Informed Investor - Spring 2024 - Future Focus by Informed Investor

START-UP DEBATE Is it better to HQ your company out of NZ?

KIWISAVER ROBOT MEGA TRENDS Will AI take over your How investment will be funds management? shaped by future forces

CHANGE OF GUARD Implications of the UK election results $6.5 MILLION QUESTION How high will Bitcoin go by 2050? MONEY STYLES Relationship, money and making it work

NZ$11.95 INC. GST

I N F O R M E D I NVESTO R

Contents IN THIS ISSUE

08. Contributors Meet some of our expert contributors.

10. What We Like A showcase of trends, ideas and luxe living.

14. Essentials Fresh colour and vibrancy the key.

16. Let the Mega Force be with You There are massive inexorable forces on the horizon set to reshape the global economy and, as Amy Hamilton Chadwick explains, it will pay investors to keep across all of them.

23. Building on Success: Silverfin Capital’s Inghams Hatchery Scheme

This unique property syndicate is delivering a 7.5 per cent pre-tax annual distribution.

24. Going Up, Going Down Economist Cameron Bagrie takes a good, hard look at New Zealand and how we’re going as a nation.

26. Could Bitcoin Reach $6.5 Million by 2050? Using Santostasi’s pricing model, we can see where Bitcoin may go in the next quarter century if the fundamental value continues to hold, reports Easy Crypto.

28. The Grip That Could Strangle Kiwi Innovators We may like to believe in ingenuity and innovation, but overzealous attitudes to regulation, especially competition policy, risk suffocating technology startups, writes Peter Bale.

32. The Evolution of Ethical Investing A quiet revolution is brewing in the world of investing ... conscious investors are now looking to put their money where their values are, writes Olive Coulson.

34. Putting the Hard Yards in Can passive income help you achieve financial freedom? Amy Hamilton Chadwick says less TikTok and more time on the investment work clock is a start.

36. When the Right Advice Pays Off A financial adviser can give valuable guidance so you can get the most out of your money, says Consilium’s Scott Alman.

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 2

38. So, What Did You Do in The 2020s, Granddad? Term deposits could be the saddest story you share with family in years to come, but it’s not too late to change the narrative, writes Martin Hawes.

42. Is a Robot Managing Your KiwiSaver? As we embrace the age of artificial intelligence, the question must be asked, is AI also managing our investments? Ben Tutty catches up with real people in the industry to find out.

46. Changing of the Guard in London The Labour Party’s recent victory in the UK election looks set to usher in political stability and – perhaps surprisingly given the party’s name – a more business-friendly government, writes Andrew Kenningham.

50. How to Embrace Your Money Style Differences Through open communication and a willingness to compromise, couples can turn financial differences into a source of mutual support and growth, writes Bridgette Jackson of Equal Exes.

52. Meet the Magnificent Eight Sam Stubbs predicts a bright future in which the finance industry and banks move aside as consumers call the shots.

54. Snapshot Events around the world that are affecting the investment market.

Take control of your KiwiSaver investments With the KiwiWRAP KiwiSaver Scheme you can work with your adviser to invest in shares and managed funds from around the world. Choose from over 400 investment options, including Apple, Vanguard, Berkshire Hathaway, index funds, ETFs and so many more. It’s time to get advice and treat your KiwiSaver as an investment.

Now you can.

Highest average member balance as at March 2023*

Find an accredited adviser at www.kiwiwrap.co.nz

www.kiwiwrap.co.nz | 0800 KIWI WRAP (0800 5494 9727) Designed for investors with a balance of $50,000 and above. Available only through a KiwiWRAP accredited adviser.

Consilium NZ Limited is the issuer and manager of the KiwiWRAP KiwiSaver Scheme. The Product Disclosure Statement and a full list of investment options for the KiwiWRAP KiwiSaver Scheme is available at www.kiwiwrap.co.nz. *KiwiSaver Market Review 2023 (Melville Jessup Weaver).

I N F O R M E D I NVESTO R

Contents 56. Playing it Softly Market performance this year now looks likely to be a bit softer, although it’s a relief that softer also appears to be a sentiment shared by the Reserve Bank, writes Kelvin Davidson.

59. The Benefits of Making a Will Making or updating a will is a relatively easy process and accurately reflects the changes in your life, writes Annabel Sheppard.

60. For Those in Peril by the Sea

Property experts, researchers and policymakers warn climate change is a risk home buyers tend to ignore and do not price in as they enjoy living near the sea, rivers and creeks, writes Sally Lindsay.

64. The Future of Investing Property investors have it tougher in 2024 and, as Andrew Nicol writes, a challenging landscape demands strategic thinking.

66. Catering for the Way We Work and Invest Oyster Property Group is meeting changing needs with modern commercial property assets that will help shape the future of our cities.

70. Fashion Update

The colours and styles of spring 2024.

72. Shimmering on a New Trading Platform Gold investing has traditionally been seen as an area for only the wealthy, but Goldie, a new high tech investment platform, is changing the scene, as Sally Lindsay reports.

74. Show me the Way to the New Santa Fe Liz Dobson takes a close look at the fifth generation of Hyundai’s Santa Fe, which breaks new ground for the popular SUV.

76. Time to Add a Warming Touch Interior designer Mary-anne Tobin, of Design Addiction, offers early glimpses into the interior trends for 2025 along with three essential tips for spring.

80 S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4

80. New World of Whisky An opportunity to invest in new world whisky with a leading West Coast business.

EDITOR’S LET TER

The Future can be a Fickle Mistress

Published by: Opes Media Informed Investor 33 Federal Street, Auckland Central, Auckland. www.informedinvestor.co.nz

At this moment, while we can identify the forces that may affect our collective future, nothing is set in stone, but it pays to be prepared and informed as an investor. Investment is, by its nature, an act of optimism. When we invest in property, bonds, managed funds, et al we are handing over our fate (and our money) to the future, trusting it will reward us. But the future is fickle. Looking back, it’s possible to see how technology, social and political forces shape outcomes. But, at this moment, while we can identify the forces that may affect our collective future, nothing is set in stone. As Tennessee Williams put it: “The future is called ‘perhaps’, which is the only possible thing to call the future. And the important thing is not to allow that to scare you.” However, it pays to be prepared. Our lead story in this Future Focus issue was written by our excellent writer, Amy Hamilton Chadwick. In it she looks at the “mega trends” likely to impact the future of investing – AI, the ageing population, the hybrid working model and green energy transformation. Amy unpacks each of these to get a handle of the implications of each. It’s a fascinating read and there are alarming conclusions. But there are also silver linings: as we move towards a green future, investment can act as an impetus for positive change.

“The commission acted on competition grounds, mostly the impact on DJ hardware and mixing software in New Zealand, a market which accounts for less than one per cent of Serato’s turnover. In doing so, the commission may have stopped not just the Serato founders from cashing out but given other would-be startups pause,” writes Bale. Whether or not to HQ your start-up in New Zealand is an interesting question. The Commerce Commission decision is likely to raise the eyebrows of Kiwi entrepreneurs with their eyes to the future. Time, as they say, will tell the flow-on effect. Also, in this issue we explore the future of housing in a world of climate change. Sally Lindsay explores the implications of coastal and clifftop properties, which are already subject to erosion. Insurance cover will change dramatically in the next 20 years and those yearning for a home by the sea may be advised to think long and hard before purchasing. We also profile new gold investment app Goldie, check out the latest interior trends, and all the fashion for spring. We hope you enjoy the magazine.

Elsewhere in the magazine experienced international journo Peter Bale casts his eye over the controversial Commerce Commission ruling, which put the kibosh on the acquisition of Serato by Japanese parent company, Pioneer. The offer was NZ$100 million – a life changing number.

Joanna Mathers Editor

Editor Joanna Mathers

Resident economist Ed McKnight

Art Director Mark Glover

Printer Webstar

Account Manager Stephanie Bryant – 021 165 8018

Retail Distributor Are Direct

Subscriptions Jill Lewis – subscriptions@informedinvestor.co.nz This magazine is subject to NZ Media Council procedures. A complaint must first be directed in writing, within one month of publication, to the email address, stephanie@informedinvestor.co.nz. If not satisfied with the response, the complaint may be referred to the Media Council PO Box 10-879, The Terrace, Wellington 6143; info@mediacouncil. org.nz. Or use the online complaint form at www.mediacouncil.org.nz. Please include copies of the article and all correspondence with the publication. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 6

Informed Investor is an investment magazine published quarterly by Opes Media. You need Informed Investor’s written permission to reproduce any part of the magazine. Advertising statements and editorial opinions in Informed Investor reflect the views of the advertisers and editorial contributors, not Informed Investor and its staff. Informed Investor’s content comes from sources that Informed Investor considers accurate, but we don’t guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk: Informed Investor magazine is not liable to anybody in any way at all. Informed Investor does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. Informed Investor magazine does not give any representation regarding the quality, accuracy, completeness or merchantability of the information in this publication or that it is fit for any purpose. To advertise in Informed Investor, you must accept Informed Investor magazine’s advertising terms and conditions. Please contact Stephanie@informedinvestor.co.nz about advertising. Informed Investor is printed on environmentally responsible paper. The paper is produced using elemental chlorine-free pulp, sourced from sustainable and legally harvested farmed trees. The magazine is recyclable. PRINT ISSN 2744-6085 DIGITAL ISSN 2744-6093

UP FRONT

Meet Some of Our Contributors CAMERON BAGRIE

ANNABEL SHEPPARD

Cameron is the managing director of Bagrie Economics, a boutique research firm. He was previously chief economist at ANZ, a position he held for over 11 years.

Annabel Sheppard is a Partner in the Property & Estate Planning Team of Wynn Williams.

AMY HAMILTON CHADWICK

MARTIN HAWES

Amy specialises in property and finance journalism. She has been a writer and editor for almost 20 years. Amy is a registered financial adviser.

Martin is the chairman of the Summer KiwiSaver Investment Committee. He’s an authorised financial adviser and offers his services throughout New Zealand.

SCOTT ALMAN

SAM STUBBS

Scott is the Managing Director of Consilium and has been a leader in the Australasian financial services sector for more than 30 years. As founder of Consilium, Scott has led the business staying true to its founding principles to champion professional financial advice and those who deliver it.

Sam is the founder and MD of Simplicity, New Zealand’s only low-cost, nonprofit funds manager. Previously from the banking world having worked for Goldman Sachs and NatWest Markets in London and Hong Kong, Sam believes the finance industry should be as much a force for good as a source of profit.

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 8

C ONTRIBUTORS

KELVIN DAVIDSON

BEN TUTTY

Kelvin joined CoreLogic in March 2018 as senior research analyst, before moving into his current role of chief economist. He brings with him a wealth of experience, having spent 15 years working largely in private sector economic consultancies in both New Zealand and the UK.

Ben is an Auckland-based but not Auckland-bound property investor and freelance writer. He’s travelled and worked across Asia, Europe, and Australasia, writing for some of the biggest names in property and finance.

RICH LYONS

ANDREW KENNINGHAM

Rich is the retail investment manager of Oyster Property Group. He is responsible for overseeing both retail and wholesale equity raising for transactions, the growth of Oyster’s investors, and continuing to improve Oyster’s service offering to investors.

Andrew is the chief Europe economist for Capital Economics. He was previously an economic adviser for the United Kingdom Foreign Exchange.

MARY-ANNE TOBIN

ANDREW NICOL

Former senior underwriter turned qualified interior designer, Mary-Anne Tobin is constantly viewing the latest international trends and incorporating these into her designs. She also blends modern day aesthetics with practical solutions.

Andrew is an authorised financial adviser and the managing partner of Opes Partners. He has more than 15 years’ experience in banking, finance, and property.

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 9

I NVE ST I N YO U R S E L F

What We Like

A showcase of trends, ideas and luxe living.

International luxe Solitaire De Parnell’s jewellery collection features Italian designer brands known for their exquisite craftsmanship, complemented by captivating jewellery pieces from New York and collectable vintage jewellery pieces from around the world. The collection features a variety of options, from natural diamonds to Colombian emeralds, Burmese sapphires, pearl, turquoise and Mediterranean coral. Founded by Abi Tobia, originally an art painter who transitioned into jewellery more than two decades ago, Solitaire De Parnell offers a unique selection of refined, modern, and vintage jewellery driven by Abi’s passion for aesthetics and over 20 years of experience in the fine jewellery industry.

3. 5.

1. Tennis Bracelet. blue graded-colour sapphire 7.0ct and diamond 0.59ct set In white gold 18k Tw 8.4g. $12,500 2. Ruby 1.16ct and diamond earrings set In gold 18k 2.5g. $9,750 3. Firenze Galaxy Ring, with pavé diamonds set in gold 18k pink champagne gold, by Cammilli. $20,850 4. Tennis Rivière Diamond Necklace. Total diamond weight 6.54ct. Set In white gold 14k. $18,950 5. Antique Old European Cut Diamond Brooch (rapier). Diamond Tw 3.40ct and single pearl. Gold 9k and Gold18k Tw 18.24g. $21,000

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 1 0

C ONTRIBUTORS

Primordial Ponies

Deadly Ponies’ Spring ‘24 collection, Primordial, delves into the concept that earth’s essential elements have existed since the dawn of time. This season draws inspiration from nature’s ancient wonders - envision rock formations evolving over millions of years, Palaeolithic cave art depicting animals and figures traced in the earth and on a micro scale, the view of plant cells under a microscope, offering a glimpse into the origin of all things. Adding a touch of whimsy, the Flintstones cartoon lends a playful reference to prehistoric life. Spring ‘24 sees Deadly Ponies’ sumptuous Calf Nappa return in neutral hues: rich mud brown and creamy-white milk, set against a pop of grass green. Their limited, bespoke capsules highlight animalistic textures, with croc-embossed Calf Nappa and cheetah velvet offering collectors a tactile touch.

1. Mr Cinch Mini – Grass 2. Mr D Rex – Emerald Croc 3. Mr Bandit Tote – Croc Embossed Calf Leather 4. Orion Micro – Basalt

It’s a matter of trust Trusts are a tricky beast. They have their place in money management, but regulatory changes have made them more complex, and it can be hard to navigate their esoteric nuances. Janet Xuccoa, of New Zealand Family Trusts Services, has written a new book, Trusts 123, aimed at helping people understand the complexities of trusts and reach a deeper understanding of what they involve. As she explains, incorrect practices and omissions can result in trusts losing their power, and trustees can be liable. If you don’t ensure the trust you are involved with retains its integrity, you could inadvertently fail to honour your trustee duties. The book covers topics including how trusts evolved, essential trust ingredients, trust benefits, ways to get assets into a trust, and things to consider when bringing a trust to an end. It also touches on writing a will. Xuccoa is the author of Family Trusts 101, Money Secrets 101 and Women and Money: Mastering the Struggle.

The book retails at $39 and is on sale from September 2.

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 1 1

Future /ˈfjuːtʃə/

‘A period of time following the moment of speaking or writing; time regarded as still to come’ Merriam-Webster Dictionary

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 1 2

QUOTE & DEFINITION

"With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." – Carlos Slim Helu, Mexican billionaire

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 1 3

ESSENTIALS

Let’s Jump into Spring

2 1

Fresh colour and vibrancy the key.

6 4

1. Barebones railroad lantern in olive drab - www.everyday-needs.com, 2. Status Anxiety look both ways in khaki - www.statusanxiety.com.au, 3. LG cinebeam 4k smart portable laser projector - www.pbtech.co.nz, 4. Adairs taylor green & natural velvet cushion - www.adairs.co.nz, 5. nood caspian sofa bed in green - nood.co.nz, 6. Patricks Cleanse, Hydrate, Nourish, Protect Body Wash - superette.co.nz, 7. Wallace Cotton harris apron in olive - www.wallacecotton.com, 8. Martino Gamper hookalotti anodised finish - foundstore.co.nz, 9. Hommey vanilla bean stripe robe - superette.co.nz S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 1 4

Make it Count

Resene Clover 12

Resene Allusive

Resene Outrageous

Resene Hashtag

Resene Half Gin Fizz

Bright accents and cooling whites for hip home highlights.

10. Bonnie and Neil long door mat - www.smallacorns.co.nz, 11. Le Labo santal 33 - www.mecca.com, 12. Thames and Hudson salad freak - superette.co.nz, 13. Biroix cast iron dutch oven in green - www.biroix.co.nz, 14. Harland multi-NZ wool throw exquisitewooltraders.co.nz, 15. Holiday lunch box in caramel - www.shutthefrontdoor.co.nz, 16. Abel scene 03 100ml - foundstore.co.nz, 17. Citta Sisal oval basket - www.cittadesign.com, 18. Simon Lewis Wards jumbo jet orange wall art - www.thepoiroom.co.nz

resene.co.nz/colorshops

I N V E S T M E N T M E G AT R E N D S

Let the Mega Force be with You There are massive inexorable forces on the horizon set to reshape the global economy and, as Amy Hamilton Chadwick explains, it will pay investors to keep across all of them. Megatrends are transformative forces that change the way we live, work and spend – shaping economies, shifting policies, moving social attitudes and driving the allocation of capital. Megatrends should inform your investment and purchasing choices, whether you want to identify potential opportunities, avoid declining industries, or develop an exit strategy from longstanding holdings. Should you buy a petrol car or an EV? Should you switch your KiwiSaver to a more sustainable option? Where should you buy your next investment property? Every big investment decision should be made with one eye on the forces reshaping our world. Here we consider four of the global megatrends that will impact our lives over the decades ahead – artificial intelligence (AI), the ageing population, energy transition and the hybrid work model.

