ASSET 129 - 2014

ISSUE 129

PAA boss wants to add value

Would your doctor pass an audit?

RFA tackles KiwiSaver

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LEAD STORY

UP FRONT 04 EDITORIAL

Full steam ahead

08 PEOPLE New appointments

05 NEWS FROM NEW ZEALAND 09 NEWS FROM AUSTRALIA

12 REGULARS

10 What lies ahead for the coming year?

ASSET asked industry players to outline what they see as the key trends and issues for the next 12 months.

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{PROFILE: BRUCE CORTESI SAYS 2014 IS THE YEAR FOR INDUSTRY BODIES TO STEP UP}

{OPEN TO QUESTION} { INVESTMENT }

{ INSURANCE } { ASSET ADVISER }

06 What are the challenges and opportunities for this year?

24 Would your doctor pass an FMA audit?

28 Equity themes for 2014 30 RFA adds KiwiSaver to his business mix

26 Make some noise about advisers' good work

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UP FRONT

{ FROM THE EDITOR }

Full steam ahead IT’S EASY TO FEEL OPTIMISTIC at this time of year. The sun is – mostly – shining, it’s warm enough to sneak in a barbecue on the odd evening and summer holidays are not too distant a memory.

And this year, it seems we might have more cause for optimism than ever.

All predictions are for New Zealand’s economic recovery to hit its stride in 2014.

Businesses and consumers are showing signs of high levels of confidence and dairy farmers have recovered from the recent droughts. Five years on from the global financial crisis, there don’t seem to be any nasty surprises lurking around the next corner to whip the rug out from underneath us again.

On the financial advice front, many KiwiSaver balances are getting to the size where savers will sit up and pay attention, and perhaps finally start to seek some advice. Default scheme providers will have to provide some investor education, which may prompt them to seek outside assistance.

Putting this issue together, we’ve asked a lot of people what they think might lie ahead over the next 12 months.

It’s been interesting to hear from many that they think one of the biggest challenges will be improving the impression the general public has of financial advisers.

Despite all the hard work that has been going on behind the scenes to keep investors on track through tough times and ensure people’s livelihoods are protected from worst-case scenarios, the sector has suffered some terrible publicity over recent years. Failures such as that of Ross Asset Management make headlines for all the wrong reasons.

Many small operations have been so busy keeping up with changing regulation that they haven’t been able to get on the front foot and do the networking and relationship building that they would once have been able to.

PAA president Bruce Cortesi tells me in this issue that turning that around, and getting more good news stories out to the public will be one of his major goals for the organisation this year. He says industry

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Many small operations have been so busy keeping up with changing regulation that they haven’t been able to get on the front foot.

HEAD OFFICE 1448A Hinemoa Street, Rotorua PO Box 2011, Rotorua P: 07 349 1920 F: 07 349 1926 E: editor @assetmagazine.co.nz PUBLISHER Philip Macalister EDITOR Susan Edmunds CONTRIBUTORS Bruce Cortesi, Russell Hutchinson, Amanda Morrall, Edward Richards DESIGN Jonathan Harding ADVERTISING SALES 07 349 1920 027 437 7527

bodies should be championing their members and heralding their successes.

But that can be easier said than done.

Bad news tends to travel a lot faster than anything good and it can sometimes feel like it only takes a tiny negative headline to undo months, or even years, of tireless good work.

But with banks’ growing participation in financial advice, it’s going to be more vital than ever to make it clear to the person on the street why they should look for independent advice.

It should be a relief to many advisers, then, that there don’t look to be any big regulatory changes waiting just around the corner in 2014.

The biggest change for many advisers will be the new version of the Code of Professional Conduct, which will be implemented within the next few months.

This may be the year to sit back, take stock of your business and where it’s going and determine how to make the most out of the growing optimism in the New Zealand economy. As one adviser said: “People will have more money in their pockets and I want to take it off them!”

SUBSCRIPTIONS Dianne Gordon P: 0800 345 675 E: subs@assetmagazine.co.nz ASSET is published by Tarawera Publishing Ltd (TPL). TPL also publishes online money management magazine Good Returns www.goodreturns.co.nz and The NZ Mortgage Mag All contents of ASSET magazine are copyright Tarawera Publishing Ltd. Any reproduction without prior written permission is strictly prohibited.

ISSN 1175-9585

Susan Edmunds Editor

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{ NEWS FROM NEW ZEALAND } there are few big changes coming up that directly affect adviser businesses, except for those who operate a discretionary investment management service (DIMS).

“Obviously the Financial Advisers Act is in place and there are no immediate plans to make large-scale amendments other than a few tweaks as part of the Financial Markets Conduct Act, particularly around DIMS,” he says.

Fewer rule changes in 2014 Most advisers won’t have to deal with much new regulation this year.

The verdict, from financial services law specialist Jeremy Muir, should come as a relief for financial services participants who have spent the past few years grappling with the biggest law changes in the history of their industry.

Muir, a partner at law firm Minter Ellison Rudd Watts, says most of those issues have been settled and

Industry groups call for recognition Professional bodies in the financial planning industry want to be recognised in law.

Nigel Tate, president of the Institute of Financial Advisers, says the push for official recognition of professional bodies is likely to be one of the focuses of the financial sector this year.

“There are too many practitioners who are not members of any industry body.”

Tate says a number of

Nigel Tate

New Zealand’s peers have allowed professional bodies to regulate advisers’ professional conduct.

“Professional bodies are already recognised in Australia, the UK and the United States as well. If we are looking to close that regulatory gap that’s an area to be looked at.”

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OPINION

OPEN TO QUESTION

GERARD GILL

JORDI GARCIA

NEW ZEALAND FINANCIAL PLANNING

MILESTONE FINANCIAL SERVICES

WHAT WILL BE THE OPPORTUNITIES FOR FINANCIAL ADVISERS THIS YEAR?

WHAT WILL BE THE OPPORTUNITIES FOR FINANCIAL ADVISERS THIS YEAR?

WHAT WILL BE THE OPPORTUNITIES FOR FINANCIAL ADVISERS THIS YEAR?

I’m expecting lots of activity. In general in the market people will have more money in their pockets and I want to take it off them!

With the economy improving, the plan is that should flow on to more business.

There are quite a few opportunities.

With a better economic environment and increasing consumer optimism, the opportunity is for advisers to help Kiwis make better financial decisions. There’s an openness from consumers that wasn’t there a year or two ago. Also, the demographics of the aging population are starting to kick in, providing an opportunity to help baby boomers transition to their retirement. An increasing number of people need to make decisions after holding off due to the financial crisis.

