index, and 5% MSCI All Country World Index 100% Hedged to NZD Index.

Up to 31 December 2010, the benchmark constituted 40% S&P/NZX 90-Day Bank Bill Index, 40% S&P/NZX Government Bond Index, 10% Gross MSCI the World Index, and 10% Hedged Gross MSCI the World Index.

Balanced benchmark

The Balanced benchmark is designed to measure a ‘balanced’ fund of world equities and fixed interest and constitutes 22.5% S&P/NZX 90-Day Bank Bill Index, 22.5% S&P/NZX Government Bond Index, 20% MSCI All Country World Index, and 35% MSCI All Country World Index 100% Hedged to NZD Index.

Up to 31 December 2010, the benchmark constituted 20% S&P/NZX 90-Day Bank Bill Index, 20% S&P/NZX Government Bond Index, 40% Gross MSCI The World Index, and 20% Hedged Gross MSCI the World Index.

Growth benchmark

The Growth benchmark is designed to measure the equity market performance of all countries with a moderate position in cash and fixed interest and constitutes 7.5% S&P/NZX 90-Day Bank Bill Index, 7.5% S&P/NZX Government Bond Index, 30% MSCI All Country World Index, and 55% MSCI All Country World Index 100% Hedged to NZD Index.

Up to 31 December 2010, the benchmark constituted 100% Gross MSCI the World Index.

 

Benchmark notes

Unless otherwise specified our returns and benchmarks are always:

  • Shown after all taxes and fees have been deducted.
  • Annual management fees are deducted at up to 1.5% p.a. for the Kiwi Wealth Super Scheme, as per the fee schedule. Member fees are considered tax deductible.
  • The ‘MSCI All Country World Index 100% Hedged to NZD Index’ is a custom index calculated by MSCI for, and as requested by, Kiwi Wealth.
  • Transaction fees on Government Bonds are modelled at 0.02% p.a.
  • Transaction fees on equities are modelled at 0.075% p.a.
  • Tax on bonds and bank bills is modelled by multiplying the net monthly change by the top PIR.
  • Tax on equities is modelled by multiplying 5% by the top PIR.

If you have any questions about benchmarks, please feel free to contact us.

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