The rise of AI Whether you think it’s going to solve all our problems or take all our jobs, AI is one of the driving forces of modern commerce. AI has an incredible number of applications. It is already able to take massive quantities of data and extract value and insights from that data, easily and cheaply. This has meant forward leaps for data-driven sectors such as medicine and healthcare, research and innovation, forecasting and robotics. The rise of AI is likely to worsen inequality, according to a 2024 analysis published by the International Monetary Fund. However, researchers found that the enormous boost to productivity could increase income for all workers. Here in New Zealand, a 2024 study by Spark and the NZ Institute of Economic Research found that a 20 per cent uplift in adoption of AI and other advanced digital technologies could boost industry output by up to $26 billion over the next decade.

‘The rise of AI is likely to worsen inequality.’ S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 1 7

F E AT U R E S

‘It’s not only more elderly people ... it’s also fewer babies.’ “There’s a lot of panic about AI, but all the change won’t hit us at once or in the same way,” says Louise Compagnone, director of AI for Datacom. “The first horizon is here already – we have powerful systems based on large language models, but they have some key limitations that create risk. The second horizon is AI that can do increasingly complex tasks. It will be more physical, including robots, autonomous vehicles and neurotechnology. It will also solve specific problems in specialised sectors and work alongside humans in a hybrid workforce. “Finally, the third horizon will see organisations fundamentally shift the way they work. It’s going to create new jobs, new organisations and whole new industries.” Businesses that successfully evolve their use of AI will deliver far greater productivity and long-term profitability. Companies that supply critical materials and parts, such as superconductors, will also be in demand as the use of AI expands. New Zealand is well positioned as a location for data centres, which provide infrastructure that underpins AI. None of that means AI will make us obsolete, says Compagnone. She believes humans will always be invaluable for our ability to connect emotionally and innovate with ingenuity. “I’m an optimist and I think it can really be a force for good. Think about it as augmenting human potential.” Our ageing population As healthcare has improved and life expectancy increased, the average Kiwi can expect to live well into their senior years. Great news at an individual level, but the silver tsunami of older Kiwis brings with it significant challenges. People aged 65-plus currently make up around 17 per cent of the population, or around 850,000. That is forecast to reach S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 1 8

I N V E S T M E N T M E G AT R E N D S

‘The KiwiSaver balance, by contrast, is $115 billion.’ are eligible for at least some government pension, compared with 100 per cent of New Zealanders getting the full amount. Instead, Australian Super scheme balances are higher, thanks to higher employee contributions and tax incentives. “Australian workers had $3.9 trillion in their super accounts in March this year, money that assists with capital for infrastructure development, the stock market and new companies. The KiwiSaver balance, by contrast, is $115 billion. This is an issue where the horse bolted 40 years ago and it’s a bit tough. By necessity, more of us will be working past 65, and we might see the age of eligibility [for super] creep up.” The lack of working-age Kiwis might be approached with more pro-family policies and continued immigration. But our infrastructure doesn’t have the capacity to handle our current population, so more people only bring more challenges. “No matter which party is in power, we’re either in deficit or just about breaking even,” Brewer says. “An increasing slice of the budget will keep going to healthcare and super, which leaves very little for big ticket items like infrastructure.” a million people by 2028, and 1.5 million by the 2050s, at which point seniors will make up a quarter of the total population, according to Stats NZ. This will put massive pressure on our already stretched aged care sector, health system, and superannuation coffers. It’s not only more elderly people ... it’s also fewer babies. The latest census data put NZ’s fertility rate at 1.52 births per woman, well below the 2.1 rate required for population replacement. Eventually, this means we will have fewer young tax paying workers to pay our increasingly high superannuation bill.

“Treasury is forecasting our GDP to be north of $500 billion by end of 2028, and as the economy grows, the government takes about 30 per cent, or a bit less, of that GDP as revenue. That means the country will have a lot more revenue – but unfortunately superannuation costs are tracking ahead of that growth curve,” says Murray Brewer, partner at Grant Thornton. “The New Zealand Super Fund only takes the edge off the shortfall.” Brewer would like to see changes to KiwiSaver to make it more like the Australian Super scheme. Across the ditch, only 58 per cent of Australians aged 65-plus

The global energy transition Nothing is going to stop the global energy transition – the only question is how quickly it will happen. Every person’s life and every aspect of the economy will be touched by this shift, and it should be a consideration where you spend and when you invest. New Zealand is well-positioned to make the most of the net zero economy. We have considerable renewable energy resources, including world-class wind and hydro, with solar and hydrogen also playing their part. We have one of the world’s highest rates of renewable electricity in our grid, approaching 90 per cent, and we have S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 1 9

F E AT U R E S

pledged to triple renewable energy capacity by 2030. “In New Zealand we’re coming off a high base of renewable electricity so we’re in a good position,” says Kate van Praagh, GM Sustainability at Genesis Energy. “New Zealand has always traded on our reputation for being a clean, green, well managed society. Decarbonisation is another iteration of that advantage. We need to build on our natural advantages because the rest of world is moving very fast. We’re so far away from major markets that if we’re not playing their game, we’re not in the game.” Van Praagh says the pressure is on companies from every angle: customers, consumers, regulators, lenders, investors and shareholders are all pushing for change. “In some areas there’s been a slowdown, like EV sales. But the long-term trend is up. Look at the exponential growth in solar – that’s not going to slow down, because as solar panels gain scale, they’ll become more cost effective. Batteries are also changing S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 2 0

the game. We’re seeing more smart technology around them such as stovetops with batteries attached that can capture off-peak electricity at a low rate, then store it for use at peak times, spreading the load on the grid.” Using smart devices and systems to manage energy use, alongside renewable generation, will ultimately make energy more affordable even if upfront costs seem daunting. “If you consider total energy costs – your petrol, gas and electricity, for instance – overall they will shrink once everything is electrified,” says van Praagh. And, she adds, those companies and households that don’t make changes will face rising prices: “If you’re not on board, it will cost you more.” The hybrid working model The pandemic changed the way we work – and some of that change is here to stay. It’s a “Nike swoosh” pattern of adoption, according to WFH Research: a huge spike in 2020, followed by falls in subsequent

years, which is turning into slow but steady growth. Working from home is now up to four times as prevalent as in 2019, according to LinkedIn’s 2024 Global State of Remote and Hybrid Work. The report found that 98 per cent of employees want to work remotely at least some of the time, and remote companies are on the rise – those with no physical spaces at all. “The hybrid working model is now baked into office culture and office working environments,” says Matt McHardy, general manager, investor relations at PMG Funds. “Employers are now embracing hybrid work and thinking about what the future looks like. Time in the office is still important for building and sustaining culture, but most business leaders accept that two days a week working from home is fine if it’s not disrupting other work.” Here in New Zealand, remote working options can help us overcome the challenges of our far-flung location, by connecting us more easily with other job

I N V E S T M E N T M E G AT R E N D S

‘Spending in Auckland fell as people spent less time in the city.’ markets. The upside for workers is greater flexibility, while for local businesses, talent is more accessible, and overheads may be lower. But there are downsides: in 2023, NZIER research indicated that spending in Auckland fell as people spent less time in the city. McHardy says companies are now seeking commercial premises that will attract workers into the office. This means well located premises with sustainability certifications, nearby food options, and end-of-trip facilities (showers, bike racks). Without these features, it’s becoming tough to find a tenant, making it vital for investors to choose quality properties and maintain them to a high standard. In the residential property market, hybrid work allows people to live further from the office, potentially reducing demand in cities in favour of more lifestyle-friendly locations. Plus, a dedicated home office may become less of a nice-to-have and more of a must-have. Ultimately, McHardy believes hybrid work is here to stay, because gathering in person will always be valuable: “People aren’t born to be alone – solitude is not good for our health. Going into the office isn’t just about our ability to do the work, it also supports our mental wellbeing by creating human connections.” Thinking ahead before you invest There are some enormous investment opportunities to be found within these global megatrends – they can help futureproof your portfolio and let you capitalise on new markets and technologies. However, every investment comes with its own risks. Always talk to your financial adviser, research your investments comprehensively, and ensure you understand the risks before you commit your capital. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 2 1

Demeglio Extensible diamond bracelet, from $8,995, Partridge Jewellers 18ct white gold brilliant cut diamond bangle from $6,900, and 18ct gold fine oval diamond snap bangle from $9,460, Platinum handcrafted 9ct modern brilliant cut diamond ring, POA.

PARTRIDGEJEWELLERS.COM

Building on Success:

Silverfin Capital’s Inghams Hatchery Scheme This unique property syndicate is delivering a 7.5 per cent pre-tax annual distribution. Two North Waikato properties leased to Inghams (NZ) Pty Limited (Inghams), form the asset base for Silverfin Capital’s property syndication, the ‘Inghams Hatchery Scheme’, worth $29.3 million. Inghams is Australasia’s largest poultry producer, and is a wholly owned subsidiary of Australian stock exchange listed company Inghams Group Limited (ASX:ING). The Scheme started on October 20, 2023 and consists of two properties with a combined land area of 44.6 hectares, with 20-year, ‘triple net’, leases in place to Inghams. Improvements include a state-ofthe-art hatchery facility and over 25 poultry sheds and associated infrastructure. The Scheme is delivering a 7.5% per annum pre-tax distribution (forecast to 31/03/2028) payable monthly. Depreciation allowances mean that no tax is payable for the first two financial years. Silverfin have developed a long- term relationship with Inghams, who are Silverfin’s tenant across an extensive existing property portfolio consisting of a processing plant, a hatchery and poultry farms worth almost $120 million in the Waikato region. The relationship started in 2019, with the acquisition by Silverfin of a $86 million portfolio of six properties located in and around Matamata, Waikato. At the time, Silverfin liked the strong tenant covenant offered by Inghams, the long lease term, the fundamental strength of the poultry industry, and the fact New Zealand offers great credentials for farming poultry. We also noted the strict regulations on importing poultry meat into New Zealand, meaning that the New Zealand poultry farmers have a captive domestic market.

In the five years since the first Inghams scheme started, the original portfolio has increased in value from $86 million to $101 million, whilst paying a steady monthly distribution of 8.25% p.a. (pre-tax). In 2022, Silverfin bought an additional Inghams poultry farm in Te Mawhai, Waikato for $20 million. Miles Brown, Silverfin Capital’s CEO, says “there has been growth in poultry consumption in New Zealand due to continued population growth, greater affordability due to increased production efficiency, and consumer trends including health, wellbeing and convenience.” The investment fundamentals for Inghams remains unchanged today, and as a result of their successful relationship, Silverfin have partnered with Inghams on this third scheme, being the Inghams Hatchery Scheme. Brown says that this most recent Scheme was an interesting transaction in that Inghams was looking to purchase their supplier’s established hatchery business, and bring that part of the supply chain ‘in house’ to enable efficiencies and quality control. At the same time that Inghams purchased the business operations, Silverfin entered into

an agreement with the same supplier to purchase the associated real estate. A 20year lease was put in place with Inghams on settlement and the properties will now play a key role in Inghams’ poultry supply chain moving forward. The property syndication industry has been impacted by high interest rates, with the utilisation of bank debt no longer improving returns to investors. In light of the tougher environment, Brown says he was pleased with the level of investor demand in the Scheme, noting that most investors look longer-term and appreciated that this Scheme represented ‘counter cyclical’ buying. Brown also noted that they fixed the bank loan interest rates on commencement of the scheme for a period of five years to remove any interest rate volatility. The Inghams Hatchery Scheme brings Silverfin Capital’s portfolio to $568 million under management with 87 tenants and a 99.6% occupancy. A limited number of interests are available for purchase through Silverfin Capital. If you have an interest in investing in the Inghams Hatchery Scheme, please contact Silverfin Capital. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 2 3

F E AT U R E S

Going Up, Going Down Economist Cameron Bagrie takes a good, hard look at New Zealand and how we’re going as a nation. Validation The June 2024 Consumer Price Index figures show a receding headline annual rate inflation from 4 per cent to 3.3 per cent, but also moves lower in various core inflation measures. With the economy now operating with spare capacity, and people spending less, pricing gets sharper. That is the disinflation playbook. You beat up the economy until firms struggle to pass on price increases and wage demands moderate as unemployment rises.

Bad news The economy is back in recession with the latest official cash rate decision by the Reserve Bank noting: “A range of business and consumer surveys, and higher frequency spending and credit data, all point to declining activity.” Construction is weakening. Heavy traffic volumes have receded sharply two months in a row. Per capita retail spending has dropped sharply. House prices have been falling again. Service and manufacturing activity is contracting, according to BNZ’s Purchasing Managers’ Index. Unemployment is on the rise. Corporate tax paid is down on the year prior.

The trifecta New Zealand looks set to experience three technical recessions in two years. A technical recession is defined as two negative quarters of growth. We saw that in late 2022/early 2023 and the second half of 2023, but many businesses were still busy so the change in growth needed a levels sense of perspective. We are now experiencing a real recession, not a technical one. Key firms are now looking for work and we are seeing a sharp acceleration in job losses. Sales/orders are now firms’ biggest constraint, not finding labour.

A wonky path The path to 2 per cent inflation will still face challenges. Non-economically sensitive areas of the economy such as local authority rates, insurance costs and energy prices, are likely to see strong price increases. This year’s rise in local authority rates looks set to be in the order of 15 per cent on average across the country. One suspects this will be the last year councils can push through large price increases; roll on the 2025 local authority elections.

The good news Tough times precede good news in the form of lower interest rates. After threatening raising the OCR in May, the most recent decision (July) opened the door on the OCR moving down with a dovish bias. The catalyst to change has been a weak economy. While “domestic inflation measures remain more persistent,” according to the Reserve Bank, “growing excess capacity in the domestic economy provides greater certainty that they will sustainably decline.” S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 2 4

Hit the road jack New Zealand also recorded a net migration loss of 60,100 NZ citizens in the 12 months to May 2024. This exceeded the previous record of 44,400 in the February 2012 year.

MARKET INSIGHTS

Turning point?

Splintering

New Zealand has recorded a net migration inflow of 82,800 in the past year, down from a peak of 136,000 in the 12 months ended October 2023. The gain was dominated by a net inflow of 142,900 non-New Zealand citizens. India was the largest group (46,400), followed by the Philippines (28,600) and China (23,500).

Casting my eyes around the globe, the geo-political environment, the recent elections in France and the United Kingdom, and the pending US election, New Zealand seems a pretty good place to be. Division, fracturing, extremism and splintering are a global phenomenon and New Zealand is not immune. We, too, have huge economic and social issues to address to bring better balance back.

While the annual inflow remains strong, May saw more departures than arrivals and a net migration loss of 2,000. Turning point?

Getting back the mojo Green shoots of housing activity in late 2023 and early 2024 failed to germinate with house prices receding in each of the last four months, according to the Real Estate Institute of New Zealand’s house price index. House prices have fallen 3.5 per cent since February. It’s taking longer to sell a house. Sales volumes have eased. The number of listings nationally has risen 25.5 per cent year-on-year and the June 2024 stock levels increased 28.6 per cent. There are sellers, but not the buyers. Housing is suffering, like the economy, and borrowers are hoping for a lot of interest rate relief. They’ll get some.

It’s Friday Raising school attendance and achievement will be critical if New Zealand is going to prosper. The latest figures for term 2 show 53.1 per cent of students attended regularly, which is defined as 90 per cent attendance.

Addressing anaemic productivity growth, which defines living standards, must be a key imperative. A recent Treasury paper on productivity noted: “Productivity for the whole economy averaged 1.4 per cent per annum between 1993 and 2013 but averaged only 0.2 per cent per annum over the past 10 years.” We are stagnant. If we want productivity to lift, we must improve education, infrastructure, competition, financial system settings (banking) and managerial capability.

Daily attendance averaged 83 per cent. Data is showing a plague in the form of low attendance, but also where that plague is concentrated. School attendance on Fridays is lower than other days, and particularly so on long weekends and before school holidays. Covid is not that discerning. This looks more like a parenting issue. It may also be a side effect of flexible working from home arrangements, or Friday-i-tis, also appearing in the workforce. While Bagrie Economics uses all reasonable endeavours in producing reports to ensure the information is as accurate as practicable, Bagrie Economics shall not be liable for any loss or damage sustained by any person relying on such work whatever the cause of such loss or damage. Data and information have been gathered from sources Bagrie Economics believes to be reliable. The content does not constitute advice. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 2 5

Correct as at 14 February 2024.

Green shoots turn brown

PERSONAL FINANCE

Could Bitcoin Reach $6.5 million by 2050? Using Santostasi’s pricing model, we can see where Bitcoin may go in the next quarter century if the fundamental value continues to hold, reports Easy Crypto. While past performance doesn’t guarantee future outcomes, historical price trends, particularly over the long-term, are often used to predict where prices on coins, stocks and other assets might go. One prediction model claims it’s plausible for Bitcoin’s price to reach $6.5 million by 2050. Developed by physicist Giovanni Santostasi in 2018, the “power law” model uses a nonlinear chart to map out the price of Bitcoin over time. What is the ‘power law’ model? The “power law” model is simply a price chart with a few indicator lines drawn over it. In the chart the price axis (vertical) is set on a logarithmic scale, while the time axis is set on an inverse logarithmic scale. This essentially stretches the chart in two directions and, as a result, we are able to draw a straight line of best fit (green) through all the data points, making it easier to understand Bitcoin’s price movement more clearly. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 2 6

If we decide to use this line as a guide to where Bitcoin’s price might be in 10-15 years, we have the projected price of NZ$6.5 million per Bitcoin in the 2030s. You may also notice two other lines: the “resistance” line is drawn by joining the price peaks together in a straight line, while the “support” line is drawn where the prices reach their periodic lows. The three lines therefore model a possible price range for the cryptocurrency at a certain date in the future.

we’ll feel more confident about the result than if the projection is too far out. Secondly, the model only used one factor to make predictions about the price (the price itself). There are so many other factors that can influence the price of Bitcoin, including the number of users, active transactions, and market sentiment of users currently holding Bitcoin. Apart from past price performance, we must also look at the performance of Bitcoin from other measurable aspects. We can start from one question: are there any indicators that point to more people using Bitcoin for any purpose? Bitcoin user data Fortunately, we can find public information about transaction activities and users’ Bitcoin balances online. One free source is Bitcoin Magazine Pro, which pulls complex blockchain data into easily understood charts and graphs.