Advisers should be able to capitalise on two good years of market returns for growth investments. There have been a lot of distractions in the past two to three years, so hopefully advisers can knuckle down and take advantage of the benign conditions. Other opportunities exist for practices to merge. It is too hard running small one person practices when merging creates economies, capacity and capability. This is a good time to look at recruiting new young advisers. We desperately need them and nobody's doing it.

WHAT WILL THE CHALLENGES BE? People get so busy that a challenge is getting them to prioritise [getting insurance]. They know they need to do it but they need to make time to actually make the decisions and decide on a timeframe.

WILL 2014 BE BETTER THAN 2013?

Yes. There are good vibes out there and we have a couple of new prospecting strategies to utilise.

WHAT WILL THE CHALLENGES BE? The biggest challenge for financial advisers is a mental one. They were affected not just by the GFC but the last decade, with two periods of economic turmoil. That’s reflected in the general lack of confidence among advisers in their ability to deliver value to consumers.

WILL 2014 BE BETTER THAN 2013?

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RICHARD HOLDEN

BIZ INSURE

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The short answer is yes. Last year was a challenging one for many advisers, who were facing lingering uncertainty. This year people are going to be more prepared to make decisions.

WHAT WILL THE CHALLENGES BE? Keeping ahead of compliance and best practice requirements will continue to be a distraction. Having had a couple of good years, it is very important to manage client expectations going forward.

WILL 2014 BE BETTER THAN 2013?

There is still a lot of uncertainty and with interest rate rises and a general election I think locally it will be tougher. Overseas indicators look good. It will be a good year for consolidation.

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UP FRONT

a new appointment email details { PEOPLE } Ifandyoua have picture to editor@goodreturns.co.nz

FROM IFA TO PLUMBERS Former IFA director of member learning and development Joe Grayland has moved to Master Plumbers, Gasfitters and Drainlayers as the professional services director.

His role there includes training and membership quality management.

every level of the industry, including the board of the Financial Services Council. I am also very pleased that our organisation has a board which represents such a diverse sector with many skilled and capable women who are board-ready and are contributing directly to their own businesses’ performance and that of the financial services industry as a whole.”

Michael Robson

CLIENT MANAGER APPOINTED Tyndall NZ has appointed Michael Robson as client relationship manager.

He will be responsible for working with the firm’s clients, alongside its head of distribution, James Wesley.

Robson has spent six years with ASB Securities as a wholesale broker.

Wesley said Tyndall was focusing on the growth of KiwiSaver and the opportunities that presented.

“Investors are increasingly looking for investment managers whose primary focus is investment management. In particular investment managers that provide a breadth of domestic and international assets in both traditional asset classes and alternatives are poised to benefit from growth in the NZ investment industry.”

Wesley said, “Having worked at ASB and Tower, Michael’s enthusiasm and relationship management ability will help to strengthen Tyndall’s existing institutional client relationships and broaden the distribution reach to the New Zealand intermediated retail market.”

HEALTH BOSS MOVES INTO TRAVEL Former Accuro chief executive Bruce Morrison is now head of travel insurer Cover More.

It was previously known as Travel Sure and covers travellers in New Zealand, Australia and Britain.

Its policies are underwritten by Great Lakes UK.

Catherine Drayton Naomi Ballantyne

MORE WOMEN ON FSC BOARD The Financial Services Council has achieved a perfect gender balance with its board.

At the recent AGM, Naomi Ballantyne, of Partners Life, and Susan Basile, of BNZ Insurances, were appointed to the 10-member board.

They join Kate Armstrong, head of insurance and investments at Westpac and Therese Singleton, executive legal counsel at AMP Services (NZ) Ltd along with David Carter, FSC Deputy Chair and managing director Asteron Life, John Body, managing director wealth ANZ, Milton Jennings, chief executive Fidelity Life, Martin Lewington, head of Mercer New Zealand and Symon Brewis-Weston, of Sovereign Ltd. Independent chair Jenny Shipley said it was worth celebrating achieving gender balance. “Women are prominent in business in New Zealand and also make up a large number of those holding KiwiSaver accounts. They also have a very significant influence on most household decisions around discretionary income so it is critical that their interests are represented at

NEW SOUTHERN CROSS BOARD MEMBER A new director has been appointed to the Southern Cross Medical Care Society Board.

Catherine Drayton replaces Phillip Meyer, who is retiring from the board after 11 years.

Drayton is a director of Christchurch International Airport Ltd, Ngai Tahu Holdings Corporation and BECA Group limited, as well as chairing the audit and risk committee of the Canterbury Earthquake Recovery Authority. She is also on the University of Canterbury Council and a director of the NZ Hockey Federation. Previously she has served on the boards of Meridian Energy Limited and Callaghan Innovation Research Limited (formerly Industrial Research Limited).

Director Elizabeth Hickey was re-elected to the Southern Cross Board and director Keith Taylor appointed as a trustee.

Group CEO Dr Ian McPherson announced he is retiring in June. He will then continue at Southern Cross part-time until June 2015, working on Southern Cross, health sector and strategic matters, and to enable a well-planned and smooth transition.

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UP FRONT

{ NEWS FROM AUSTRALIA } financial planning space was at its highest levels in a long time.

Advice sought

ETPs take off The huge growth of exchange traded products (ETPs) in Australia is due to better adviser and investor education, an exchange traded funds expert says.

Since 2011 the ETP sector has doubled and during 2013 it grew

by A$4 billion, State Street Global Advisers head of SPDR ETFs Amanda Skelly told media. Canada, by contrast, has $60 billion in ETP investments and Europe $600 billion.

State Street has been trying to help advisers and investors understand what ETFs are and how they can use them in a portfolio, and Skelly believes it has paid off.

“Education is becoming less of a barrier to investment. I’m really pleased to see the growth really shoot up in 2013. The momentum is incredible.”

Nick Murphy

Wealth management booming Hiring activity in wealth management is at its highest levels in two years, an Australian recruitment expert has said.

Hays Recruitment regional director Nick Murphy said increased hiring started after the election. "From beginning of December to the end of January it is usually quiet, but it just seems to get busier and busier for wealth management. That's because in the last few years companies have been so cautious and reluctant to make permanent staff decisions."

He said hiring activity in the

Investors wanting higher returns are seeking advice on how to switch from fixed income to cash benchmark products without sacrificing yields, an Australian fund manager says.

But there are few products offering both in Australia, says Vimal Gor, BT Investment Management's head of income strategies.

"Every conversation I have with clients and consultants at the moment is about what they should do with their fixed income benchmark products because they're worried about the lower level of bond yields," he said.

"I think that over the short run, with the Fed dialling back and tapering expectations, that bonds are very well supported here and have the chance to rally, but over the long term they don't offer any compelling value."

The fund received a 'recommended' rating from Zenith and Gor said over the next few months he expects interest from clients to grow substantially.