Is this model reliable? While the model looks useful, it’s important to know a couple of caveats about any model, whether it’s a simple chart or a complicated AI model.

A chart that we can look at is the number of Bitcoin addresses with non-zero balance. This gives us a proxy to how many individual users have their money at stake with this cryptocurrency. As you can see, the non-zero balances exceeded 50 million, but a user can have multiple wallet addresses.

Firstly, a model is only as useful as the data you use to build it. In the case of the “power law”, the historical data used to draw those lines span from 2011 up to the present, or 13 years of history. If we use the model to project the price range in two to five years,

What’s important is not knowing the exact number of Bitcoin users, but rather how these change over time. Notice that despite the recent crypto bear market in 2022, the number of non-zero balances did not drop significantly, unlike that in the bear market of 2018-2020.

C RYP TO

Bitcoin Long Term Power Law 10,000,000

1,000,000

100,000

USD

10,000

1,000

100

Price end of day

Linear regression fit Support

Resistance

2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

Source: https://charts.bitbo.io/long-term-power-law

In some sense, Bitcoin is like gold, as both asset classes do not yield earnings, and their price is dependent mostly on market demand. Except, unlike gold, Bitcoin’s supply is verifiable. There will only be 21 million units in circulation (we can hold at least one hundred millionth of a Bitcoin). We may say that gold is scarce on Earth, until we figure out a way to mine gold from asteroids. Because of this hard limit, Bitcoin’s value could theoretically increase by at least the inflation rate. If everyone stops trading Bitcoin and decides to hold them for a year,

However, Bitcoin’s blockchain data can justify some level of optimism as the number of non-zero addresses are seen increasing, which implies increasing confidence in Bitcoin despite its volatility.

What is clear is that one way or another, Bitcoin’s performance to date indicates it’s an asset that’s here to stay. Disclaimer: Investing in Bitcoin and other cryptocurrencies carries risk. Always do your own research or seek professional advice.

Bitcoin: Addresses with Non Zero Balance $100k 50M

$10k

40M

$1k

30M

$100

20N $1

10M

0 2012

2014

2016

BTC Price

2018

2020

2022

2024

Addresses with > 0 BTC

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 2 7

Source: https://www.bitcoinmagazinepro.com/charts/addresses-non-zero-balance

There are several reasons Bitcoin is attractive to buyers, apart from its price performance. Bitcoin is free from any government intervention or censorship. This allows investors from any part of the world to hold Bitcoin without worrying about a potential shutdown. Bitcoin is also free from the politics of majority shareholders, unlike public companies, which can be influenced by powerful people.

The big takeaway Santostasi’s “power law” pricing model can be useful in projecting Bitcoin’s prices in the near future, but may not confidently do so for a longer time frame because the model is only based on 13 years of historical data. It also does not account for other factors that could influence the price of Bitcoin.

Bitcoin also exhibits qualities that traditional assets do not share, giving strong fundamental reasons why future investors would want to hold it. Ultimately, there are dozens of ways to model out predictions and each investor needs to do their diligence and research before making their bets.

BTC Price (USD)

The reason to buy Bitcoin Publicly available activity metrics can also rise and fall, either with or regardless of the price. Similarly, stockholders may find the company they’re invested in can sometimes lose a streak or two in delivering consistent earnings. Does this mean the stock or crypto is not worth buying any longer?

any reasonable seller will want to make up for lost money from that year’s inflation.

Number of Addresses

This shows there is increasing confidence among even new investors who arrived at the scene when Bitcoin was about to crash.

C O M P E T I T I O N W AT C H D O G

The Grip That Could Strangle Kiwi Innovators We may like to believe in ingenuity and innovation, but overzealous attitudes to regulation, especially competition policy, risk suffocating technology startups, writes Peter Bale. The case of Serato Audio Research – a world-leading sound mixing and DJ-software company based in Ponsonby – offers a warning for its own founders and other would-be investors trying to create the high-technology future New Zealand says it wants. The Commerce Commission, the agency charged with protecting us from supermarket and banking oligopolies, has refused approval for an agreed US$65 million (NZ$100 million) acquisition of Serato by the parent company of Japanese DJ hardware brand Pioneer. The commission acted on competition grounds, mostly the impact on DJ hardware and mixing software in New Zealand, a market which accounts for less than 1 per cent of Serato’s turnover. In doing so, the commission may have stopped not just the Serato founders from cashing out but given other would-be startups pause. “The odds are stacked against New Zealand companies already,” early-stage investor Serge van Dam told Informed Investor. “We’re far away geographically, we have shallow capital pools, very shallow technical domain expertise … this is just a total slap in the face.” S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 2 9

F E AT U R E S

‘The commission may have stopped not just the Serato founders from cashing out but given other would-be startups pause.’

Few retail investors have access to earlystage startups but venture capital, angel, private equity, and founders behind startups clearly create the kind of dynamic, growing investments that all investors may be able to gain from eventually: think Xero. It’s already hard enough to develop ideas like Xero or Serato into listed or investable companies. It’s little wonder Xero listed in Australia. Others may opt for private equity rather than trade sales to avoid the kind of competition rules that killed the Serato deal. While he recognises the commission has the authority to look at the deal, Terry Allen, a founding Serato investor, says the decision is contrary to the ambition of creating a vibrant technology sector: “If your aim in any exit is for a strategic acquisition this says ‘make sure you don’t become too successful and make sure you set up overseas.’” Missing the big payout Serato has said it won’t challenge the commission ruling, especially having spent nearly a year waiting for the judgment rather than the 40 days the commission targets.

DJ software and DJ hardware markets in New Zealand,” it said in its final statement.

Blocking the deal, however, means Allen and his co-investors, and Serato staff, won’t get the $100 million payout and the opportunity to be part of a much larger company, Japan’s Alpha Theta Corporation, which owns the Pioneer DJ hardware business.

Several investors and legal experts told Informed Investor they believe the Commerce Commission decision is an unwelcome warning to anyone trying to create a potentially scalable technology firm that they may not be able to exit and cash out in a trade sale.

The Commerce Commission said its decision focused on the DJ market in New Zealand, the decks, mixers, and software. Serato software is often embedded in hardware including Pioneer.

“I’d describe it as a misguided cockup … this decision, if it’s well understood by the VC startup community, will dramatically change behaviour,” says Auckland accountant and early-stage investor adviser Bruce Sheppard. He has advised Serato.

“The Commission is not satisfied that the Proposed Acquisition would not have, or would not be likely to have, the effect of substantially lessening competition in the S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 3 0

Other opinions are available. Hayden Wilson, a competition lawyer and chair of the New Zealand arm of global law

firm Dentons, argues that once it took on the Serato case, the commission had little scope to consider factors other than competition. “It is an entirely orthodox decision. It is a product of the setting that the law has for the Commerce Commission.” To take another view and permit the takeover, the commission would have had to decide there was no lessening of competition in the NZ DJ market when it clearly found there was. He has no dog in the Serato fight and freely acknowledges that unless the remit of the commission changes, investors will have to think more about the domestic competition implications of any NZ-based startup they invest in.

C O M P E T I T I O N W AT C H D O G

“The thing that really bites is that this is the first time people have seen the impact of competition law, on a startup,” he says.

In a statement the Commerce Commission said it was bound by the Commerce Act.

Competition policy worldwide This year the Letter of Expectation from Commerce and Consumer Affairs Minister Andrew Bayly to the commission emphasises grocery, banking, and rural telecommunications and also a command to “be brave” and to “make a difference for the better”.

“Our concern in any merger application is whether it will substantially lessen competition in a New Zealand market. In this case we were concerned that the merger could substantially lessen competition in the DJ software market and give ATC [Alpha Theta] the means to either eliminate or worsen DJ hardware rivals’ ability to integrate products with Serato.”

Competition policy is, of course, a contested area worldwide: Is the job of a regulator to unfailingly protect the consumer directly in terms of price and choice, or to use the regulatory powers to help contribute to a vigorous economy and support new entrants?

It also had concerns ATC would gain access to competitor information and have less incentive to innovate. It’s an interesting question whether the commission or other agencies should help create a dynamic tech economy or at least not stand in the way of an innovation-led New Zealand.

Call for rethink Robbie Paul, Chief Executive of Icehouse Ventures, said the decision was “unsettling” and might cause others to move overseas: “The chance of even continuing to have a subsidiary here is very low [if this stands]. There are a lot of companies who may make that choice to metaphorically burn the waka.” Paul urges a rethink to reflect the need to scale technology and how portable intellectual property is: “We’re so darn close to having probably the best place in the world to not just start a business, but foster and grow one. That’s why anything that potentially [prevents that] needs to be under the microscope to make sure that is possible. It’s really important.” S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 3 1

PERSONAL FINANCE

The Evolution of Ethical Investing A quiet revolution is brewing in the world of investing ... conscious investors are now looking to put their money where their values are, writes Olive Coulson. In the heart of Wellington, Andrew, a 33-year-old software developer, is making waves, not in the tech world, but in the realm of finance. “I used to think investing was just about making money,” he says. “Now, I realise my retirement savings can make money and change the world.” Across New Zealand a quiet revolution is brewing in the world of investing. Gone are the days when ethical investing meant simply avoiding “sin stocks” like tobacco or firearms. Today’s conscious investors are looking to put their money where their values are – and they’re discovering that doing good and doing well aren’t mutually exclusive. “We’re seeing a seismic shift in how Kiwis want to invest. It’s no longer just about returns – it’s also about making a positive impact,” says Barry Coates, founder and CoCEO of Mindful Money. The numbers don’t lie. Recent consumer research reveals a staggering 74 per cent of Kiwis would consider investing in schemes that support companies creating positive benefits for society and the environment. Fifty-four per cent would do so if returns matched traditional investments, while 20 per cent would accept lower returns for the sake of positive impact. What does this shift look like? The journey from traditional investing to what experts call “impact investing” isn’t a straight path. It’s more of a spectrum, with each approach offering investors different ways to align their portfolios with their principles. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 3 2

1. Traditional investing: This is most funds offered in NZ; they focus solely on financial returns, without explicitly considering environmental, social or governance factors. 2. Responsible investing: • Exclusions: These funds screen out harmful sectors like fossil fuels or weapons manufacturers. •

Engagement: As well as avoiding the worst companies, these funds actively engage with businesses to improve their environmental, social, and governance (ESG) practices. Think of it as being a proactive shareholder, pushing for positive change and improved returns from within.

3. Sustainable investing: • Better companies: These funds actively seek out and invest in companies that are operating more sustainably through commitment to continuous improvement and good policies for managing their environmental footprints, including waste and emissions, workforce and community relations, as well as having strong leadership and governance. This might include homegrown heroes like Meridian, Kathmandu or All Good Organics.

•

Thematic investing: Focusing on specific themes like clean energy or sustainable agriculture.

4. Impact investing: • This is where investors directly fund projects or companies that create new innovation and measurable positive change. Think of new developments in renewable energy, affordable housing developments, or innovative healthcare solutions. What's the goal? Financial returns alongside tangible social or environmental benefits. Each step along this spectrum represents a deeper commitment to using your money as a force for positive change. Unleashing Kiwi ingenuity Some of the most interesting and innovative approaches are happening in the world of unlisted companies (like most SMEs). Kiwi companies like Lodestone, SolarCity, and LanzaTech, Cleanery and NovoLabs are not just talking about a greener future – they’re building it. “These New Zealand companies are part of a global industrial revolution in cleantech which is based on low emissions, sustainable

MINDFUL MONEY

Vehicle Innovation and S&P Global Clean Energy or Kōura’s Clean Energy Fund. Note these funds are concentrated and should be used as “satellites” alongside a core diversified multi-fund portfolio. As Barry Coates explains, “The growth of funding for positive impact enterprises is hugely important. It’s providing capital for entrepreneurs and growing companies to tackle the urgent challenges of environmental regeneration, social well-being and climate action. “It’s the sweet spot for investors; they can avoid harmful investments as well as feeling good about how their savings are making a difference.” Here’s how you can join the revolution: 1. Start by avoiding harm: Can’t invest in a cutting-edge startup? Look for a fund that avoids harmful investments. 2. Speak up: Tell your bank or KiwiSaver provider you want to invest in creating positive outcomes, including through innovative impact investing options. 3. Start the journey: Choose a KiwiSaver or managed investment fund that has weighted investment towards sustainable leaders or positive impact.

resource use and high-tech jobs,” says Kate Vennell, Co-CEO of Mindful Money. “But there are not many routes for Kiwis who want to invest in these emerging enterprises. Yet the benefits are huge to New Zealand through new jobs and services, additional exports, and potentially attractive future returns. Equally, these enterprises need to go offshore to access capital.” That’s where the next wave of financial innovation comes in. Funds like Purpose Capital, Climate Venture Capital Fund, Impact Enterprise Fund and Soul Capital are investing in those companies and offering positive social and environmental outcomes as well as financial returns. However, these opportunities aren’t open to all investors. You need to be a “wholesale investor” to invest in these companies. That means sophisticated and experienced investors with typically more than $5 million in net assets or you have professional qualifications in finance. These funds are intended to be long-term investments and have higher risk due to the inherent nature of start-ups and SMEs and the lighter regulatory framework.

Mainstreaming Since most opportunities are restricted to wholesale investors, impact investing still represents a tiny fraction of New Zealand’s investment landscape. So why isn’t more money flowing into these opportunities? “The challenge is to mobilise investment from the big funds, like KiwiSaver and managed funds, to support impact investing,” says Kate. “That way investors can have the benefits of a licensed, diversified and regulated retail fund which is designed to meet target investor outcomes including for responsible investment.” That first move is starting to happen, with KiwiSaver providers getting in on the act. Simplicity, Generate and Pathfinder are offering everyday Kiwis a chance to invest in a better future. Each of them has investments in social and affordable housing, renewable energy and a range of other positive impact companies. Other investment providers include impact companies in their funds, like Harbour Sustainable Impact Fund, Devon Global Impact Bond Fund, and ASB Positive Impact Fund. There are also sustainability-themed funds, like Kernel’s S&P Kensho Electric

4. Spread the word: The more people know about positive impact investing, the faster it will grow. 5. Think long-term: Remember, companies solving big problems today could be the market leaders of tomorrow. The future is impact As the sun sets over Wellington’s harbour, Andrew checks his investment app. His portfolio, once a sea of faceless corporations, now tells a story of positive change – renewable energy projects, affordable housing, and breakthrough green tech startups. “It’s not just about the returns,” he says, smiling. “Although those are nice too. It’s about waking up every day knowing my money is out there, making a difference.” In the end, that’s what the future of investing in NZ is all about. It’s not just growing wealth, but also growing positive impact. It’s about harnessing the power of Kiwi ingenuity and capital to tackle the biggest challenges of our time. The green gold rush is on. The question is: are you ready to stake your claim in a better future? Like all investments, impact investing carries risks. The value of investments can go up and down. This article is for informational purposes only and should not be considered financial advice. It can be valuable to consult with a qualified financial adviser.

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 3 3

PA S S I V E I N C O M E

Putting the Hard Yards in Can passive income help you achieve financial freedom? Amy Hamilton Chadwick says less TikTok and more time on the investment work clock is a start. Passive income is such an appealing idea – earn money without doing anything! It sounds like a dream come true. You can build up a stream of income that keeps flowing in while you lie on the beach. However, there’s no simple formula to instantly give you a full-time income so you can quit your job, despite what you might see online. Countless Reddit, YouTube and TikTok accounts will try to sell you on “easy” and “automatic” ways to create passive income. Claims like “Nine passive income ideas – how I make $27k per week”, and “Turn two hours of work into a monthly income” make it sound like a breeze to generate money with little to no effort. Unfortunately, they’re generally just trying to sell you a course or a trading platform. “I keep an eye on what’s being said and a lot of it is sold as a get-rich-quick scheme, which of course it’s not,” says Liam Robertson, financial adviser at Milford. “But building your passive income up is difficult. If it was easy, nobody would have a normal job and we’d all be living off passive income. It actually takes time, effort and thought to get to that point, and it’s hard.” The three ways There are three relatively safe, triedand-tested ways to increase your passive income: 1. Investment income from traditional assets: Cash, term deposits, bonds, shares and managed funds will all allow you to make money off your money. This is the closest thing to truly “passive” income because once you’ve put your money in, you don’t need to do anything. Anyone can get started with very little money, but to earn enough to survive from the profits requires plenty of upfront capital. “If you invested say, $1,000,000 and took S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 3 4

out a regular set income of say 4 per cent or $40,000 per annum, you may find that your original capital over time remains largely intact or may even grow depending on your risk profile,” says Simon Hepple, wealth advisor at PIE Funds. “At today’s rates, cash returns less tax are around high 4 per cent, which is not too bad, and bonds are not far off that too. Property and shares have [net] income yields of around four to six per cent per annum, but there is still some work involved in managing these and ensuring you are diversified. Of course, people will try to sell you shortcuts, like trading platforms, but truthfully these don’t work. They’re just selling to people who are looking for instant gratification.” 2. Rental income from property: A classic choice for the Kiwi investor, an investment property provides you with regular rental income. As a bonus, the value of the property will typically increase over the long term, providing future capital gains. Rentals have been an impressive vehicle for wealth creation over the past few decades, with massive growth in prices and rents. Buying enough rental properties can generate a six-figure passive income, making your job very much an optional extra. In 2024, a sizeable rental portfolio is increasingly inaccessible. Interest rates are higher, houses are pricey, compliance costs have risen, and it’s far harder to get a home loan thanks to tougher servicing requirements from lenders. Plus, managing and maintaining the property takes time and money. “Even with a property manager, rental income is anything but passive,” Hepple says. “For the rental properties I look after on a personal basis, there’s something to do every second week. From chasing unpaid

rent to letting tradies into the property, there can be a lot of work over the course of a year.” 3. Business income: Owning a business can, in theory, eventually provide you with passive income. But it tends to require a huge amount of work to grow a business to reach that point, Hepple points out. Kiwis who do manage to build their companies up to this level tend to sell, allowing them to eliminate the stress of management and walk away with a large chunk of cash. In theory, a smaller business could also eventually create passive income, like being a YouTuber, musician, Amazon dropshipper, or even selling a course online. Yet again, it usually takes a huge amount of work to stand out in a crowded marketplace. For example, 90 per cent of YouTube videos never reach 1,000 views, according to Pex analysis, and for those 1,000 views a creator will make an average of US$18, according to Shopify.

Forget the free lunch You might have noticed a theme here: passive income always requires work. Whether it’s the work it takes to save up $1 million and figure out how to invest it, the effort of managing a rental, or the long hours involved in building a successful business. “There’s no such thing as a free lunch. Everyone is saying there is, but there isn’t. At the moment it’s hard out there to increase your passive income,” says Hepple. “During the process of onboarding, some new clients will ask me, ‘How do the rich people do it?’ And I say, ‘Like everyone else’. There’s a perception that the rich got rich quickly out of nowhere, but that’s the exception to the rule and it’s usually through tech start-ups.” However, if you do invest time and money into growing your passive income, the payoff can be well worthwhile. You earn money without trading your time for it. Passive income gives you diversification,

so you’re not relying just on your job for income. Eventually, you can achieve a level of income that gives you some degree of financial independence, which means you have far more choices when it comes to how you spend your time. “Everyone has their own definition of financial independence,” says Robertson. “Maybe you can work for half the salary in a job that really interests you. Maybe you can do some volunteering. You could have flexibility of location, where you can do your work from anywhere. And maybe, in time, you don’t need a job at all.” How to get started Like most types of investment, you’ll need to tailor your approach to generating passive income so it matches your circumstances, financial goals and risk profile. For example, do you have plenty of time, an appetite for risk, and very little cash? Maybe it’s worth investing some time in starting a

small business. Whereas if you have a high income but you’re low on free time and you want to reduce your risk, contributing to a managed fund might be a better approach. “A side hustle might have heaps of upside,” Robertson says, “but it’s far less likely to happen versus a traditional investment.” It takes careful consideration to choose revenue streams to develop, so working with a financial adviser could be valuable. You’ll need to assess the risks and potential rewards of each method and whether it will help you achieve your goals. “If someone comes to me and they want to grow their passive income, I do a risk profile,” Hepple says. “What are their goals? How much do they need? Then I’d build a portfolio with a mixture of assets and revise it over time. I’m firmly of the belief nobody knows what’s around the corner, so keep it diversified so you de-risk the market as much as you can. That’s as close as you can get to a free lunch.” S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 3 5

CONSILIUM

When the Right Advice Pays Off A financial adviser can give valuable guidance so you can get the most out of your money.

Investing is a well-established science, but managing your money is more complex than simply working out which asset classes will pay the most reliable returns. It’s also about finding answers to those tricky life questions – should you pay down the mortgage or invest? Take a holiday or boost your savings? Retire early or earn more? A financial adviser can provide you with valuable guidance, so you can get the most out of your money, says managing director Scott Alman. Building a relationship with an adviser early helps you answer life’s tricky questions as they arise, stay on track during tough times, and reach your goals. Advice that pays off People often seek financial advice after a life-changing windfall like the sale of a business or inheritance. That’s a fantastic idea, but waiting until you’re rich to get advice means you miss out on compounding benefits that accrue over many years. Think about someone who starts eating well and exercising regularly at the age of 30. They will likely reap the benefits earlier and be healthier than someone who does nothing until they’re 55, then makes big changes. The 55-year-old will still gain huge benefits from a healthy lifestyle, but making the required changes will be much harder.

of time add up to a huge total effect. When you save and invest early, the results can be incredible.” Have a plan, let it work Despite their importance, financial decisions are often influenced by people who might not have our best interests at heart. Well-meaning friends who’ve just discovered cryptocurrency, that online finfluencer who’s trying to sell a daytrading course, or your uncle who believes only gold can save you. A financial adviser can help you stay connected and committed to your investment goals, so you’re not swayed by unhelpful advice or alarmist headlines. “Generally speaking, an advised portfolio outperforms a non-advised one,” Alman says. “The biggest benefits of getting advice are the behavioural changes advice encourages people to make along the way. In a market downturn, clients won’t jump ship and crystalise their losses. They aren’t tempted by fads and flavours of the month. The value of advice is that it helps you look through the noise, so you are more likely to stick to the process and let the plan work its magic.”

Alman says it’s his personal trainer who keeps him accountable on his fitness goals, helping him stay healthy for the long haul – and a financial adviser can do the same for your money.

Advisers with world-class tools As a proudly New Zealand-owned company, Consilium has been working alongside financial advisers across the country for more than 12 years, promoting and supporting the delivery of quality advice.

“Lots of small decisions over a long period

Offering a range of services, from robust

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 3 6

investment research and model portfolio administration to specialised custodial support, Consilium arms financial advisers with world-class technology and solutions to allow them to compete with even the biggest organisations. The success of this approach is in the numbers. More than 150 adviser firms throughout New Zealand are now working with Consilium, using its ever-expanding suite of funds, tools and platforms to support over 20,000 investors. One of the company’s most innovative initiatives was launching the KiwiWRAP KiwiSaver Scheme, the first advice-led

How financial advice pays off According to research by Financial Advice NZ:

Advised New Zealanders are twice as likely as unadvised Kiwis to feel at least reasonably prepared for retirement.

70% of advised Kiwis felt they had enough money for an emergency, compared to just over 50 per cent unadvised.

66% of advised investors were happy with their financial situation, compared with less than half (47.7 per cent) of unadvised Kiwis.

International research by Vanguard found that financial advice improved net returns by 3 per cent. That might sound small, but it really adds up.

scheme that allows investors to tailor their KiwiSaver portfolio. In just three years, it has grown to $100 million in funds under management, with significant growth in advisers applying for accreditation to offer the scheme to their clients. Now, investors can work with an adviser to create personalised strategies for their KiwiSaver and non-KiwiSaver assets. “KiwiWRAP lets you customise your KiwiSaver portfolio. You can choose from over 400 different investments and, along with your adviser, you can structure your KiwiSaver portfolio to achieve the outcomes you want,” says Alman. “Investment

flexibility is becoming increasingly sought after as KiwiSaver balances grow." Tailored advice to achieve goals “A good adviser gives you someone objective on the other side of the desk who can ask you the questions you wouldn’t necessarily ask yourself,” says Alman. “They help you work out what your goals are, and then get you to those goals – whether times are tough or easy.”

For example: $50,000 invested for 25 years at a 4 per cent return will grow to around $130,000. An additional 3 per cent takes the return from 4 to 7 per cent, growing to around $270,000 – more than double. Sources: Financial Advice NZ, Trust in Advice, 2020, Financialadvice.nz; Bowerman, Robin, Good financial advice improves more than just returns, 2021, Vanguard.com.au.

If you don’t already have an adviser, someone to work with you and help you navigate your financial journey, it’s never too late to find one.

www.consilium.co.nz

PERSONAL FINANCE

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 3 8

D I V E R S I F I C AT I O N

So, What Did You Do in The 2020s, Granddad? Term deposits could be the saddest story you share with family in years to come, but it’s not too late to change the narrative, writes Martin Hawes.

The year is 2066. Your granddaughter, fresh back from uni for the holidays, has just popped round for a visit. You make tea, try to ignore that new “hairstyle”, and settle in for a chat. So, you ask, what’s your favourite subject this year, Rebecca? Well, granddad, I guess it would have to be economic history, she says. We have been picking apart what happened in the 2020s. Amazing stuff! Weren’t you around then, granddad? Well, yes, I was, Rebecca. Your nana and I were in our 40s. Trying to hold down a job, raise your mum and get ourselves ahead. Gee, granddad, you and nan must have made a heap of money back in those days. The very start of AI, blockchain, and really just the beginning of decent battery storage, genomics and medical devices. That must have been a wonderful time to be an investor. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 3 9

PERSONAL FINANCE

‘The big story of our time is technology, and that has been the case for decades.’

You stop and think: the 2020s – can I remember what was going on then? Some trouble in Poland, was it? Or maybe it was Ukraine? And China – weren’t they starting to get a bit aggressive about Taiwan around then. Perhaps that was when that guy Trump was President of the US. And wasn’t Putin strutting around the place at the time – Nana and I were a bit worried about him. And, yes, of course – they were the years when you could get a decent return on a term deposit, maybe 5 or even 6 per cent sometimes. But, granddad, our lecturer said that Nvidia, Microsoft and Apple were only tiny little companies then ... worth a pathetic amount, about $3 trillion or something. MoonHols, SuperStud and SolarBeam had not even started. Look at them now ... you all must have done well out of them. Well, you see, Rebecca, in those days we could roll over TDs and get 5 per cent - sometimes nearly 6 per cent. Nana and I thought that was a pretty good deal. Anyway, have you kept up the piano lessons? Yes, I would change the subject too! Had I invested

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4 0

only in TDs and a few other scraps during this time, I would be loath to own up to it 40 years later. Okay, I know it’s all easy in hindsight. Rebecca’s lecturer is a right pain in the neck, making the easy hits and skewering us all with his 20/20 vision as he looks in the rear vision mirror. It’s never so easy at the time. And yet, as an exercise, pretending that you are far off in the future and looking back to see what you could do is useful; it puts things in perspective and gets us to focus on the big, important things that are going on and, in some cases, changing the world. When we live in the real world we are bombarded by all sorts of stuff, all asking us to give them our money: there’s that property developer on Facebook offering 10 per cent, maybe you should have a look at that? And rental property seems to have a bit more value these days – perhaps it’s down enough to make it worth buying? The big trends The real world is full of offers and opportunities and

D I V E R S I F I C AT I O N

amongst all that time spent down in the weeds it’s hard to see the big trends, to look outside our own little sphere and see what is going on in the world. Of course, the big story of our time is technology, and that has been the case for decades. Fortunes are being made; technology in all its different forms advances apace. No-one should think AI is the only game in town: areas like battery storage, clean tech, genomics, blockchain, medical devices, 3D printing, biotech, automation and robotics etc. All of these are expanding quickly ... and there is money to be made. So, how do you play this explosion of technologies from an investment point of view? The thing is to take ownership (to take an equity stake) of companies that are at the forefront of this technological revolution. You probably will not do this by yourself – it’s hard to pick winners in a fast-moving tech boom. It’s near impossible for you to pick the winners in any one of these complicated areas with cutthroat competition

without giving up your day job. To be honest, I wouldn’t even try. Managed funds Instead, I would play the theme and own mostly managed funds giving overall exposure to the most important, likely-looking areas. Yes, I might have a few individual companies, but most of my exposure would be in managed funds giving me a good overall spread in the technologies of choice.

‘Instead, I would play the theme and own mostly managed funds.’

Get out of the weeds and have a good think about some of the big things that are happening in the world and think about how you can profitably invest in them. That might take you out of New Zealand (and your comfort zone) but in a decade or two I am sure you will be very glad you did.

The information contained in this article is general in nature and is not intended to be personalised financial advice. Before making any financial decisions, you should consult a professional financial adviser. Nothing in this publication is, or should be taken as, an offer, invitation or recommendation to buy, sell or retain a regulated financial product. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4 1

PERSONAL FINANCE

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4 2

ARTIFICIAL INTELLIGENCE

Is a Robot Managing Your KiwiSaver? As we embrace the age of artificial intelligence, the question must be asked, is AI also managing our investments? Ben Tutty catches up with real people in the industry to find out. Artificial intelligence (AI) is already a big part of our lives. It’s working in the background when we shop for groceries online, choose a show on Netflix or scroll social media. It makes you wonder ... is AI managing our investments too? The robot advice market, investment powered by AI, is tipped to be worth almost $69 billion by 2030 (SkyQuest). We talked to three leading New Zealand investment funds to see if they were onboard with the trend and find out whether they’re using AI. Kernel Kernel is one of New Zealand’s fastest growing KiwiSaver and investment providers, having recently reached $1 billion in funds under management after starting just four years ago. They offer a passive investing approach, with a selection of 19 diverse, low-cost funds. Kernel head of customer strategy, Catherine Emerson, says they’re not using AI to manage investments currently, but they do use AI for customer service: “Since introducing an AI tool just over three months ago, it has been involved in 32.6 per cent of new conversations, with a resolution rate of 63 per cent. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4 3

PERSONAL FINANCE

‘AI cannot replicate personal experience, so there’s still space for humans to think creatively.’ “During this three-month period, we have also seen an AI customer satisfaction (CSAT) score of 76 per cent, while our human teams’ CSAT score is 96 per cent,” she says. Kernel’s CEO, Dean Anderson, says he’s frequently asked whether AI can help pick outperforming stocks, and while there’s potential, he remains cautious. He says AI has been used in investing for decades. “Well, I think as we’ve seen with most AI applications to date – it isn’t about trying to outperform the market. Instead, it has helped investment professionals more efficiently interpret large amounts of data and to find correlations and trends within data. “If markets are more efficient overall, in that they can process information which becomes reflected in the share prices faster, then this is actually beneficial for index funds – it makes it even harder to outperform [the market] and reinforces the value of at least having a core of your portfolio in low-fee, well-diversified index funds,” he says. Right now, Kernel sees AI as a tool to act as “100 interns”, to automate menial tasks and increase efficiency, so staff can focus on adding value for customers. Dean says AI cannot replicate personal experience, so there’s still space for humans to think creatively, producing thought leadership content, creating innovative products and solving problems. For customers, Dean says good investing is actually about habits and AI can help reinforce those. While there are opportunities, there are also risks. Dean reckons one is that trends or correlations are extrapolated that don’t really exist. For example, there’s plenty of academic study and debate around value versus growth investors and most recently S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4 4

value investing has underperformed for a couple of decades. AI investment managers may also be a worry. “I suspect we are going to see various retail AI trading bots, often touting their ability to deliver superior returns – investors need to be very cautious, as with any investment that seems to offer some form of exceptional outcomes.” InvestNow InvestNow is a New Zealand-based investment and KiwiSaver provider that makes it easy for Kiwis to access investments from all over the world online. They offer a selection of passively and actively managed funds with low fees.

General manager Mike Heath says InvestNow doesn’t use AI at all: “The InvestNow service is delivered by a team of engaged and capable people, all very passionate about the proposition we offer to Kiwis keen on investing.” He says that while they don’t use AI tools, in the future he can see AI will bring some operational efficiencies and provide access to resources and capabilities that smaller teams may not be able to afford for themselves, freeing staff up to spend more time on in-depth, technical and customer centric work. “For investment managers and portfolio managers, the question will be how they

ARTIFICIAL INTELLIGENCE

‘The rise of AI will change what target companies are invested in based on the part they play in the value chain.’

can use AI to improve their investment practice. How do they tap into a huge knowledge base and analytical database to improve their investing decisions?” With all that said, Mike doesn’t expect AI to replace financial advisers any time soon. After all, the key to investing successfully is aligning your portfolio with your personal circumstances, risk profile, time frame and purpose, and then regularly reviewing your investments to make sure they suit. AI just isn’t equipped yet to help make those human decisions. “The challenge for AI is how it interprets the same answer from more than one investor as people can say something and mean the same or quite different things,” he says.