"Generally we would expect over the coming months and quarters that we would get a lot of demand in this product," he said.

"We're seeing a significant increase in inquiry in the institutional space as people get worried about their bond yields, so obviously if you're looking to move out of any composite funds, this would be a good alternative."

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PROFILE

{ PROFILE }

AN EYE FOR OPPORTUNITY PAA’s president Bruce Cortesi says he’s always looked for ways that things could be done better.

By: Susan Edmunds

T

here aren’t many financial advisers who can claim to have been locomotive engineers, personal trainers and to have owned recording studios.

But Professional Advisers Association president Bruce Cortesi says his varied work history primed him perfectly for his present role, helping people achieve their goals with solid investment, risk and mortgage advice.

He started his working life stationed on trains – and was responsible for bringing one-man operation into New Zealand before moving on to become a personal trainer at Don Oliver, where he was the manager of the New Lynn branch of the gym for a number of years.

There, he worked with a number of prominent sportspeople, including All Blacks. What he enjoyed most was helping them identify an aspiration and then work to achieve it.

From there, he moved into a sales role – all the while juggling owning a recording studio.

It’s been a hectic and fast-paced career but the wide range of roles has given him useful life skills that transfer well to his advice business, he says. “None of the positions I’ve had have been related but I’ve enjoyed them very much.”

Right through, he says he’s always been prepared to stand up for what’s right – something which should stand him in good stead at the helm of the organisation.

University students have no knowledge of the industry and what it’s about. That’s a problem that we’re lacking new recruits coming through.

“I caused a national rail strike one day.”

Cortesi entered the financial services industry in 1996, when he and wife Anne sold the recording studio and moved to Papamoa, looking for a better lifestyle for their family. He started with NZI as a sales officer at a time of significant upheaval, with companies changing hands and new procedures being implemented.

Although he’d been an insurance client before, he was surprised to find himself on the other side of the table. “I had exposure to the industry very early on but I never thought I would end up in it.”

But in the insurance industry, too,

he quickly started to look at ways that things could be done better.

He was aware that across the ditch, Australian advisers were moving towards regulation. He wanted to be ahead of the game in New Zealand. “I was following a six-step advice process in 1997, doing a full fact find and report and was told I was silly by my peers but I’m a person who likes to challenge things if I feel they’re not right and I did challenge the way people did business.”

In 2000, he brached out on his own and set up PlanWise Financial Services Ltd. Eight years later, it underwent its first major expansion. It now has offices in Tauranga and Waikato, with a team of AFAs and RFAs, a claims manager, underwriter and marketing specialist, as well as three PAs and an administrator.

Claims are processed on site and some insurer decisions have been overturned in customers’ favour. Cortesi primarily works in risk and mortgage finance but other team members look after investments and KiwiSaver. This specialisation helps, he says. “I think it’s a big, tall order to expect an adviser to keep up to speed with everything that’s required.”

The lack of financial literacy that he encounters in his day-to-day life is a big concern for Cortesi.

Planwise runs a programme for young people outlining the basics, which has been well received. Bookings were flowing

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PROFILE

in, even for January. “We get requests regularly from schools and requests from Government departments to run courses.”

It was prompted by a friend’s son who was diagnosed with leukaemia and died before his 17th birthday. The experience of the boy's parents made Cortesi realise the insurance industry was entirely overlooking the youngest sectors of the population.

“The industry has largely ignored the impact on parents if one of their children is diagnosed with something such as cancer.

Nine times out of 10, one of the parents has to give up work. It’s a huge loss of income for the family. People have not considered the financial impact.”

Few young people even realised there were insurance policies available that would help if they had a car accident or had a health problem that meant they needed money to help them carry on with all the things they hoped to do, he said.

He came up with the idea of a youth protection plan, where a family could take out life and trauma policies for their children, and would also be provided with financial literacy training to set their youngsters on the right path. At the courses, Cortesi finds that parents ask as many questions as their children. “There’s a massive gap.”

Before he became involved, Cortesi says he didn’t know much about the financial advice industry. And he says that’s still a problem that it faces today.

“University students have no knowledge of the industry and what it’s about.

That’s a problem that we’re lacking new recruits coming through. That’s a concern for me.”

He has been in the PAA’s top role since May and says it has been a whirlwind of change.

He had been involved with the PAA for more than a decade and was the regional chairman for Waikato Bay of Plenty when he agreed to take on the presidency.

“I felt I could deliver something more.”

The additional workload can be hard to juggle but Cortesi says the PAA work is satisfying. “There will be challenges for the PAA but the association is well placed to bring in a greater value proposition to members.”

Making it clear to the public that financial advice is valuable will be top of the to-do list. ”We need to spend more time promoting the value that advisers give and bring that into the public space. It’s very absent at the moment.”

People weren’t hearing about claims being settled and goals achieved for clients, he said, but about the horror stories and Ross-style disasters.

“I feel we have an industry that is a bit disjointed. We have some players

pulling in one direction and some in another.

It’s a tug of war with no growth and it’s difficult to move forward.”

Strong professional bodies would help, he said. “For the PAA one of the biggest tasks for myself and the board is to lift awareness and raise the value proposition for members.”

The PAA will look to release a number of initiatives throughout this year and has recently advertised for a BDM, who will work with members to develop tools to help with compliance or other issues t hey struggle with.

“The feedback from members is that they want to get efficiency back into their business. Compliance has taken that away,” Cortesi said.

Alliances would help develop the organisation’s proposition for members, he said.

Although there’s a daunting to-do list ahead of him, Cortesi is approaching 2014 with an upbeat attitude, expecting it to be a year of successes for the financial advice force. “It comes to a choice, you can choose to be positive about the year, indifferent, or negative. At the end of the day I’m a great believer that the choices you make today determine the shape of your tomorrow.”

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COVER STORY

{ FINANCIAL FORECASTS }

Smart Start to This could be the year that financial advisers have been waiting for.

By: Susan Edmunds

P

redictions for 2014 are for few regulatory upheavals, solid growth in the New Zealand economy, and increasing demand for financial advice.

We asked some of New Zealand’s industry players what they thought the key trends for this year would be.

Music to many advisers’ ears will be the news that any rule changes are not expected to be too onerous, KiwiSaver balances are reaching the tipping point where people start paying attention and seeking advice, and most advisers should be able to provide good news to their investment clients.

New Zealand’s GDP growth is expected to increase to 3.5% by the middle of this year, on the back of the Christchurch rebuild and growing construction activity, which is already being seen in many places around the country.

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That will prompt movements in the official cash rate and advisers may be called upon to advise on interest rate strategies as rates lift off their historic lows. Some economists are already predicting that the OCR could reach 3.75% by the end of the year.

There are still opportunities to be found in global and local equities, commentators say, despite fears that markets are fully-priced.

But that does not mean investors should jump in without thinking twice - advisers will need to keep them appraised of potential potholes in the road.

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COVER STORY

Economic overview

Global markets five years on Bevan Graham, AMP chief economist

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his year marks the five-year anniversaries of the Global Financial Crisis (GFC) in March, the end of the US recession (June) and the end of the global Great Recession (September). It has been tough going ever since, but as we start the New Year, the outlook is a tad brighter. Last year had its fair share of angst and no doubt there will be more things to worry about this year. But right now it looks like 2014 will be a year in which global growth will improve while inflation looks set to remain benign, which means monetary conditions can remain accommodative.

indicators such as relative unit labour costs in the Euro area, budget deficits in the key developed economies and current account balances in China and the US suggests some progress has been made. The question is the extent to which these improvements are temporary or permanent.

A quick trip around the world‌ We expect annual average 2.8% GDP growth in the US this year, up from 2013 and slightly above potential of around 2.5%. Importantly, consumer confidence is recovering and business confidence is improving with strengthening hiring and investment intentions. Jobs growth is becoming broad-based, especially given the rebound in construction and the local and state government sectors. Stronger GDP growth this year along with low productivity will see further declines in the unemployment rate.

Key macro themes for 2014 Austerity will remain a key theme impacting negatively on growth in many major developed economies for some time. But the key difference between this year and last year is there will be less of it.

A degree of cyclical synchronicity will also help the global growth outlook. Higher growth in the US and the Euro area will provide an important impetus to global trade which will support growth in emerging markets after a challenging 2013 in some of those economies.

A common theme for us since the GFC has been the need for significant structural economic reform in just about every economy.

A cursory glance at a number of important

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After nine months of a sharper-than-expected slowdown from late 2012, GDP growth in activity in China appeared to stabilise in the second half of 2013. The big China question has been the extent to which the recent slowdown in growth postGFC has been cyclical or structural. In our view it has been mostly structural thanks to the fact the labour market has continued to perform well during the slowdown. That means the new leadership has been able to continue to focus on structural reforms rather than resort to near term stimulus measures.

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COVER STORY

{ FINANCIAL FORECASTS } We expect global growth to rise to 3.6% in 2014.

-Bevan Graham-

We are expecting annual average 7.5% China GDP growth in 2014 as higher export growth on the back of stronger global growth offsets the impact of tighter credit conditions on investment activity.

With inflation trending up we see a continued move towards a neutral monetary policy stance this year while the leadership appears committed to maintaining its budget deficit at 2% of GDP. That means the likelihood of new stimulus remains low unless growth takes a sharp turn for the worse.

The Euro area limped out of recession in mid-2013, although growth was probably best described as anaemic. We expect GDP growth of 0.8% in 2014 with high unemployment, continued deleveraging at the household and corporate level and the strength in the euro the key headwinds.

Inflation in the Euro zone moved lower in the latter part of 2013, prompting the European Central Bank (ECB) to cut its refinancing rate in November and raising concerns about the prospects of deflation.

With an outlook of low growth presenting further downside risks to inflation, the ECB is likely to do more in 2014.

New Zealand is finally heading for a period of robust economic growth, with 2014 shaping up as being the "sweet spot" in the cycle where the economy is firing on all cylinders. Business and consumer confidence are high, the terms of trade are at record levels, dairy volumes are bouncing back from the drought, and net migration is strong. In addition, there is the increasing impetus from construction as

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the Canterbury rebuild cranks up another gear and Auckland residential construction remains firm. Higher global growth next year will also give the export sector a boost.

Only continued fiscal consolidation and the perennially high New Zealand dollar will take some of the gloss off the growth story.

The challenge in 2014 will be to manage constraints and curb excesses to ensure growth proves to be sustainable.

Global growth We expect global growth to rise to 3.6% in 2014. Long-term average global growth is 3.5%, so we see growth moving from just below trend last year to just on trend this year.

The increase in growth from last year is the combination of developed market growth rising from 1.1% to 2.1% and emerging markets growth rising from 4.9% to 5.3%. That indicates a shift in growth momentum towards the developed economies, while the quantum remains firmly in favour of the emerging economies who will still account for 65% of global growth in 2014.

Further out, we see global growth moving higher to around 4.0%. Without a concerted effort on a wide range of structural policy fronts across a broad range of economies, it’s difficult to get more optimistic about the medium term outlook.

So what could go wrong?

Every year since the GFC our predictions for the year ahead have finished with a warning that the risks were biased to the downside. To prove the point, we started 2013 expecting 3.4% global growth which now looks like coming in at 3.0%.

This time it’s different. The outlook for 2014 comes with forecast risk that is

evenly balanced, with as much chance of growth exceeding expectations as of it disappointing. In some cases, such as New Zealand, the risks to growth are biased mainly to the upside.

The chance of higher growth brings with it the risk of an earlier absorption of spare capacity, and concerns about inflation and the removal of monetary accommodation. It has become highly unfashionable to worry about inflation. The conventional wisdom is there remains significant spare capacity in developed economies that will take a long time to absorb. That is true only to the extent that the spare capacity in each country is relevant to its post-GFC growthresourcing needs. Time, and higher growth, will tell.

We also can’t completely dismiss the other ‘flation just yet – the risk of deflation in the Euro area. However, the reality is that at this point in time, inflation remains low in most developed economies.

There are other Euro area risks besides confronting the troika of low growth, low inflation and high unemployment. This year we need to see further progress on banking union, including the more vexed issues of fiscal union and debt mutualisation.

We are only just starting to appreciate the social cost in some countries of frontloaded austerity and high unemployment. In many countries the risk of social unrest and backlash against the political establishment remains high.

Finally, there are the inevitable geopolitical risks. As with last year these appear likely to be centred in the Middle East and Asia. There are also a number of elections we will be watching with interest including Turkey, Indonesia, South Africa, Brazil, India and of course here at home.

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COVER STORY

KiwiSaver

Big year for savers and advisers Henry Tongue, Generate

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014 promises to be a watershed year for KiwiSaver, with three major dynamics making seismic shifts in the market.

These are: The influence of Quarterly Disclosure Statements (QDS) showing that not all funds are equal, average member KiwiSaver balances becoming the second largest asset behind the family home for a lot of members, and the requirement for default providers to provide investor education to members.

There is also the election to consider and the potential for Labour to campaign on making KiwiSaver compulsory. All this means that 2014 will be the start of a tsunami of financial advice on KiwiSaver.

The result could see big changes in the funds Kiwis are investing in and who they are invested with. It could also see clients getting a significant value-add from financial advisers or moving to larger institutions who provide the service.