“Think about the experience when you sit down with a financial adviser. They ask all sorts of questions, to understand the customer and their investment needs, but each customer may use different language or context to provide the answer – the skill is in understanding what the customer is saying, what they mean, and how it’s then reflected in investing advice provided.” Pie Funds Pie Funds is a Kiwi investment manager that offers KiwiSaver, investment funds and wealth management. They offer actively managed funds that aim to consistently beat the market and were one of NZ’s fastest growing companies in 2018 and 2019. CEO Ana-Marie Lockyer says Pie Funds integrate AI across multiple business functions to enhance staff productivity and optimise operations. That includes assisting their investment team with research and analytics, allowing them to better use their time adding value to their portfolio when they meet companies. “For example, this has resulted in a 50 per cent reduction in coding time, savings of substantial costs in various operations, and reduced research time and time in design activities by up to 75 per cent in some cases,” she says. Ana-Marie believes investing will change, thanks to AI. “AI will no doubt transform investing by enabling more predictive analytics and interpreting unstructured data, such as news and social media trends, to provide broader insights into market sentiment at the least. The rise of AI will also change what target companies are invested in based on the part they play in the AI value chain, and how they are adopting AI to drive performance.” AI models will continue to get smarter, and adoption will become easier: “Pie Funds focus on staying current with advancements, exploring valuable use cases, and ensuring responsible AI use. Investing in staff training about AI, its benefits and limitations, is crucial for us to navigate this new AI world with full awareness. “Embracing AI will ensure support with our broader purpose of generating wealth for our clients and building meaningful relationships with them.” S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4 5

F E AT U R E S

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4 6

GLOBAL INSIGHTS

Changing of the Guard in London The Labour Party’s recent victory in the UK election looks set to usher in political stability and – perhaps surprisingly given the party’s name – a more business-friendly government, writes Andrew Kenningham. Elections rarely lead to a rapid turnaround in a country’s economic performance. After all, GDP growth and inflation are driven primarily by forces outside the control of politicians, such as technological progress, energy price shocks, currency movements or immigration. And despite the sound and fury surrounding most elections, in reality policy differences between major parties often turn out to be quite low. What’s more, the new Labour government faces particularly serious challenges which will make it hard to deliver big improvements. High public debt and deficits leave little room for tax cuts or increased spending to boost demand. And the Labour Chancellor of the Exchequer (de facto finance minister), Rachel Reeves, has promised not to raise taxes to fund increased public services such as health, education and the justice system, which are, in most cases, on their knees. In fact, one of her first actions was to cut big infrastructure projects and welfare payments on the grounds that the Conservative government had left an undeclared “black hole” in public finances. In addition, the Bank of England raised its

key policy rate to 5.25 per cent last year to tackle double-digit inflation. This is the highest interest for many years and means the real cost of borrowing for many is prohibitive. Also, Brexit has made trade and investment between the UK and its most important trade partners in Europe more difficult. And the UK has suffered from weak productivity growth for decades. Nonetheless, government policies – and competence – can make a difference over long-time horizons, and there are some reasons for cautious optimism about the UK economy under Labour. Political stability The first is that the election result should lead to a period of political stability. The Conservative Party has been preoccupied by infighting and culture wars in recent years and there has been an extraordinary turnover of political leaders – since 2016 there have been six prime ministers and seven Chancellors of the Exchequer. In contrast, Labour has a big majority, appears united and is focussed on delivering on its campaign promises. Provided this lasts, it should help support business confidence and investment. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4 7

F E AT U R E S

‘The improved outlook is likely to boost returns on UK assets.’ The European Union The second reason for cautious optimism is that the government wants to repair the UK’s relationship with the European Union. The UK’s 2016 decision to leave the EU and not join its customs union or Single Market has contributed to a decline in exports and investment which economists estimate has cost the country around five per cent of GDP. To be clear, there is no realistic prospect of the UK rejoining the EU anytime soon, or indeed joining the Single Market and customs union – not least because the major European countries don’t want to be thrown back into long and unproductive negotiations. But Keir Starmer’s government wants to reduce some of the additional barriers to business which Brexit has caused. It may make progress in areas such as cooperation on science, mutual recognition of qualifications, work visas for young people and energy cooperation. And a more constructive relationship between the UK and Europe should help foster confidence for businesses. Business support The third reason for optimism is that the Labour Party is clearly focused on supporting business. This is a change from the outgoing Conservative Party which – despite its historical links to business – has in recent years clashed with large corporations over many issues, including EU relations and migration. The relationship hit a nadir with former prime minister Boris Johnson famously declaring “f... business” in response to demand from the Confederation of British Industry. Labour will probably listen more to business interests when negotiating future trade agreements, reforming planning rules, construction and renewable energy, and when changing tax rates. Interest rates And fourth – and unrelated to politics – the economy should benefit from falling interest rates. Inflation has already fallen to only 2 per cent, which is the bank’s target S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 4 8

level from a peak of more than 11 per cent in 2022, so most observers expect the bank to begin cutting interest rates soon, reducing them to around 3 per cent by the end of next year. This should reduce the burden of interest expenditure for households and companies and prompt more companies to borrow for investment. To be clear, nobody should expect miracles. Like other European economies, the UK is facing huge challenges including an ageing population and sluggish trend growth. And the Labour Party has ruled out many of the bigger reforms – such as nationalising utilities or rejoining the EU – that have the

potential to significantly raise economic activity. But there is at least a chance that the economy stabilises, and activity picks up gradually over the coming years. The improved outlook is likely to boost returns on UK assets – which have performed very poorly over the past decade or so. The pound has been the best-performing major currency so far this year and institutional investors have been increasing their exposure to UK-listed equities. And there’s a good chance this virtuous circle of better economic management and higher investment returns will last at least for the next couple of years.

informedinvestor.co.nz/subscribe

Stay Informed for Under $50 a Year. Informed Investor magazine is a New Zealand luxury investment and lifestyle magazine which explains in plain English your financial options and how to build wealth. It covers the share market, property investment, KiwiSaver, personal finance, the economy, books, travel, and all the good things in life you can buy when you invest wisely.

Subscribe here

PERSONAL FINANCE

How to Embrace Your Money Style Differences Through open communication and a willingness to compromise, couples can turn financial differences into a source of mutual support and growth, writes Bridgette Jackson of Equal Exes. Money is at the heart of many decisions couples make together, and it’s no secret financial stress can damage a relationship. We know this from research, including a 2012 US study, which found that when financial disagreements were present, they were a strong predictor of divorce. The study also showed that when financial well-being was in place, it was not associated with divorce. Pair this with a study from the American Institute of Certified Public Accountants, which noted that 73 per cent of married or cohabitating Americans experience relationship tension due to money decisions. Nearly half of the couples reported the tension negatively impacted their intimacy. We also know that differing money styles within a relationship can strengthen the partnership or lead to conflict. Understanding that these differences shouldn’t drive a wedge between partners is crucial. Through open communication and a willingness to compromise, couples can turn financial differences into a source of mutual support and growth. Money personalities Defining the five types of money personalities: •

•

The Saver: Cautious with spending, always thinking about the future. Savers often feel secure knowing they have a safety net and will be perceived as overly frugal or restrictive by some. A saver is also happy to have their money in the bank and typically does not like taking risks with their investments. The Spender: Lives for the moment, prioritising experiences, lovely things and immediate gratification. While they enjoy life’s pleasures, spenders sometimes struggle with long-term financial planning. The Shopper: Gains emotional satisfaction from purchasing, whether it’s clothes,

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 5 0

gadgets or gifts. A shopper can also be a saver, but their penchant for long-term investing will vary. This money personality needs to think long-term about their financial goals to avoid impulsive purchases. •

The Debtor: Debtors often find themselves in debt because they don’t keep track of their spending. A personality trait is also to spend more than they earn. A debtor may also be focused on their credit score as they look to future big purchases like a home or car.

•

The Investor: Focused on growing wealth through investments, whether in property, stocks, or other ventures. Investors are typically long-term planners but may take risks that make their partners uncomfortable.

are we willing to sacrifice to make it happen, and what are our non-negotiables? •

Establish financial guardrails: Set clear financial boundaries to prevent misunderstandings and ensure a secure financial future. This could mean agreeing that any purchase over $150 needs to be discussed first. Alternatively, setting up a joint budget that outlines who pays for what and how much each person can spend without consulting the other.

•

Divide responsibilities according to strengths: Instead of forcing each other to change, embrace your differences. If one of you is better at saving, they might handle the long-term financial planning. If the other is more comfortable with day-to-day expenses, they could take charge of managing the household budget.

Anxiety, shame and envy It’s not uncommon for a couple to have different money personalities. One might be a saver, while one is a spender. For both parties, this can trigger anxiety, shame or even envy, which can impact trust. However, these differences can be managed with the right approach for long-term gain. •

Be open and honest: The first step is to have an open conversation about your financial situation. This conversation includes everything from your income and debts to your financial goals and fears. It’s crucial to lay everything on the table for no surprises later, as you cannot make informed decisions until you know what you both own and owe.

•

Set common financial goals: Even if your priorities differ, there’s often room for compromise. For example, one partner might prioritise saving for a house while the other dreams of travelling. You’ll feel united and cooperative by working together to create a timeline that accommodates both goals. Ask yourself how does our budget need to change to reach these goals? What

Common pitfalls Money can be a source of stress if not handled properly. Here are some common issues and how to begin to address them: •

Lack of communication about big financial decisions: If one partner makes significant financial decisions without consulting the other, it can lead to a lack of trust and unity. Whether you manage your

MONEY MANAGEMENT

earns significantly more than the other, it can create tension, especially when splitting bills. It’s important to have an honest conversation about what feels fair and sustainable; this might mean splitting bills proportionately to your income or finding another arrangement that suits your situation.

finances jointly or separately, discussing any significant purchases or financial commitments and their potential impact is essential. Examples I have seen are the purchase of a sports car, jet ski, boat, lounge sofa and booking a holiday. •

•

Financial infidelity: Hiding money or lying about finances is a serious issue. According to recent surveys, 39 per cent of people have hidden cash or made secret purchases. This behaviour undermines trust and can lead to significant problems down the road. Transparency and open communication are essential for the emotional well-being of any relationship. Drastically different spending habits: When one partner is a spender, and the other is a saver, it can lead to arguments unless there is common agreement. Finding a happy medium is to set common financial goals together so you both know what you are working towards. Bringing in the financial guardrails and some independence and responsibility according to strengths could be a happy medium. As a couple, you can also consider seeking advice from a financial coach who can help you create a budget that works for you and/or a relationship coach. Income differences: When one partner

•

Emotional challenges: Beyond the tangible financial issues, there are often unseen emotional challenges. Financial stress can lead to feelings of loss, fear, or anger towards your partner. Acknowledging these emotions and giving each other time to work through them is essential.

Communication a powerful tool Establishing ground rules for discussing finances is a good idea, especially if one partner often becomes stressed or if the discussion covers personal debt by one or both. This approach, which includes active listening, avoiding blame and clarifying contentious topics when emotions are running high, can provide a sense of reassurance. If direct communication is challenging, you might find the BIFF (Brief, Informative, Friendly, Firm)

method helpful for written communication. Tips for managing the budget •

Keep track of where your money is going.

•

Maintain your savings.

•

Prioritise paying off debt.

•

Regularly revisiting your budget can help you both stay on top of your finances and ensure both partners are on the same page.

Remember, different money styles don’t have to be a deal-breaker in a relationship. By understanding your own and your partner’s money personalities, communicating openly and working together to set and achieve financial goals, you can manage your finances and strengthen your relationship. This process is about finding a balance that allows you to grow together, fostering a sense of hope and optimism. Bridgette Jackson is a CDC-certified divorce/separation coach with a postgraduate dispute resolution qualification. She is also a trained divorce mediator, a relationship coach (Institute for Life Coach Training), and a member of the Institute of Executive Coaching and Leadership (accredited by the International Coaching Federation). She is also a certified organisational coach, level one, with the Institute of Executive and Leadership Coaching and an enrolled barrister and solicitor of the High Court. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 5 1

I NVESTM E NT

Meet the Magnificent Eight Sam Stubbs predicts a bright future in which the finance industry and banks move aside as consumers call the shots. In investing, there is an often-used term, ''The trend is your friend''. And when it comes to the business of investing, there is no stronger trend than the one we are entering: the rising tide of KiwiSaver capital. This is a theme repeating itself around the developed world. A younger generation is saving for their retirement while older savers are seeing their pensions rise and are divesting themselves of big houses, to invest more and live off the profits. So, with this rising tide of capital, what are the big trends that will impact what you can invest in, and what will it return? I can see eight big themes. The first is relatively less money invested in public stock and bond markets, and more in private markets. Why? Because plenty of big investors want to access investments unavailable to others, and to invest in companies that just want to get on with their business without the palaver of being a listed company. KiwiSaver managers are already preparing for this. Simplicity, Milford and Booster already have well established private investment teams, with Fisher recently announcing key hires. It’s already common in Australia for pension funds to have in-house private equity and venture capital teams. Another significant trend is the concentration of listings into the larger global exchanges. When data moves at the speed of light, it’s more efficient for all traders to go to a few marketplaces than many small, spread-out ones. So, for listed companies, the NZX will become even less significant and large overseas options like the NASDAQ more important to target. Some of this, in my opinion, may be due to NZX favouring the profits from its own fund management operations over running

an efficient marketplace. However, we are seeing this movement globally. Picking markets The third trend I see is passive investing continuing to grow. Why? Because the world is too competitive to expect many managers in New Zealand to win when it comes to picking markets and stocks. When the largest hedge funds advertise, they have more computing power than Google, and that power is hard to beat. Over 50 per cent of global pension assets are managed passively and that trend is likely to continue. That doesn’t mean there won’t be active traders out there generating liquidity; the biggest programme and quant traders are doing just that. But unless you have an enduring competitive advantage, why bother trying to beat them? My fourth observed trend, or prediction here, is that cash will (finally) earn more than zero in bank accounts. It won’t be long before every dollar you own, wherever you choose to hold that dollar, is earning something. Open banking is the key here. And given that New Zealand has around $80 billion in non-interest-earning accounts, every one per cent return on those will be another $800 million in investors’ pockets and $800 million off bank profits. The fifth big trend will, all things going well, be funding of infrastructure via KiwiSaver capital. To my mind there is simply too much money in KiwiSaver, and too much need for domestic infrastructure, for them not to meet. This will require some assistance, at times, from local and central government. But eventually their paths will cross, and New Zealand will evolve towards something like the international norm of 5 to 10 per cent of pension fund investments in direct and/or unlisted infrastructure. The sixth trend is the triumph of the product.

What I mean by this is that, in an increasingly transparent world, the best products will win. The finance industry has, for decades, hid behind distribution networks, apathy and ignorance to sell mediocre and expensive products. This has made it the most profitable industry in the world, but that party is ending. AI will be the industry’s party pooper here. It won’t be long before search engines provide a proper answer to “what investments are best for me?” rather than an answer that the industry can effectively pay for via advertising dollars. KiwiSaver accounts The seventh trend is the key financial product in our lives becoming our KiwiSaver account, not our bank account. Open banking means core banking services will hang off the key store of wealth for many Kiwis (their KiwiSaver account), and not the other way around. Compulsory KiwiSaver (which I see as an inevitability over time) will exacerbate this trend. My final projected trend will be Kiwi housing investments becoming more institutionalised, like so many markets around the world. Forget about Du Val type failures; KiwiSaver managers will join their overseas equivalents and own a lot of rental housing and do it properly. For investors that means fewer owning rentals directly, and more investing in residential-focused housing funds. Once again, New Zealand is primed to catch up with the rest of the world on this trend. And that, to my mind, is the future of investing. Less listed investments, less bank involvement, less active investing. More money for your cash, more importance on KiwiSaver, more infrastructure investments, better products and more homes owned via funds than directly. It all adds up, in my opinion, to a very bright future. Because in all these things it’s the consumer, and not the finance industry and banks, that win. Finally. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 5 3

M A R K E T U P D AT E

Snapshot Events around the world that are affecting the investment market. GERMANY

The German economy continues to wallow, according to figures released by the Federal Statistical Office in August. Industrial orders fell for sixth months in succession at the end of June, with imports and exports also decreasing yearon-year. Manufacturers reported a 2 per cent decrease in orders in June, with a 6.2 per cent year-onyear decrease. The first half of the year also saw a decrease in both exports and imports. DW.com reported an exports drop in key sectors year-on-year, with a 1.6 per cent decline. Exported cars and car parts were particularly affected, with a 2.4 per cent drop. Chemical products dropped by 4.4 per cent year on year.

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 5 4

UNITED STATES

Fears around the US economy weakening was somewhat abated last month with a Commerce Department release that revealed food and retail sales were up 1.1 per cent from June to July 2024, and 2.6 per cent year-on-year. This led to economists at Morgan Stanley boosting their forecast for growth in the June-September quarter to 2.3 per cent, up from an earlier estimate of 2.1 per cent. The boost in growth is likely to play favourably for vice-president Kamala Harris’ presidential campaign, with the election taking place on November 5.

AUSTRALIA

A study published in the Medical Journal of Australia reveals the effect long Covid has had on the national economy. The study, led by the University of Melbourne, Australian National University, and UNSW Sydney, calculates the lost labour hours of the people affected with long Covid who are unable to work, and came up with the astonishing figure of $9.9 billion for the 2022 year.

VIETNAM

Vietnam is seeing a surge in their e-commerce sector, with consumer demand and digital adoption driving growth. Vietnam has not been as badly affected as much of the world by the global economic slowdown, and the Ministry of Industry and Trade (MOIT) expects the sector to grow steadily for the rest of the year, reaching growth of 9 per cent by 2025. According to Vietnam News Agency citing market analysis firm Metric, Vietnamese consumers spent 143.9 trillion Vietnamese dong ($9.27 billion) on e-commerce platforms in the first half of the year.

Correct at Aug 21, 2024.

SNAPSHOT

SOUTH KOREA

JAPAN

NEW ZEALAND

INDIA

South Korea has been presented as a standout example of the “3i strategy” that allows countries to reach high-income status, in a report from the World Bank. In their Middle Income Trap report, the effect of this policy is revealed. In 1960, its per capita income stood at just $1,200. By end of 2023, that number had climbed to $33,000. “South Korea began with a simple policy mix to increase public investment and encourage private investment,” the document states. “That morphed in the 1970s to an industrial policy that encouraged domestic firms to adopt foreign technology and more sophisticated production methods. The Ministry of Education set targets—and increased budgets—for public universities to help develop the new skill sets demanded by domestic firms.”

Japan’s economy expanded by 3.1 per cent in the second quarter, with tourism and private consumption both playing a significant role. The Q2 results exceeded forecasts of 2.1 per cent; the Bank of Japan has forecast that a solid economic recovery will help inflation hit its 2 per cent target. MSN reports that this will be used to justify raising interest rates further, after it hiked them last month in its continued quest to exit years of massive monetary stimulus.

A new report conducted by Xero, "I want to pay that way" has found that 86 per cent of consumer payments are made by cards. While consumers prefer to pay this way, only two in five small businesses provide credit or debit card payment options to their customers and clients. The report continues that payment preferences vary across business types. Consumers prefer to use bank transfers to make online payments specifically to businesses in trades (47 per cent) and housing (45 per cent). With 78 per cent of consumers making payments with bank transfers, it’s clear why they are the most popular payment method and are offered by 79 per cent of small businesses.

India’s growth has surpassed all estimates, with the country’s fiscal year (2023-2024) achieving 8.15 per cent GDP growth. This represents three consecutive years of growth. “Optimism prevails,” a Deloitte India article released in August states. “With prevalent signs of the rural economy rebounding, strong growth in manufacturing, robust bank balance sheets and credit growth, and stronger exports in services and high-value manufacturing, there is confidence that India’s underlying potential will help it outpace growth in the rest of the world.”