The introduction of Quarterly Disclosure Statements should not be underestimated.

Now we have real comparable data available on websites like Sorted.org.nz which shows the notable differences between funds. Fiveyear returns for KiwiSaver Growth Funds range from 7.51% down to -4.30% and the fees for the last financial year ranged from 0.8% up to 6%. Kiwis will be able to easily make basic comparisons and providers will

become more competitive in terms of fees versus risk and performance.

Average member KiwiSaver balances are moving over $10,000 and in the larger urban areas are already considerably higher.

These balances are now becoming the second largest asset behind the family home for many members. But only 10% to 20% of Kiwis have received financial advice on their KiwiSaver, one third don’t know which fund they are in and 35% of all funds invested are in default and conservative funds. Kiwis are potentially missing out on hundreds of thousands of dollars in their retirement by not taking advice on KiwiSaver. In Australia as soon as the value of super accounts got to this mark the investing public started making active choices.

The new KiwiSaver default term starts from July. One of the proposed changes has been that default providers will have to provide investor education.

The result could see default provider advisers calling all their members and offering advice on where to put their KiwiSaver, and potentially offering to review their mortgage and insurances while they are at it. The end result should be better for all KiwiSavers, in that they will get advice and should end up in a more appropriate KiwiSaver fund. It should also see good providers and advisers succeed.

Given the massive value-add for clients and growing member balances this is a space that advisers need to be in - if they are not already.

Unlock the value of your practice

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{ FINANCIAL FORECASTS } Compliance

Key themes for 2014 Gavin Austin, ABC Compliance

F

inancial Markets Conduct Act.

The first decision advisers need to consider is whether they provide a class or a personalised Discretionary Investment Management Service (DIMS).

It’s not an easy question to address at present as there is still debate on how to interpret the Act. If you go with the guidance from FMA then 99% of advisers currently licensed to provide DIMS will be deemed as offering a class DIMS. Advisers will be able to apply for a DIMS Licence from April 1, and the Act, for this part, then becomes effective from December 1.

Advisers licensed under the FA Act 2008 to offer DIMS can carry on until December 1, by which time they either need to be licensed and have all the appropriate systems in place or have made arrangements for current DIMS clients’ transition to another service or to another licenced adviser.

By the time this article is in print more details may well be available. It may be

possible for an individual AFA to continue to offer DIMS through another licenced entity.

This would encourage advisers to band together for a common purpose and bring other efficiencies to their businesses.

Advisers should not rush to any decision to give up DIMS under the FA Act but should carefully consider all options. In the meantime current requirements carry on so make sure your ABS is up to date and make sure you’re up to speed with the guidance on record keeping. Information can be found on the FMA website.

A new Code of Professional Conduct The emphasis here will be continuing professional development (CPD) being linked to the adviser’s professional development plan (PDP). In simple terms if it’s not in your PDP, then no CPD. Many advisers’ PDP plans don’t work this way, and a large percentage that I reviewed had the CPD but either no PDP, or one that had very little relevance or meaning. The PDP had been constructed from a template with a tick the box mentality.

AFA Regulatory Reporting Guide (RRG)(AFA Standard Condition 2).

Yet another acronym. The first report is due to be lodged with FMA by May 12. Final regulations will not be known until February 20. Based on the consultation paper distributed in August 2013 the adviser will have to provide a lot of data.

AML/CFT annual reports Another task for advisers in 2014. You don’t have to submit this one but it must be done and available for review if requested. The key will be to find an easy IT way to utilise the RRG data to complete this as there are more than 100 sets or sub sets of data.

The outlook for 2014 looks busy but not onerous, if approached the right way.

Your compliance adviser should be able to minimise the impact on your valuable time and let you focus on client-facing time, which is where you add the most value as a professional.

Asset allocation

Equities exceed expectations again – can it last?

Keith Poore, AMP head of investment strategy

E

quity markets exceeded most investors’ expectations in 2013, with global equities returning 29% and New Zealand equities returning 16.5%. In contrast, economic growth generally underperformed expectations in 2013. This pattern could be reversed in 2014 if investors expect anywhere near the same returns as last year.

Rising global growth, subdued inflation and accommodative monetary conditions

promise another year of healthy equity returns versus bonds. The main risk to this view is if strong US growth leads to a sharper than expected decline in the unemployment rate, and inflation subsequently ticks up as "spare capacity" is used up, which sees the market price in an earlier than expected exit from zero rates.

In this scenario, both bond and equity prices decline. Ultimately, improving global growth will be positive for earnings and

hence share prices, but given the strong gains in equity markets over the last few years, the valuation buffer is all but gone. Therefore an equity valuation "reset" is a distinct possibility before prices trend higher again.

Regardless of whether this scenario plays out or not, equity risk premiums have moved lower over the year as shares have moved higher along with bond yields. As a result, the valuation rationale for an overweight to growth assets is not as strong as it was a year ago.

Keeping New Zealand financial advisers strong 0800 88 22 88

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{ FINANCIAL FORECASTS } Still some value in global shares We think US equities moved into "fully valued" territory over 2013, at least relative to internal fundamentals such as earnings and book value. There is still value in US equities relative to bond yields, as indicated by the above average equity risk premium, though this has shrunk considerably over the last year following the 30% gain in share prices.

Equity valuations are not flashing red yet.

Neither are other risk indicators such as bank lending conditions or high yield credit spreads. One indicator that is more cause for caution is US broker margin debt. While not at the peak (relative to trend) of 1987, 2000 and 2007, margin debt has risen rapidly over the last few years.

Outside of the US we see more value in other markets, such as peripheral Europe, the UK and possibly Japan if earnings continue to improve.

New Zealand shares fully valued Domestic equities returned a healthy 16.5% for the year (excluding imputation credits) despite higher bond yields, significant share issuance and rising regulatory risk.

New Zealand shares look fully valued on our models, trading with half a standard deviation of "fair". Earnings growth has been solid over the last 12 months and, with signs growth is spreading to the wider economy, we expect that to continue this year.

Nevertheless, we expect New Zealand shares to underperform global markets again this year, though by not as much as 2013. Slightly higher valuations than offshore, earlier interest rate hikes here than offshore, a strong dollar and an uncertain election outcome will act as headwinds to a strong domestic economy, improving trading partner growth and positive corporate earnings.

Expect further (but shallower) increases in bond yields Rising yields resulted in cash outperforming both global and domestic bonds last year for the first time since 2006, with New Zealand government bonds producing their first negative return since 1994. This was reinforced by retail investor rotation out of bonds and into cash and equities during the year.

Higher nominal bond yields in the US and core Europe, combined with relatively stable inflation expectations, led to a move higher in global real bond yields over 2013. While this process is not over, a decent part of the adjustment has now occurred. With global cash rates on hold for at least a year, the rise in bond yields should be shallower from here.

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In contrast to offshore, New Zealand real bond yields remained positive throughout the crisis and recovery. This reflects the higher New Zealand cash rate relative to offshore. On a fully hedged basis, global and domestic bonds offer a comparable nominal yield of around 4.3%.

Global credit spreads declined over the year, moving to post Global Financial Crisis (GFC) lows in the process. Credit spreads, particularly high yield spreads, can be a useful monitor of financial excesses.

At 3.8%, US high yield spreads are below the 20 year median of 4.7%. US high yield spreads got as low as 2.4% in 1997 (pre the Asian crisis and Long-Term Capital Management bailout) and 2007 (pre GFC),

so they are not in the danger zone yet.

Spreads can probably move lower as the global economy gathers momentum, but the large gains have already been made in credit.

Summary It is clear equity markets exceeded most investors’ expectations in 2013. While there is still some value in global shares as rising global growth, low inflation and easy monetary policy is positive for returns, investors should not expect the same level of gains in 2014. New Zealand shares should also put in a positive return in 2014 but they are expected to modestly underperform global markets. The trajectory for bond

It is clear equity markets exceeded most investors’ expectations in 2013.

-Keith Poore-

yields will likely continue to be upwards over 2014, albeit at a shallower trend, given the large rise last year. This will constrain bond returns in the near term, but improve return prospects over the medium term.

Fed needs to change its course.

Fixed interest

➋ NZ macroeconomic momentum: For

Your 2014 checklist Christian Hawkesby, Harbour Asset Management

I

us, the key question is not if the RBNZ increases the OCR in 2014, but how far the OCR will eventually rise. The market is pricing 125 basis points of OCR hikes. This will require the NZ economy to deliver on its momentum and promise. Watch for news on the housing market, credit growth, export prices and growing conditions.

t was an eventful year for fixed

➌ NZ dollar: An overvalued NZ dollar has

interest investors with yields rising in 2013. In our opinion, there are the 10 key things that financial advisers should be watching in 2014.

been a continual headache for the RBNZ, but another key theme has been the lack of volatility in foreign exchange markets more generally. Watch for a potential re-emergence of exchange rate volatility, which could either accelerate or hamper the RBNZ’s plans.

➊ US unemployment and inflation: Global bond yields rose in 2013 as the US Federal Reserve hinted at scaling back quantitative easing (QE). Watch for signs that the US unemployment rate and US inflation rate are gradually coming back to their targets of 6.5% and 2% respectively, or whether the

➍ Sensitivity to interest rate rises: Ever since the OCR was cut to record lows after the GFC, mortgage holders have migrated to 019

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{ FINANCIAL FORECASTS } floating interest rates. This makes household cashflows much more sensitive to the OCR. Watch for signs as to whether the household sector can withstand incremental increases in the OCR throughout 2014.

any loosening in the fiscal reins, which could send interest rates and the exchange rate higher than otherwise.

for a weakening French economy, which could be a catalyst for renewed European challenges.

➐ Corporate credit spreads: Credit

Solid Energy and its bondholders in 2013 provided a reminder that corporate bond investors also need to continually watch for company-specific risks.

was below the RBNZ’s target range for much of 2013, held down by an elevated exchange rate and subdued global inflation.

Watch for evidence of re-emerging NZ inflation pressures and wage demands.

outperformed government securities in 2013, supported by an improving economic outlook. As corporate bond issuance picks up in 2014, watch out for any new deals where credit margins have narrowed so much that they provide investors with insufficient compensation for the risks.

➏ NZ general election: Watch for any

➑ Tail risks: The European sovereign crisis

changes in the RBNZ’s mandate that could muddy its policy focus, dent its credibility or erode its independence. Also watch for

and US debt ceiling debates have dominated headlines since 2011, given their ability to trigger widespread flight to safety. Watch out

➎ NZ inflation expectations: NZ inflation

➒ Company-specific risks: The woes of

➓ Regulation: As the FMA regime continues to bed down, financial advisers should expect further scrutiny in 2014.

Prepare to show that clients are adequately diversified, investment choices are backed by sufficient research, and that the things to watch in 2014 are being watched.

You add the most value as a professional.

International equities

Investing by geography and sector John Berry, Pathfinder Asset Management

I

ternational equities were up

more than 20% in 2013. But the joy was not evenly spread – broadly, developed markets did well while emerging markets struggled. Will this continue into 2014?

Markets are widely considered fully priced

but we remain positive. Global GDP growth could approach 4% this year – regions with growth should drive stock prices higher.

Below are thoughts for spreading investments on a geographic basis across major developed and emerging markets:

Country / Region

Weight

Thoughts

US

Overweight

US GDP growth could positively surprise - approaching 3%. With a forward P/E of 14.8 times earnings the US is not expensive.

Europe

market weight

Europe slowly improves - no talk now of a Eurozone breakup.

We favour Germany with its huge productivity advantage from the Euro. The world’s third-largest exporter benefits from global growth. Germany’s forward P/E is a relatively low 12.5 times earnings.

Japan

Overweight

Ignoring Japan’s long-term issues, we remain positive in the short run. Strong corporate earnings growth and aggressive monetary policy should send the Nikkei higher (but the Yen lower – consider hedging currency exposure).

China

market weight

China has many challenges – economic, structural and social. But it also has immense opportunity. China remains our preferred emerging markets exposure.

Other BRICs

Underweight

Despite positive long-run outlooks, the near term could be a struggle for India, Brazil and Indonesia. With large current account deficits each could face difficult times during “tapering”.

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Here are some thoughts for investing on a sector and industry basis:

Sector or industry

Weight

Thoughts

Tech stocks

Overweight

2014 should favour growth stocks. Capex spending (previously deferred since the GFC) is an immense benefit to tech, computing and information technology.

Homebuilders

Overweight

US housing and building recover.

Distressed sales are well down, prices and activity are up.

Healthcare

Overweight

Healthcare in the US continues to be a long-term growth story based on increasing longevity and demographics.

Financials

Overweight

Beaten up financial stocks have turned the corner – helped by repaired balance sheets and US GDP growth. Stock prices remain half their pre-GFC peak.

Utilities

Underweight

Utilities (seen as a fixed-income alternative) will suffer from higher interest rates. Some (such as European conventional energy) have serious structural issues.

Consumer staples

Underweight

A defensive sector on a high forward P/E - hard to see growth.

Mining stocks

Underweight

Miners were slammed in 2013. Gold could struggle from interest rate expectations. Other commodity producers suffer from several years of sluggish commodity prices.

Currency impacts should be considered for investment offshore. NZ’s domestic growth and export demand should lead to a series of interest rate hikes this year – supporting the NZ dollar. In the absence of any significant economic shock, don’t expect a weak dollar any time soon.