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 5 5

PROPERTY

Playing it Softly Market performance this year now looks likely to be a bit softer, although it’s a relief that softer also appears to be a sentiment shared by the Reserve Bank, writes Kelvin Davidson. At the tail end of last year, we pondered the year ahead in 2024 and thought “underwhelming upturn” might be a useful phrase to encapsulate the housing market’s prospects – anticipating some growth in sales volumes and property values, but not a lot. And over the first three to four months of the year, that phrase was doing a pretty good job. However, market conditions have weakened notably in the most recent few months, with the stock of available listings remaining elevated, and the (credit restrained) pool of active buyers taking their time to negotiate a price and agree a deal. Sliding backwards Indeed, measured across estate agents and private deals, we recorded just 4,744 transactions in June, down 22 per cent from the same month last year, which broke a run of 13 months of growth. The 12-month running total for sales now stands at 72,161, which is up from April 2023’s trough of 62,374, but still well below the long-run norm of around 90,000. It’s not surprising that as housing (and jobs) market confidence levels dip a bit, the volume of sales remains subdued. The sluggishness of market activity is also flowing through to property values S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 5 6

in an environment where mortgage rates remain high (for now), and an abundance of available listings has put pricing power firmly in the hands of buyers. CoreLogic’s House Price Index registered a 0.5 per cent drop in national average values in June, taking the change since March to -0.8 per cent. Auckland has dropped 2.6 per cent over the same period, although Otago is up 2.5 per cent. Patchiness is still a feature. Bad for some, great for others Clearly, some existing property owners may not exactly be chuffed with a renewed drop in house prices, but on the flipside it’s playing into the hands of first-home buyers (FHBs), who have maintained a record high share of purchases in the vicinity of 26 per cent lately. Sure, the first-home grants have now been removed, but there are plenty of other factors that will continue to help FHBs, including lower house prices, access to KiwiSaver for at least part of the deposit, an effective monopoly on the low deposit lending allowances at the banks and, of course, less competition from other buyer groups, especially mortgaged investors. On that note, 80 per cent interest deductibility, an easing in the loan to value ratio rules, and the shorter bright-line test could tentatively kick-start investor

sentiment again. But if anything, I would actually be watching for some selling activity by existing landlords who are struggling with cashflow and now find themselves off the hook for capital gains tax sooner than expected. Lower interest rates Perhaps the most notable shift related to the property market in recent weeks has been a softer tone from the Reserve Bank, and the growing probability that we will see an official cash rate cut before the end of the year, which would help mortgage rates fall. A lot still hinges on inflation behaving nicely, but the weakness of the real economy is becoming all too clear. On balance, the performance of the property market over 2024 as a whole now looks likely to be a bit softer than we first thought. It’ll still be underwhelming, but “upturn” might now be too strong a word. At this stage, sales volumes might only be about 5 per cent higher in 2024 than 2023’s very low starting point, with average property values possibly not changing at all. As we get into 2025 and beyond, there are also two solid reasons to think capital growth might be lower than in the past – caps on debt-to-income ratios, and a government highly motivated to boost housing supply right across the type/value spectrum.

C ORELO GIC

Average Property Value

Northland

$748,505 0.0%

CoreLogic House Price Index Percentage change last three months

Bay Of Plenty

$892,536 -0.1%

Auckland

$1,267,854 -2.6%

Gisborne

Waikato

$605,141 0.9%

$823,623 1.0% Taranaki

$640,936 -1.6% Manawatu/Whanganui

Hawke’s Bay

$560,633 0.0%

Tasman

$738,605 -1.1%

$816,988 2.3%

Wellington

$904,404 0.1% Nelson

$783,748 -0.7%

Marlborough

$708,107 1.4%

West Coast

$400,134 4.1%

Canterbury

$734,922 0.7% Southland

$476,841 1.5%

Otago

$909,982 2.5%

New Zealand Average

$926,913 -0.8% S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 5 7

Make your property search simple.

Find your dream home with thousands of property listings right across the country.

Start your search at OneRoof.co.nz

SEARCH NOW

WYNN WILLIAMS

The Benefits of Making a Will

Making or updating a will is a relatively easy process and accurately reflects the changes in your life, writes Annabel Sheppard. When it comes to wills, people generally assume that when you die your assets and estate automatically pass to your partner and/or family. This assumption is not necessarily true. When buying or selling a property or undertaking a transaction, people often concentrate on getting the job done and forget to complete or update their will. It often goes on the “to-do list” to look at later. However, people ignore this task at their peril. Who should make a will? Anyone who is 18 years or older can make a will. However, a person under this age may make a will if they are (or have been) married or in a de facto relationship. As soon as you have assets worth over $15,000 (e.g. in your bank account or KiwiSaver), you will need to have a person appointed to oversee your estate to close your accounts and withdraw the funds after you die. This person is known as an executor. In the absence of a will – and therefore an executor appointed by you – someone will have to apply to the High Court to appoint an administrator to deal with your property. This can be costly and impersonal, but perhaps more importantly, what happens to your estate is dictated by the provisions in the Administration Act. It may well be that your estate is divided between your partner and children, but in some circumstances other family members may have a legitimate claim. How do I make a will? While there are online versions and “doit-yourself” tools freely available, we recommend you consult a lawyer. This will

help ensure the will is signed properly and deals with the right technicalities. Your lawyer can also help advise on your options and what needs to be in place to ensure your wishes are implemented. Updating your will is a relatively easy process to reflect a change in your circumstances. What do I need to include? The starting points for you to consider are: •

Who do you wish to appoint as executor(s) of your will (i.e. people who will administer your estate)?

•

Do you have any specific gifts that you want to make (e.g. chattels or monetary gifts to friends or charities)?

•

If you have children or dependants, who you would like to appoint as their guardian on your death?

•

Do you have any specific directions in relation to certain assets?

•

Who would you like the rest of your estate to go to?

Once you have your will, it’s important to review it every few years or if your circumstances change (e.g. you have a child). This will ensure your will keeps pace with your wishes throughout your life. While we like to think that time is on our side to get our affairs in order, life has a habit of being unpredictable. Having an up-to-date and watertight will ensures your decisions are respected, including in relation to how you want your property dealt with and who will manage the process. Annabel Sheppard is a Partner in the Property & Estate Planning Team of Wynn Williams.

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 5 9

C L I M AT E C H A N G E

For Those in Peril by the Sea Property experts, researchers and policymakers warn climate change is a risk home buyers tend to ignore and do not price in as they enjoy living near the sea, rivers and creeks, writes Sally Lindsay. Stats NZ research shows about 50,000 New Zealanders and 500,000 buildings worth more than $145 billion are near rivers and in coastal areas already exposed to extreme flooding. This has not pushed homeowners inland. In fact, the country’s housing obsession has led to record prices and personal wealth piling into sprawling homes built near waterways and coastlines, amplifying the threat to houses, people, the economy and banks. Since the early 2000s, housing has risen to become almost five times the value of the country’s GDP, compared to 1.9 times in the US. For now, there are few signs of systemic problems in the housing economy because of climate risks. However, pockets of pain are springing up, such as parts of the country’s coastline crumbling into the sea because of climate change impacts.

More than 40 researchers have just released a dataset that takes detailed stocktake of coastal erosion since the late 1970s. The dataset shows in some places land is being steadily lost. For example, Hawke’s Bay councils are facing a $35 million bill for urgent work to protect erosion-threatened properties in Haumoana, Te Awanga, Westshore and Bay View. Some places with “chronic” erosion will only see that trend worsen with sealevel increases, which scientists recently showed could amount to 1.2 metres by the end of the century in large parts of the country. Insurance premiums After the Auckland floods and Cyclone Gabrielle last year, the Environment Ministry investigated how property owners are preparing for the impacts of climate change.

‘Pockets of pain are springing up, such as parts of the country’s coastline crumbling into the sea.’ S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 6 1

PROPERTY

‘There is no doubt climate change is a threat to property. However, it’s just not about the sea rising and flooding.’ The independent research found most respondents recognise climate impacts are already here but are yet to take steps to protect their property. None are taking any adaptation action as they don’t know how climate change will impact them. Although many do perceive some impact, such as insurance premiums rising with about 1,000 homes already uninsurable and being bought by authorities following last year’s floods, they think it’s someone else’s responsibility to cover the cost of climate impacts. Less than half feel it’s the property owner’s responsibility. One third say affordability stops them taking action. Insurance premiums have doubled in the past 10 years due to growing climate risk and high construction costs, says Kerry Watt, Reserve Bank director of financial stability assessment and strategy. “What we would like people to do is to start to take more notice of the specific risks to the properties they might be buying.” From a practical point of view, the ministry’s research found people don’t know what they can realistically do as they don’t generally connect the actions they’re taking to adapt their homes with reducing the impacts of climate change. Fewer than one in 10 people are taking action beyond basic house maintenance. CoreLogic’s chief property economist, Kelvin Davidson, says this is understandable.

While climate risk isn’t having a noticeable effect on property values at present, quantifying the exact impact of natural disaster risk on property prices is obscured by other factors, chiefly demand and mortgage rates.

“There is no doubt climate change is a threat to property. However, it’s just not about the sea rising and flooding. It’s the greater frequency and intensity of extreme weather events, whether it’s rainstorms, prolonged droughts, wildfires, erosion, earthquakes, increased variability in weather patterns and increased frequency of damage.”

Top dollar CoreLogic’s head of research, Nick Goodall, says the positive attributes of coastal property, such as the view or waterfront access, far outweigh climate change risks. People are still paying top dollar for coastal property and the desirability for homes or holiday houses near water has not diminished.

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 6 2

“The negative impact doesn’t come into it, possibly because of a belief that problems are decades away and won’t impact on the current owner.” He and Davidson say it’s hard to quantify the impact because there is no definitive research that says if there’s a 1 per cent sea rise, property values will fall by a certain percentage. They do expect coastal property prices to go down as more people accept the risks, and higher insurance premiums add to a property’s costs. Mortgage Express says the impact of climate change could lead to shifts in demand and

C L I M AT E C H A N G E

value. As risks intensify, areas vulnerable to weather-related disasters could experience a decline in demand and properties in regions perceived as lower risk may become more desirable. And proposed regulations and policies that look to address the climate crisis could influence property development, renovation and compliance requirements. Higher taxes Climate change could also mean higher taxes or new levies as future governments grapple with the costs of mitigating the effects of a warming planet and adapting to that new reality, says Professor Ilan Noy, Victoria University’s economics of disasters and climate change chairman. “Money will need to be spent on things like flood protection and supporting people and communities affected by climate impacts, such as those whose homes can no longer be insured.” All of these things will cost money, and that money comes out of people’s taxes, Noy says.

Lower Lowerfees, fees,more moreSimplicity Simplicity Check Checkout outour ourrange rangeofofglobal globalInvestment InvestmentFund Fundoptions optionsallallwith withlow, low, low lowfees. fees.Including: Including: HEDGED HEDGED GLOBAL GLOBAL BOND BOND FUND FUND

HEDGED HEDGED GLOBAL GLOBAL SHARE SHARE FUND FUND orem ipsum

UNHEDGED UNHEDGED GLOBAL GLOBAL SHARE SHARE FUND FUND

orem ipsum

0.15% 0.15% FeeFee Fee | Investment | Investment Fund Fund 0.15% 0.15% Fee | NZ | NZ PIE PIE fund fund

0.15% 0.15% FeeFee | NZ | NZ PIEPIE fund fund

A low-fee A low-fee index index fundfund withwith overover 1,400 1,400 investments investments in more in more thanthan 20 countries. 20 countries. 100% 100% hedged hedged to NZD. to NZD.

A low-fee A low-fee fundfund invested invested in over in over 2,700 2,700 investment investment grade grade bonds bonds in more in more thanthan 20 countries. 20 countries.

A low-fee A low-fee index index fundfund withwith overover 1,400 1,400 investments investments in more in more thanthan 20 countries. 20 countries. NotNot hedged hedged to NZD. to NZD.

Check Check outout ourour fullfull range range of low of low feefee KiwiSaver KiwiSaver andand Investment Investment Funds Funds at simplicity.kiwi at simplicity.kiwi Simplicity Simplicity NZ Ltd NZisLtd theisissuer the issuer of the ofSimplicity the Simplicity KiwiSaver KiwiSaver Scheme Scheme & Investment & Investment Funds. Funds. For Product For Product Disclosure Disclosure Statements Statements please please visit visit our website our website simplicity.kiwi. simplicity.kiwi. For more For more on fees on fees go togo simplicity.kiwi/fees. to simplicity.kiwi/fees.

O P E S PA R T N E R S

The Future of Investing Property investors have it tougher in 2024 and, as Andrew Nicol writes, a challenging landscape demands strategic thinking. Becoming a property investor today is a far cry from when I first started, 21 years ago.

increasingly stretched, we’re likely to see a shift towards more considered property investment.

The barriers to getting started have only grown, leaving many would-be investors feeling disheartened. With property prices at record highs, people are wondering: Is there any future for property investment at all?

The professionals The share market, by contrast, has long benefited from professional guidance. There have always been a ton of very well researched, analytical companies that help Kiwis invest in shares and broad financial markets.

Over the past decade we’ve seen a slew of regulations reshape the property market. loan-to-value ratio (LVR) restrictions, the bright-Line test, and changes to depreciation rules have all tightened the screws on property investors. We’ve also seen the introduction, then removal, of interest deductibility, followed by the implementation of debt-to-income (DTI) ratios. All of this, on top of stricter lending criteria, has made becoming an investor even more complex. The old strategies of property investment don’t work anymore. The once-simple approach of buying the house next door, giving it a fresh lick of paint, and renting it out, no longer has the same results. Similarly, it’s not enough to turn the family home into a rental while you upgrade to a larger property. This is why today’s investors need to adopt a more strategic approach. And as rental yields compress and affordability becomes

In the past property has never been supported like that, but this is changing. As the property market becomes more complex, we’re likely to see a rise in businesses like us at Opes Partners that aim to “professionalise” property investment. As we do, the main focus will be on data, analytics, diversifying portfolios and relying on professional advice. I believe this is the future of property investing. The Reserve Bank’s chief economist, Paul Conway, agrees. When he was a guest on the Property Academy podcast, I asked him: “What is the future of property investment?” His answer: “Property investors will still be around, but the game will change.” So, instead of just buying anything, investors will need to make more calculated decisions.

Two strategies Looking ahead, I see two strategies that will work. First, the approach of buying existing properties and undertaking heavy renovations to boost value and rental income. This is known as “cashflow hacking.” Second, there’s the build-and-hold strategy, where investors buy new builds. This approach allows investors to sidestep many new regulations while targeting properties likely to deliver strong returns. Property has long been the go-to investment for many New Zealanders, and I believe it will continue to do so. However, with KiwiSaver now 17 years old and growing, and the increasing popularity of share market platforms like Sharesies, we’re seeing a trend towards more diversified investment portfolios. While other assets will certainly claim a larger share of people’s wealth, I still believe property will remain the number one choice. Yes, it’s more challenging to get started in property investment today, and it’s easy to feel nostalgic for the “good old days”. Even for me, I think back to when I was 19 and bought a $200,000 property with just a 5 per cent deposit. But we must remember we are now living in the “glory days”. In 20 years, we’ll look back at 2024 with the same nostalgia people today feel for 2004. Today is the “good old days”. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 6 5

OYSTE R

Catering for the Way We Work and Invest Oyster Property Group is meeting changing needs with modern commercial property assets that will help shape the future of our cities. While residential assets may be the more familiar property investment option in New Zealand, unlisted commercial property funds offer an alternative to real estate ownership in a sector that’s presenting exciting growth opportunities as the country’s commercial environment evolves. Oyster Property Group is one of NZ’s leading unlisted property fund managers and for more than 20 years has been providing Kiwis with easy access to commercial property investment opportunities. With $1.8 billion in assets under management, Oyster purchases quality properties of significant scale in the office, industrial, and large-format retail sectors, then executes strategies on behalf of its investors to deliver monthly income and the potential for long-term capital growth. Oyster Property Group’s General Manager – Property, Fabio Pagano, says it’s Oyster’s robust in-house management capabilities and value-add strategies that appeal to investors. “Oyster investors are diversifying their portfolios with institutional quality real estate assets that are managed by experts and supported by long-term strategies to maximise their value,” he says. “We don’t just buy assets and sit on them

– we’re active fund managers. A big part of this is the development and delivery of business plans designed to extract optimal returns from each property we manage on our investors’ behalf.” Value for years to come

He adds that property is a long-term play for investors and a future-focused approach is critical to maximising the fundamentals of this asset class. “Our investment philosophy is to acquire quality, well-located properties in resilient sectors with robust longterm outlooks. Oysters’ expertise lies in industrial, office, and large-format retail. “We then actively seek opportunities to increase the value of the asset over time. So, while the investment is passive for our investors, it’s anything but for the team at Oyster. “The way we work, live and play in New Zealand is evolving at pace – our focus is on positioning our properties to meet the needs of businesses, tenants and wider New Zealand, well into the future. “Alongside maximising our properties as they currently stand, we’re looking ahead to emerging property, infrastructure, work and lifestyle trends, alongside the master plans for NZ’s major economic regions to ensure our assets are positioned to take advantage of further

income and capital growth opportunities. “Our strategies aim to maximise leasing potential and income, asset usage, resilience, unitary plan alignment, capital value, and future sale potential. It’s these factors that come together to optimise total returns for our investors.” The multi-use commercial developments and premium office parks in the Oyster portfolio demonstrate these strategies in action. Take the Central Park precinct in Ellerslie, for example. Once a tired, underutilised business park, but with droves of latent potential, Central Park has evolved into one of NZ’s largest mixed-use commercial developments through a value-add strategy under Oyster’s management. Born out of a partnership between Oyster and global investment firm KKR, Central Park is paving the way for the future of “live-work-play” precincts in the Auckland region and delivering significant value to its investors, the 3,000 people who work there and the surrounding community. Today, the asset houses some of NZ’s most high-profile brands, including Bunnings, Bidfood, Turners & Growers, Estée Lauder, and government agencies such as Waka Kotahi NZ Transport Agency and KiwiRail – the list keeps growing. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 6 7

PROPERTY

‘Our strategies aim to maximise leasing potential and income, asset usage, resilience, unitary plan alignment, capital value, and future sale potential. It’s these factors that come together to optimise total returns for our investors.’ Since the acquisition, the value-add strategy has delivered an aggressive leasing programme to lift occupancy to 95 per cent and drive rental growth, an award-winning partnership with KiwiRail, which has established its Auckland Rail Operations Centre, and new income streams, including The Green, an awardwinning food and beverage precinct. Two adjoining residential developments and hotel accommodation further highlight the gravitation towards mixeduse precincts - and there’s further growth ahead, with successful consenting for additional titles, subdivision rights, and change-of-use already completed. Just down the road, Oyster has transformed the Millennium Centre business park into a vibrant, modern, green working environment that’s attracted Loreal, Z Energy, Griffins, Toyota, adidas, EnviroWaste and Siemens as tenants.

rental growth, and the potential for capital appreciation of the property.