We are positive on the 2014 outlook for global equities, especially in developed markets, but be mindful of currency impacts.

NZ Shares

Beware of potholes

T

Anthony Halls, Portfolio Manager, Mint Asset Management Limited.

he New Zealand equity market

has hit the ground running in 2014, but there are potholes ahead for inattentive investors.

Rampant enthusiasm for tech stocks has the market quickly out of the blocks but shareholders will want to see the earnings to justify what have become lofty valuations.

The more substantial sectors in dairy, retirement villages, healthcare and construction all appear intact and form a robust core to the market. Positive business confidence provides support to the broader economy and helps to underpin earnings for these industries.

Transport companies should also benefit from vigorous economic activity but care needs to be exercised with the special nature of airlines and airports.

As an industry, telecommunications is booming yet the listed sector is struggling to cope with tough regulatory settings and fierce competition.

The electricity sector remains in the doldrums as the market digests last year’s large-scale IPOs and worries about the potential for policy change, depending on the election results later this year.

Other consumer-related sectors have simply moved with the tide and are still grappling with the systemic impact of the internet. Incumbents are concerned about the intrusion of global powerhouses such as Google, Apple, Amazon and Netflix which could alter the landscape for content and its delivery.

Historically low interest rates have helped kick the housing sector along but the party will come to an end this year as the RBNZ starts lifting the OCR. While households have felt secure enough to spend up a little, corporate balance sheets have remained frugal with generally low levels of gearing.

The first hurdle for earnings is the elevated level of the NZ dollar, especially against the Australian dollar which is fundamentally

headed in the opposite direction. Parity with the Aussie is not anticipated but exporters to our largest trading partner will be hoping for some respite eventually.

Alternatively, as the US and European economies emerge from their torpor, any slack from across the Tasman may be taken up in this direction. Asian trade, including tourism, remains a long term positive factor for New Zealand companies that can execute a good strategy.

The NZSE50 is not cheap at 16 times forecast earnings for the 2014 financial year but is supported by a generous gross dividend yield of 6.8%. If careful investors have progressively taken some money off the table during 2013, that cash will be lured back into the market as IPOs, led by Genesis, will create a reinvestment opportunity.

The window of opportunity for mergers and acquisitions, IPOs and secondary market activity is clearly weighted towards the first half of the year. Looming in the back half of the year is the general election which will put most corporate activity temporarily on the backburner. Political agendas invariably create uncertainty in boardrooms so until clarity is achieved in this regard, expect a hiatus in business strategy.

New Zealand equities are brimming with justifiable confidence but as always, a judicious approach to stock selection will be required to deliver outperformance and avoid potential landmines.

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{ FINANCIAL FORECASTS } Listed Property

Listed property deserves limelight Craig Tyson, Equities Manager, ANZ Investments

N

ew Zealanders have

an enduring love of residential property, and this love affair is constantly in the media spotlight.

The local listed property sector, on the other hand, does not get the same attention – but deserves to.

NZX-listed property investment companies offer the opportunity to invest in a diversified selection of some of the best commercial property in the country.

These properties deliver a consistent revenue stream from commercial rents, over a multi-year lease period. The listed market also offers liquidity.

2013 review 2013 performance peaked in May as higher bond yields took the wind out of the sails of the sector. Expectations that the US Federal Reserve planned to start reducing bond purchases moved global bond yields higher.

The performance of property has historically lagged economic growth as vacancy is taken up before rents are re-set at higher levels on long-term leases. Twelvemonth performance to December 31, 2013, was up a modest 4.5%, compared to returns of 21.4% in 2012. However, the signs of solid rental growth in 2014 are grounds for optimism.

What changed?

The internalisation of Kiwi Income Property Trust (KIP) was the big story for 2013. KIP is

the largest of the five listed property companies to internalise over the past five years.

Half the sector is now managed through an internalised structure. This offers investors better choices and creates a greater alignment of interests and increased transparency.

Expectations for new stock market floats in 2013 didn’t materialise. However, it’s more than likely the number and size of the companies in the sector will grow, due to improving investor demand as KiwiSaver continues to increase fund flows into the NZX.

2014 Outlook After six years of anaemic growth, NZ’s economy could grow even faster than the consensus forecast of 3.1% in 2014, according to ANZ’s composite business and consumer confidence indicator.

This strengthening economy will result in higher demand for space in 2014, having a positive impact on rental growth. Vacancy across the sector is already very low and the stronger economy will shift power back towards landlords for the first time since the start of the GFC. We expect solid growth in Auckland prime office net effective rents, but the tough leasing market in the retail sector will continue. The growing trend towards online retailing is likely to keep a lid on retail rental growth, especially in secondary locations. The industrial sector, particularly

Life insurance

Focus on growth Brendon Neal, head of adviser distribution, OnePath Life 022

in Auckland, is forecast to have some of the strongest rental growth due to improving business conditions.

One of the headwinds in 2014 is the prospect of interest rate rises. Despite rising rates we expect a return to growth in distributions this year. Broking analysts’ consensus forecasts for the year ahead show a gross dividend yield of 8.9% (for 33% taxpayers) and dividend growth of 1.9%. Building valuations are at reasonable levels ,with the sector trading at a small (3%) discount to average net tangible asset value (NTA) and in line with the long-run spread over bond yields.

Despite the headwinds in the retail sector and higher bond yields, we believe the sector can deliver an improved return on last year’s performance.

The 2014 outlook is one of solid, albeit not stellar, returns. The sector is in good financial shape from a balance sheet perspective and well-positioned to deliver dividend growth from the improving rental growth outlook.

The threat of potential policy intervention in the electricity market was one of the nasty surprises for many investors in 2013.

With no prospect of regulatory intervention in the listed property sector, its attractive dividend yield and defensive attributes could make it a good place to be for many yieldfocused investors in an election year.

NZX Listed Property Facts: The NZ listed property sector is made up of 10 commercial property investment companies of varying size, listed on the New Zealand Stock Exchange (NZX).

With an asset base of $9.3bn and a free float market capitalisation of $5.1bn (as at 31/12/13) it represents 8.8% of the NZX50 and is larger than the Australian sector where listed property is 6.2% of the S&P/ ASX200.

NZX-Listed Property has delivered a compound annual return of 8.8% (gross with imputation credits) per year for the 10- year period to 31/12/13.

Over that 10- year period the sector outperformed the broader market (NZX50 Index) by 0.65% per year despite providing a less volatile return profile than the market.

T

he economic signs for 2014

are all pointing to positive growth and there’s every reason for insurance advisers to share in the current upswing in sentiment.