Strategically located close to major arterials and public transport routes, with ample car parking, the centre comprises seven freestanding office buildings, a gym, end-of-trip facilities, a tennis court, and food and beverage outlets.

“There is more to come – exploration of new value-add projects to drive additional revenue streams, and master planning investigations are already underway for the centre as we seek to derive even more value for our investors.”

“From SME’s through to large multinationals, businesses continue to seek and sign long-term office leases at Oyster’s properties, but the way tenants use office space is changing – and our assets and strategies are evolving with them.

Sustainable growth

Pagano says Oyster’s sustainability strategy plays a critical role in unlocking future value for investors through resilient, future-proof assets.

“We are responsive to this environment by supporting our tenants to create flexible, modern workspaces that suit new organisational and operational structures, foster connectivity and attract great talent by enhancing the employee experience.

NZ’s largest companies are now required to make climate-related disclosures, a standard that appears likely to become best practice for all businesses. Many organisations also mandate sustainability credentials as part of leasing and procurement policies.

“The Millennium Centre strategy has delivered on this, and we’re seeing the results in strong leasing momentum,

“We’re seeing increasing demand from tenants for commercial spaces that meet their own sustainability requirements

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 6 8

today and for landlords that will partner with them as they advance their ESG strategies in the coming years. “We’re meeting this demand by continuously advancing our portfolio to offer market-leading sustainability credentials. “This includes smart water and electricity meters across all assets, a NABERSNZ and Greenstar rating programme, installing EV charging stations [and solar] in partnership with our tenants, and our enrolment in the Carbon Reduce certification programme from Toitū Envirocare.” Oyster is pursuing its first Green Star Design and As Built rating on a current business park development and planning for the portfolio’s first carbon-neutral asset. Investing in tomorrow For more information on the Oyster Property Group portfolio and current investment opportunities: www.oystergroup.co.nz

Ready to unlock your site’s potential with a

Free Site Assessment? YOUR HOUSE

YOUR OPPORTUNITY

Let us help you take the first step to gaining greater returns for your property. With Ashcroft Homes’ Site Feasibility Assessment, you will discover what you can achieve on your site, including: What is permitted under your zoning and planning.

A proposed layout using Ashcroft Homes’ standard plans.

Review of the site and its development potential.

Indicative costs for the build, siteworks and subdivision.

Visit ashcrofthomes.co.nz or call us on 0800 377 588

I NVE ST I N YO U R S E L F

Fashion Update

The colours and styles of spring 2024. 8.

3. 7.

1. Allbirds Tree Runner – $200, 2. Cotopaxi Teca Windbreaker Half-zip in Sunrise – $159.99, 3. Levi's XX Authentic Short II Coastal Scenic – $139.90, 4. Levi's 555 Relaxed Straight – $169.90, 5. Cotopaxi Allpa 38L Roller Bag in Black – $689.99, 6. Levi's Authentic Button Down – $109.90, 7. Garrett Leight Meadow sun – $655, 8. Cotopaxi Fuego Hooded Down Jacket – $499.99, 9. Cotopaxi His & Hers Campaign - $ Various S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 7 0

FA S H I O N

9. 8.

1. Kathryn Wilson Sara Heel – $349, 2. Garrett Leight Manzanita – $655, 3. CAMILLA & MARC Emerson trench – $900, 4. Birkenstock Arizona Rivet Logo in Vegan Canvas Elemental Blue – $250, 5. Jasmin Sparrow Nico Bangle – $500, 6. Silk & Steel Soleil necklace/brooch – $169, 7. Kathryn Wilson Barbie Heel – $349, 8. CAMILLA & MARC Aire slip dress – $660, 9. Kowtow Mile Trench – $549 S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 7 1

I NVE ST I N YO U R S E L F

Shimmering on a New Trading Platform Gold investing has traditionally been seen as an area for only the wealthy, but Goldie, a new high-tech investment platform, is changing the scene, as Sally Lindsay reports. Goldie is the first investment trading platform in New Zealand to source, price and offer shares in gold bars. It was launched at the end of last year and has already far exceeded expectations, with 11,000 people signing up within five months and buying shares in gold bars at the top end of single figures and about to tip into double figures. About $1 million in trades have been done. By comparison Sharesies, a market leader in the development of online investment platforms, had about 3,500 investors at the same time in its evolution.

is not really possible and Maclachlan says that is where Goldie’s disruption sits – offering fractionalised ownership.

It took about three years to launch Goldie after investing, developing and building the online platform, meeting FMA and other legal requirements, investing in gold bars and creating a definitive marketing plan.

Gold has been a defensive investment asset for generations. Geopolitics have enhanced its lustre this year and it has risen from $105 a gram only a few weeks go to between $125 and $130 now, outperforming other asset markets.

The idea for Goldie came about when managing director Cam Maclachlan and his partners tried to buy gold at market price (then $96 a gram) but could only purchase through middlemen at $152 a gram. “We realised an everyday person couldn’t essentially get market price on these real assets. It led us into building the tech platform that could break the barriers and let everyone get access to amazing real assets in an easy-to-learn concept at a market price.” A gram of gold is about $125, depending on where the market is on any given day. An investor will be paying closer to $200 if they physically want to own a gram of gold. Investing in physical gold for less than that S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 7 2

Goldie fractionalises gold bars to decigrams (equal to one tenth of a gram) and sells them online to investors in a fraction of a second. Vault security, insurance As each gold bar is sold down, another is bought. Apart from buying the gold, the added challenge for Goldie is keeping the precious metal safe and paying for vault security and insurance. “By leveraging technology and covering all the costs upfront, it allows us to buy amounts of gold similar to going straight to a Nike store. We get a bulk price and investors get fractionalised amounts on an end product that is actually real.

“A large part of this is dealing in real things as opposed to assets, trying to help with financial literacy, removing the barriers, breaking the stigma of what an investment platform is and how it speaks to the wider community.” Part of the long development stage was having to be self-funded for Goldie’s initial investors, working efficiently on the platform and legalities as well as engaging with an audience that wasn’t necessarily aware or conscious of gold being an investment. Financially literate, educated investors know the benefit of gold as a safe, slow, steady investment. The younger generation doesn’t have that on their radar. “Some of them have shares and some have KiwiSaver, but this market was completely untouched and there was no easy way to get through the challenge of that.” With innovation at the front end of the technology and the brand, Goldie has been able to engage with a much broader and younger investor audience.

GOLDIE

‘Gold has been a defensive investment asset for generations.’

simple and easy to use, and that even as a refresh for the educated, experienced investor, it feels different. “Its performance has been far beyond anything we expected, and we are trying our best to get people excited by what they’ve just invested in – a real asset sitting in Wellington.” Besides having the barcode of the gold bar investors have taken shares in, Goldie expects to let them see and touch the asset over time by possibly visiting the vault where they are held. Goldie is now looking at how it actually gets people into the vault. The company is also working on other investment categories and is about to launch silver, although that is in the precious metals market. At the same time, it’s looking at how to use the platform for investment in artwork and is about to launch a seed fund to invest in this. Goldie has been talking to art buyers to find pieces, such as a Warhol or a Banksy, to invest in. “An enormous amount of time and effort is needed to authenticate and verify they are their genuine works of art. They have to be traceable,” says

Maclachlan. “We have one piece that we have been looking at for months that could suit investors aged from 20-45. It’s about finding the time with the tech ready to introduce these pieces.” Secondary market He says once there is a community that Goldie knows is passionate about investing in a piece of art or some other collectible that experts believe will rise in value over time, the company will create access to it, and it will work off the secondary market. “The piece can be taken around the country and investors can see the things they have invested in. Many high-end art never sees the light of day. It’s going to be much more of a personal ownership than has ever been available to the everyday Kiwi. “That’s the job for Goldie, keep engaging and having a brand that resonates with various communities and does something within the investing space that hasn’t been done before from a brand and back-end platform development perspective.” Goldie also hopes to take its platform global. The company says it has something unique that retail investors deserve.

While financially literate investors are making big investments because they realise it’s cheaper than if they were dealing in the space on their own, the intrigue and lower entry barrier of just over $10.25 a decigram is attracting much younger and less savvy investors. That fractionalised price gives an everyday person access to the market, then insurance and a small trading fee based on the investment is added. Goldie purposely set out to give less experienced investors the keys to getting their first gold decigram. “It’s been quite phenomenal. And the number of trades completely caught us off guard,” Maclachlan says. “The proactive nature of people seeing the benefit of investing in gold has been something we didn’t expect this early on.” Engaging, fun platform The trading platform has seen much more buying than selling. Maclachlan says one of the biggest things Goldie wants to show is that the platform is engaging and fun, S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 7 3

I NVE ST I N YO U R S E L F

Show me the Way to the New Santa Fe Liz Dobson takes a close look at the fifth generation of Hyundai’s Santa Fe, which breaks new ground for the popular SUV. Hyundai’s Santa Fe medium SUV has always been popular with Kiwis thanks to its rugged appeal and capability, plus features seen in European rivals. When the third generation was launched here in 2012, critics scoffed at its $80,000-plus price point, saying New Zealanders wouldn’t pay that much for a South Korean SUV. The critics were quickly proved wrong, with shipments selling out before landing. The fourth generation also proved popular with owners staying loyal to the brand, and in total 26,000 Santa Fe SUVs have been sold in NZ since 2000. But now the fifth generation 2024 Hyundai Santa Fe represents a significant leap forward for the brand, showcasing a bold new design, a luxurious and tech-laden interior, and impressive performance and handling. The all-new Santa Fe Hybrid is powered by a petrol/electric hybrid system featuring a 1.6-litre T-GDi Smartstream engine and a 44.2kW electric motor, drawing power from a 1.49Wh lithium-ion polymer battery. The hybrid powertrain produces 172kW and 367Nm and is paired with a 6-speed automatic transmission to maximise efficiency. The electric motor and petrol engine work together seamlessly to deliver ample torque where it’s most needed, while maximising efficiency and minimising CO2 emissions, to provide a smooth, quiet and eco-friendly driving experience. The level of regenerative braking can be adjusted in three steps using the paddle shifters behind the steering wheel, giving the driver greater braking control and the ability to improve fuel efficiency across a range of driving conditions. The Santa Fe has all-wheel drive, making it a versatile vehicle but as a diesel model has been removed by Hyundai Motor Corp, towing capacity is now at 1,600kg, down from 2,500kg. Hyundai NZ is offering a $10,000 discount launch price for the three models, with each vehicle stepping up in specs as the price increases. The Active launch price is $74,990, Limited is at S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 7 4

$86,900, while the top spec (road test model Calligraphy) is $94,990.

now that the Santa Fe has arrived in NZ, it’s easy to see the resemblance.

“As a 100 per cent Kiwi-owned and operated company, we select models that suit the Kiwi lifestyle. In the all-new Santa Fe, there is more space than ever before, the powertrains are more powerful yet more efficient, and technology has never been so smart and intuitive,” says Hyundai New Zealand chief executive officer, Scott Kelsey.

I spotted one of the first Santa Fe sevenseaters to arrive when I was driving on Auckland’s Southern motorway and was impressed with its strong road presence.

The Korean Range Rover The Santa Fe sits between the relatively new Palisade large SUV and the five-seater Tucson SUV.

Hyundai has described the new Santa Fe’s aesthetic as “parametric dynamics”, which emphasises sharp angles, geometric shapes, and a bold presence.

With its boxed ends, flat roof, vertical tailgate, flexed wheel arches, and unique H-shaped light signature, the 2024 Santa Fe looks nothing like its predecessors.

At the front, the Santa Fe features a large, intricately patterned grille flanked by slim, angular H-shaped LED headlights that extend into the bumper. This aggressive front fascia is complemented by a sculpted hood and pronounced wheel arches, giving the SUV a muscular stance.

When it came to the fifth generation, Hyundai’s design chief SangYup Lee could have stayed true to the previous model’s curved lines, but instead made a radical move to steer the Santa Fe from the exterior looks of many of its competitors. The medium SUV from South Korea has no design factor carrying over, and the looks are so radical it could have had a new name badge. When first photos appeared online, people described it as a Range Rover look-alike and

The design language for this model draws heavy inspiration from rugged off-road vehicles while integrating modern, urban sophistication.

The side profile reveals a distinctive character line that runs the length of the vehicle, accentuating its length and adding a sense of motion even when stationary. The rear of the Santa Fe is equally striking, with sleek H-shaped LED taillights connected by a thin light bar and a robust bumper that enhances the rugged appeal.

MOTORING

‘The looks are so radical it could have had a new name badge.’ It has a total of four ISOFIX and five top tether mounting points, including points for the third-row seats, so it can accommodate a range of car seats. Stable, confident The 2024 Santa Fe’s handling is precise and composed, thanks to its well-tuned suspension and responsive steering. I took numerous journeys during my seven-day test, from motorway commutes to inner city streets where the turning circle was easier than expected. The SUV feels stable and confident on winding roads, providing a comfortable ride. Hyundai’s HTRAC all-wheel drive system enhances traction and stability in various driving conditions, including snow, rain, and light off-road terrain. Hyundai’s design team aimed to create a vehicle that stands out in urban and natural settings, and the 2024 Santa Fe achieves this with its unique blend of toughness and elegance. The inspiration behind this design comes from a desire to appeal to adventurous families who need a versatile vehicle that can handle daily commutes and weekend getaways. Inside, the 2024 Santa Fe is a cabin that exudes luxury and sophistication. Hyundai has significantly upgraded interior materials, with soft-touch surfaces, high-quality leather, and tasteful metallic accents. The overall layout is driver-centric and spacious, providing comfort and convenience. Crisp graphics The dashboard features a minimalist design with a large, horizontally oriented touchscreen infotainment system taking centre stage. The screen offers crisp graphics and a user-friendly interface. It supports wireless Apple CarPlay and Android Auto, ensuring seamless smartphone integration. Below the touchscreen, you’ll find a set of intuitive climate control buttons and knobs, making it easy to adjust settings without taking your eyes off the road.

Hyundai has also paid attention to passenger comfort, offering spacious seating for up to seven. The second-row seats can be adjusted for extra legroom, and the third-row seats are suitable for children or shorter adults.

Don’t expect to see the Santa Fe at any fourwheel-drive off-roading circuits, instead more than likely at mountain bike parks as its overall function is to be a support member of your family.

In the Calligraphy you can swap up the secondrow bench seats for two captain’s chairs, making it easier to access the rear seats. This is ideal if you have three kids, so they have some space – especially for road trips.

Parking by supermarkets, I did feel like a fraud as I didn’t have a gaggle of teens or tots as passengers. But with the two rows of seats down, the huge space helped me when I moved into my new house. Does that count as family-friendly?

My Calligraphy also had heated and ventilated front second row seats, panoramic sunroof, and a Harman Kardon sound system. Boot space is another strong point. With the third row folded down, it offers ample storage. The hands-free power liftgate adds convenience. The tailgate opening is 145mm wider than the preceding model and has a larger cargo capacity, so there is ample space for everyday items as well as bulky sports equipment and camping gear. At 4.8 metres in length, the all-new Santa Fe brings best-in-class third-row comfort, with extra headroom (up 60mm) and legroom (up 50mm), a raised cushion (up 30mm), a 10-degree backrest recline and enlarged side windows.

Handling is a standout feature, with precise and well-weighted steering that offers excellent feedback. This makes driving the SUV a breeze, whether navigating tight city streets or winding country roads. The vehicle maintains impressive composure through corners, with minimal body roll. Brakes are responsive and reliable, providing strong stopping power. The midsize SUV segment is highly competitive, and the 2024 Hyundai Santa Fe faces strong rivals from several established brands. Some of its main competitors include the Toyota Highlander, “sister” brand Kia’s Sorento and the Mazda CX-90. And while it faces stiff competition, I liked Santa Fe’s combination of style and technology. Liz Dobson is the founder of AutoMuse.co.nz and has been a motoring writer for more than 25 years. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 7 5

I NVE ST I N YO U R S E L F

Time to Add a Warming Touch Interior designer Mary-anne Tobin, of Design Addiction, offers early glimpses into the interior trends for 2025, along with three essential tips for spring. In our living spaces, we will continue to see a harmonious blend of ebony and ivory tones, complemented by rich caramelised amber, burnt cinnamon shades, and a variety of blended family cedar grains, telling a story of unity and warmth. Get ready to welcome grounded earthy palettes into your space. Picture deep greens perfectly paired with brushed bronze tones, and don’t shy away from mixing metals, and mixing wood grains. Gunmetal and brushed nickel will take centre stage for anyone aiming for a designer touch. Much like the jingling coins in our pockets, you’ll know exactly which metal speaks to you. As for me? I’m all about the American quarter. Colour drenching Another way to invite colour into our homes is through repainting, so why not experiment by embracing the latest colour drenching trend? This technique involves everything in the same shade – from skirting and walls to ceilings, doors and architraves. It’s an exciting concept; try it out in a small space like your powder room or laundry. It will provide depth to your room, or a bit of excitement for a season. Patterns of India and peaceful florals will also make waves; we may see limestone and sandstone. Dark maroon hues and royal blue will be prevalent with colour drenching. Try the pinot noir of Resene’s 2024 colour palette Incarnadine. Maroon is a colour of strength and resilience, embodying maturity, and the triumph of those who have weathered life’s storms, Nec pluribus impar. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 7 6

Chanut upholstery from Casamance.

INTERIOR DESIGN

Far left: Pure linen Laconia Air by James Dunlop. Left: Colonnade in Cinnabar. Below: Kelly Wearstler designs from Lee Jofa, exclusive to Warwick Fabrics NZ.

Alternatively, you could opt for a softer tone, with apricot or rose matched with mixing wood grains, such as ash and walnut. Inspiration is everywhere if you know where to look. Take a cue from OPI’s Got the Blues for Red or find fresh perspectives in an outdoor walk; it’s possible to find inspiration in familar places if we take a different perspective. Sparkle of magic Kendall Jenner’s August Vogue France spread has officially declared it: embellishments are in. This season it’s all about metals, transparency and intricate details. Rita Ora is also leading the stage with her appearances. Perhaps you have inherited a family heirloom or broach or oversized buttons. Now’s the time to shine.

People of the arts I am loving the reimagined movement of Bauhaus. Kelly Wearstler designs from Lee Jofa is exclusive to Warwick Fabrics NZ, and is a testament to this resurgence, blending boldness with elegance. James Dunlop’s re-released 2019 Chromatic, now aptly named Bauhaus, has an expanded colour line which includes my personal favourite, clay. This range speaks to other fabrics such as Laconia Air. You know it’s a trend worth watching when Warwick joins the fray with its Bauhaus version in upholstery. Their new colourway in teak is simply stunning. Geometric designs are making a triumphant return. Who says you can’t be fabulous, and a little mysterious all at once? This season we’re channelling the fierce elegance of an Italian Mafia widow. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 7 7

I NVE ST I N YO U R S E L F

‘Gunmetal and brushed nickel will take centre stage.’ Zimmerman Fall collection 2024 showcases this. Think black lace, black mesh and all the drama you can handle. The Kio Metallic & Bioko mesh tops at NES Boutique are the perfect nod to this fierce, elegant style. Three tips for spring: 1. Simplify your surroundings Spring is a time of refresh and reset, a time to make a colour splash in our homes. But before we do this one must declutter. Not only will it help improve mental focus and productivity by clearing out clutter from your workspace and living areas, it also allows room for new treasures. After all, they don’t call it spring cleaning for nothing. Start by picking a closet, ask Alexa to play John Farnham, grab a trash bag and decide: recycle, reuse, donate or toss. Once you’re done, treat yourself to a manicure or a whisky, depending on how wild that closet was. 2. Organic texture overhauled 2025 will see texture overhauled. Feel the breeze of freedom with designers like The Foundry introducing the Oceana series of ceramic and glass vessels. Tania Whale Ceramics’ Kapok is also making waves, setting its own trend. The future is organic. 3. Romanticised and oversized Once you have that new organic piece or sculpture, invigorate your space with beautiful fresh flowers. If you can afford it, why not keep them going through to summer? Or plant some in your garden. If the stocks aren’t as high as usual this year, that’s OK. With larger vessels, they are a statement on their own, otherwise you can create an amazing dried floral arrangement that will create height and last for months. Oversized florals will be prevalent; dramatic drapes with matching cascading floral beauty. Imagine burnt cinnamon drapes paired with a vibrant saturated orchid display.

Top and bottom: Morph Vase by The Foundry Credit: The Foundry New Zealand, purchased through House of Forbes

Shop the look with the new Ivory Collection at: www.designaddiction.co.nz by New Zealand interior designer Mary-anne Tobin.

S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 7 8

Chanut upholstery from Casamance.

Commercial

Outlook Winter 2024

The digital edition is out now! In this Winter 2024 Commercial Outlook issue, we showcase a selection of quality commercial properties right across Property Brokers Country. 0800 367 5263 | pb.co.nz/commercialoutlook

Commercial Real Estate *T&Cs apply | Property Brokers Ltd Licensed REAA 2008

I NVE ST I N YO U R S E L F / W H I S KY

New World of Whisky An opportunity to invest in new world whisky with a leading West Coast business. Reefton Distilling Co. is currently preparing to raise a minimum of $1 million from both private and wholesale investors as they look to scale up their Moonlight Creek whisky production to meet the global demand for new world whisky. Having established themselves at the forefront of the New Zealand distilling industry, Reefton Distilling Co. have continued to expand distribution, develop their range and introduce new products, year-on-year. Within two years of opening, they established Little Biddy Gin as the number two premium gin in New Zealand, a position they have retained in one of the most competitive segments in the alcohol market. As part of their longer-term growth strategy of establishing a broad portfolio of complementary premium spirits, they began laying down their first Moonlight Creek single malt whisky in September 2022. In 2023 they made headlines as the first New Zealand distillery to contract distill whisky for the Scots, securing a multi-year supply contract with the Scotch Malt Whisky Society (SMWS) on the back of the quality of their new make spirit. Demand for new world whisky Reefton Distilling Co.’s expansion into whisky production has been well-timed. The sale of Cardrona Distillery to leading global drinks business International Beverage, in 2023, has put New Zealand whisky firmly on the radar of the international whisky world, who are actively seeking new world whiskies. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 8 0

R E E F TO N D I STI L L I N G C O.

With their eyes firmly focused on the future, Reefton Distilling Co. are building a valuable asset base for global whisky sales and with hundreds of casks already laid down, they have the ability to significantly increase whisky volumes in the near to medium term. In order to scale up to meet the demand for new world whisky Reefton Distilling Co. are raising a minimum of $1 million. The offer is live via Snowball Effect, New Zealand’s leading equity crowdfunding platform, to both retail and wholesale investors, with minimum investment of $1,000. Funds from this raise will be used for investment in their Moonlight Creek whisky inventory, new warehousing for inventory and operations. This initial offer is part of a larger raise, which will take place over the next 1824 months. Reefton Distilling Co. have appointed boutique investment bank, Arcbridge Partners, who supported the Cardrona Distillery sale, as a raise partner for this further investment offer. Arcbridge has extensive experience in the global beverage industry and note that New Zealand is seen as one of the rising stars of new world whisky. Arcbridge believes that Reefton Distilling Co. will attract the interest and attention of the global beverage industry and investors as the company delivers on the milestones that they have set.

Moonlight Creek Whisky The most important requirements for making fine whisky are the best ingredients, an abundance of clear pure water, the highest quality malted barley, and a team of dedicated and experienced people. Reefton Distilling Co. has all of these key ingredients in profusion. The West Coast’s abundant rainfall feeds some of the purest spring water in the world and Moonlight Creek Whisky uses only the finest barley grown and malted in New Zealand. Distillery manager, Gareth Morgan, brings a wealth of whisky making expertise to his role, his career path has seen him involved in all areas of the whisky industry, including distilleries such as The Macallan and Tamnavulin. Gareth is ably assisted by master brewer/distiller Andy Deuchars, who hails from California and began his career as a wine maker before moving into brewing, and then distilling. Both Gareth and Andy say that they “relish the task of creating a New Zealand whisky that will stand with the world’s best”. Reefton Distilling Co. also have the support of a distinguished panel of international experts from both the southern and northern hemispheres, namely, Bill Lark, founder of Tasmania’s LARK Distilling, Sandy McIntyre, distillery manager at Tamdhu Distillery in Speyside, and Polly Logan, distillery manager at Tormore Distillery, whisky maker and former master blender at The Macallan, Scotland. With Reefton Distilling Co.’s Moonlight Creek Whisky yet to fully mature, the final flavour profile is still to be discovered, but early responses from members of the world-renowned whisky panel bodes well. Polly Logan provided feedback on Reefton Distilling Co.’s one-year aged spirit (ex-Bourbon) and six-month aged (ex-Olorosso sherry), commenting: “the spirit is developing well, it would already stand up to some bottled products, it’s so balanced. The Olorosso is superb, starting to develop those gorgeous deep dried fruits we’d expect with a lively treacle edge. Superb, massive well done to you and the team.” Reefton Distilling Co. have planned a controlled release strategy for their whisky, the first release to market will be a limited edition three-year aged single malt whisky, which will be on sale in September 2025. Further limited releases are planned for year five and year seven. S P R I N G 2 0 2 4 | I N F O R M E D I NVESTO R 8 1

Earn a fixed return of 11-12%p.a. with interest Earn Earn Earn a afixed afixed fixed return return return ofof11-12%p.a. of11-12%p.a. 11-12%p.a. with with with interest interest interest paid monthly secured by first mortgage paid paid paid monthly monthly monthly secured secured secured bybyby first first first mortgage mortgage mortgage Minimum investment of $100,000

Finbase provides private investors, family offices and high net worth individuals who meet relevant wholesale investor criteria an investment backed by First Mortgage Security. Finbase Finbase Finbase provides provides provides private private investors, private investors, investors, family family offices family offices and offices and highand high nethigh net net

Wholesale investors only Minimum Minimum Minimum investment investment investment of $100,000 of $100,000 of $100,000 No costs orinvestors fees deducted Wholesale Wholesale Wholesale investors investors only only only Returns are pre-tax NoNo costs No costs costs or or fees or fees deducted fees deducted deducted

Investor security: worth worth individuals worth individuals individuals whowho meet who meet relevant meet relevant relevant wholesale wholesale wholesale investor investor investor criteria criteria an criteria an an investment investment investment backed backed backed by First byprovide First by Mortgage First Mortgage Mortgage Security. Security. Security. Funds are utilised to First ranking mortgages to commercial borrowers for the purposes of short term property Investor Investor Investor security: security: security: projects, maximum 12 term of any loan. Funds Funds are Funds utilised are utilised are utilised to provide to provide tomonth provide FirstFirst ranking First ranking ranking mortgages mortgages mortgages to to to commercial commercial commercial borrowers borrowers borrowers for the for purposes the for purposes the purposes of short of short of term short term property term property property Maximum lending of 60% of property value. projects, projects, projects, maximum maximum maximum 12 month 12 month 12term month term of term any of any loan. of any loan.loan.

Returns Returns Returns areare pre-tax are pre-tax pre-tax

Maximum Maximum Maximum lending lending lending of 60% of 60% of 60% property of property of property value. value. value.

Recently funded investments: Recently Recently Recently funded funded funded investments: investments: investments:

Whangaripo, Warkworth

St Albans, Christchurch

Waiheke Island, Auckland

Whangaripo, Whangaripo, Whangaripo, Warkworth Warkworth Warkworth

StFAlbans, St Christchurch I R SAlbans, TSt MAlbans, O RChristchurch TG A G EChristchurch SECURIT Y

Waiheke Waiheke Waiheke Island, FIR S T Island, MOR T GIsland, AAuckland G E Auckland S E CAuckland URITY

F I R SFTI RMSF O TI R RMT SO G TR AMT GO GER AST GEGECAS UGEREC I TS UYERC I TUYR I T Y

FI RST M O RTG AG E S EC U R IT Y Loan Amount

LVR

Loan Loan Amount Loan Amount Amount LVR $312,000 30%LVR LVR

Term Term Term Term 12 months

$312,000 $312,000 $312,000 30%30%30% 12 months 12 months 12 months

Security description: Four bedroom residential Security Security Security description: description: Four Four bedroom Four bedroom bedroom residential residential residential home, located on description: circa 2.3ha section home, home, located home, located on located circa on circa 2.3ha on circa 2.3ha section 2.3ha section section

Purchase price: $1,030,000

Purchase Purchase Purchase price: price: $1,030,000 price: $1,030,000 $1,030,000

Interest rate: 11.5%p.a. paid monthly in arrears

Loan Amount

LVR

Loan Loan Amount Loan Amount Amount LVR 60% LVR LVR $315,000

$315,000 $315,000 $315,000 60%60%60%

Term

Loan Amount

Term Term Term 4 months

4 months 4 months 4 months

Security description: Circa 470m² freehold

Security Security Security description: description: description: Circa 470m² Circa 470m² freehold 470m² freehold freehold development site, withCirca an existing three development development development site, site, with site, with an existing with an existing anthree existing threethree bedroom home onsite bedroom bedroom bedroom home home onsite home onsite onsite

24 months 24 months 24 months

Security description: Circa 30ha land block

Security Security Security description: description: description: Circa Circa 30ha Circa 30ha land 30ha land block land block block

Value : $1,650,000

Value Value : $1,650,000 Value : $1,650,000 : $1,650,000

Interest rate: 12%p.a. paid monthly in arrears

Interest Interest rate: Interest rate: 12%p.a. rate: 12%p.a. paid 12%p.a. paid monthly paid monthly in monthly arrears in arrears in arrears

Interest rate: 12%p.a. paid monthly in arrears

Purpose Purpose Purpose of funds: of funds: of Refinance funds: Refinance Refinance existing existing lender existing lender lender plus equity release for working capital plus plus equity plus equity release equity release for release working for working for capital working capital capital

Purchase Purchase Purchase price: price: $525,000 price: $525,000 $525,000

investment investment investment property property property fromfrom current from current lender current lender lender

Purpose Purpose Purpose of funds: of funds: of Bridging funds: Bridging Bridging finance finance until finance untiluntil consent is finalised consent consent consent is finalised is finalised is finalised

Exit strategy: Refinance to main bank with Exit Exit strategy: Exit strategy: strategy: Refinance Refinance Refinance to main to main bank to main bank withbank with with FY25 accounts FY25FY25 accounts FY25 accounts accounts

$575,000 $575,000 $575,00035%35%35%

Term Term Term24 Term months

Purchase price: $525,000

Interest Interest rate: Interest rate: 11.5%p.a. rate: 11.5%p.a. 11.5%p.a. paidpaid monthly paid monthly monthly in arrears in arrears in arrears

Purpose of funds: Refinance existing Purpose Purpose Purpose of funds: of funds: of Refinance funds: Refinance Refinance existing existing existing investment property from current lender

LVR

Loan Loan Amount Loan Amount Amount LVR LVR35% LVR $575,000

Interest Interest rate: Interest rate: 12%p.a. rate: 12%p.a. paid 12%p.a. paid monthly paid monthly monthly in arrears in arrears in arrears

Purpose of funds: Bridging finance until

Exit strategy: Refinance construction Exit Exit strategy: Exit strategy: strategy: Refinance Refinance Refinance to a to construction to a a construction to a construction lender lender lender lender

Finbase Finbase Finbase is proud is proud is proud to to have tonever have never missed never missed missed anan investor aninvestor investor an investor Finbase proud tohave have never missed interest interest interest payment payment payment nor suffered nor suffered suffered a asingle a single a single loss loss ofloss interest payment nornor suffered single loss ofof of investor investor investor capital. capital. capital. investor capital.

Purpose of funds: Refinance existing lender Exit strategy: Refinance to main bank with

Exit Exit strategy: Exit strategy: strategy: Refinance Refinance Refinance to main to main bank to main bank withbank with with FY25 accounts FY25FY25 accounts FY25 accounts accounts

WeWe will We will cover will cover your cover your legal your legal and legal and accounting and accounting accounting feesfees offees fees up of to up of up to to We will cover your legal and accounting of $2,500 $2,500 $2,500 to discuss to to discuss thisthis investment this investment investment opportunity opportunity opportunity with with $2,500 todiscuss discuss this investment opportunity with your your professional your professional professional advisors, advisors, advisors, with with no with obligation nono obligation noobligation obligation for forfor for your professional advisors, with youyou toyou invest to to invest after after doing after doing so.* doing so.* so.* you toinvest invest after doing so.*

ForFor investment For investment investment For investment opportunities opportunities opportunities contact contact contact our ourour opportunities contact our portfolio portfolio portfolio managers: managers: managers: portfolio managers: Hayden Hayden Hayden Thompson Thompson Thompson

Pernell Pernell Pernell Callaghan Callaghan Callaghan

Jordan Jordan Jordan Evans Evans Evans

021 253 021 7816 253 021 7816 253 7816 hayden@finbase.nz hayden@finbase.nz hayden@finbase.nz 021 253 7816

021 143 0214291 143 0214291 143 4291 pernell@finbase.nz pernell@finbase.nz 021pernell@finbase.nz 143 4291

021 375 021 636 375 021 636 375 636 jordan@finbase.nz jordan@finbase.nz jordan@finbase.nz 021 375 636

Hayden Thompson hayden@finbase.nz

Pernell Callaghan pernell@finbase.nz

Jordan Evans

jordan@finbase.nz

ForFor more For more more information information information visit visit our visit our website our website website at www.finbase.nz at www.finbase.nz at www.finbase.nz

For more information visit our website at www.finbase.nz

Finbase Finbase isFinbase registered is registered is registered as a Financial as a Financial as aServices Financial Services Provider Services Provider under Provider under the under Financial the Financial theService Financial Service Providers Service Providers Providers (Registration (Registration (Registration and Dispute and Dispute and Dispute Resolution) Resolution) Resolution) Act 2008 Act 2008 of Act New 2008 of Zealand. New of Zealand. NewIts Zealand. registered Its registered Its registered number number is number FSP1003560. is FSP1003560. is FSP1003560. *Terms *Terms and *Terms conditions and conditions and conditions apply.apply. For apply. marketing For marketing For marketing Finbase is registered as a Financial Services Provider under the Financial Service Providers (Registration and Dispute purposes purposes the purposes images the images the are images ofare suburb ofare suburb of locations, suburb locations, locations, not the notspecific the notspecific theproperty. specific property. property.

Resolution) Act 2008 of New Zealand. Its registered number is FSP1003560. *Terms and conditions apply. For marketing purposes the images are of suburb locations, not the specific property.