For some time the focus has been on compliance and training while the economy was in recovery. In the new growth environment, the key to success will be

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Sustainability, trust and success go hand in hand.

-Brendon Neal-

building sustainable business models and partnerships that can deliver real long-term value to clients, advisers and providers.

This needs to be achieved by growing the whole insurance market rather than shuffling the existing one around. There is now a real opportunity to face the challenge of New Zealanders’ underinsurance and tackle this problem as an industry.

Sustainable growth is fundamental to successful business partnerships and there are three pillars that will help build longterm value: ➤ Simple and effective product design – Providers need to design insurance policies that are fit for purpose and appropriate for efficient production and distribution. The pressure to add bells and whistles, that offer little or no value for most people, is only driving up the cost of production. Higher costs result in higher premiums and are not helping make life insurance more affordable for many New Zealanders.

➤ Stronger regulation improving consumer confidence – The new prudential rules on solvency capital, corporate governance, risk management and financial strength ratings are designed to promote a sound and efficient insurance industry and foster greater public confidence in it.

Consumers deserve to know whether a provider is strong enough to be around when they need it at claim time. ➤Relationships based on trust drive value – The way we do business is based on good relationships, so it makes sense to build long-term relationships based on trust.

Independent distributors will want to work with providers that have a strong reputation in all these areas because consumers are becoming increasingly discerning. Clients will be asking if the provider you are recommending has an established record of paying out claims. The best way of demonstrating that is to know the history and the financial strength of the providers you recommend.

At OnePath Life, we were one of the first to change the structure of our commission model to focus on persistency and retention, rather than emphasising volumes. Now we’re starting to see results and those who’ve put the long-term interest of their clients first have also been the best advisers on our books in terms of retention and revenue. Sustainability, trust and success go hand in hand.

My role is to improve the way we do things for advisers so we better meet the needs of our policyholders, advisers and shareholders.

I’ve learned we need to approach advice with a balanced scorecard - giving consideration to product, service, financial strength and claims reputation and ability.

Too often there are examples of quality insurance cover replaced on poorly substantiated grounds. I’ve seen the impact of this first-hand when non-disclosure, or changes in health, have left clients worse-off than if their cover had not been replaced.

The financial implications for the client and the reputational damage for both the adviser and insurer are often irreparable.

Instead, we need to continue to focus on “growing the pie”, looking at ways to enter new markets, and helping advisers improve their value proposition by building capability in the business and farm-owner segments.

We’ll continue to focus our efforts and support on those advisers and business partners who share our values when it comes to the provision of great advice, great products and a continuous focus on service and retention.

Building sustainable business partnerships to create a lifetime of value is in the best interests of everyone in the industry, and in the year ahead there will be plenty of opportunities to prosper in a growing economy.

Health insurance

The true cost of healthcare Ian McPherson, chief executive, Southern Cross Healthcare Group

W

ith an election this

year and mounting evidence the public health system will be unable to cope with future demand, as a country we are on the cusp of being required to define what the public purse should – and can afford to - pay for.

The public system does a fantastic job of providing acute treatment, mental health services, maternity, elective procedures and aged care but the cost of maintaining this system is rising exponentially.

Since 1950, New Zealand’s real per-capita GDP has increased by 144%, while real per capita government spending on healthcare has increased by 412%.

New Zealand doesn’t have an unlimited pool of money to sustain this. Despite increasing both health funding and the number of procedures provided each year

(currently 140,000); the public elective system is still bursting at the seams.

Late in 2013, the Health Funds Association of New Zealand and the New Zealand Private Surgical Hospitals Association released findings from a TNS survey that looked at demand for elective surgery. It found that there is as much unmet demand for elective surgery as there is elective surgery performed in the public system.

Already around half of all elective surgical procedures undertaken in New Zealand are self-funded, either through health insurance or some other out-of-pocket contribution.

But the majority of New Zealanders without health insurance said in the TNS survey that they would struggle to pay for a $6000 private surgery procedure.

A knee replacement costs from $19,000, cardiac bypass surgery from $35,000 and one course of radiation therapy $15,000.

Last September, a Southern Cross commissioned survey asked New Zealanders how they expected to cover their healthcare costs in retirement – the stage of life where the most healthcare is required. The majority expected to use free government services, followed by personal savings and health insurance. But 10% said they would borrow from family, 5% expected to take out a personal loan and 3% said they would sell the family home.

The survey showed that only 19% of New Zealanders have begun saving for healthcare costs in retirement and only 23% of those over 50 have begun saving.

This year we need to see more discussion about what healthcare actually costs, what we’re prepared to pay for and who will pay.

We’ve been here before with retirement savings and we can’t afford to bury our heads in the sand when it comes to healthcare.

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{ INSURANCE }

COULD YOUR DOCTOR PASS AN FMA AUDIT?

Perhaps it’s doctors who should be emulating advisers, rather than the other way around.

{ RUSSELL HUTCHINSON }

I

t might be time for a little of the consumerist movement to hit our medical professionals, just to bring them up to the standards offered by financial advisers.

I haven’t written that incorrectly - financial advisers are often compared to other professionals. Most frequently we hear unflattering comparisons about the difference in the length of education: Doctors train for years but financial advisers can be out there selling some financial products within a few weeks.

But that isn’t the whole picture, and in terms of the interaction with clients, comparing modern medical practices with

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modern financial advice practices shows that doctors now have to catch up with financial advisers – not the other way around.

First, consider the unpleasant similarities: Company representatives are active in promoting the benefits of a particular solution. Doctors receive visits, samples, and training events and incentives, just like financial advisers do.

Sometimes the effectiveness of solutions is as controversial in medicine as it is in financial services. Just as the debates rage hotly over whether investment advisers actually add any value compared to “doing it yourself”, the treatments offered in many situations offer only marginal benefits after sometimes flawed, limited trials, and incomplete data.

Often drugs are not directly compared.

They can be compared with out-of-date treatments, non-typical populations, in ideal circumstances. Rarely are two modern drugs compared in head-to-head trials side by side. Unpromising comparisons are quietly shelved and only the most flattering statistics are used. In financial services, direct comparison likewise remains a minority activity and with some pretty significant shortcomings.

None of those practices are a credit to either financial advisers or doctors – they take place a lot, but of course many individual practitioners do a much better job, or do a better job in some specialist areas.

Even so, consulting your local GP can do a heck of a lot more good than most people can manage on their own, or consulting the resources available online.

It is generally the same with financial advisers.

Even in poor practices they can dramatically improve outcomes for those that seek their advice compared with taking no advice.

Financial advisers fare better when we consider the differences: The worst financial advisers merely cost you, lose, or steal your money; the worst medical professionals can kill you, even if that is just by omission. Three experiences of friends and acquaintances recently with long-delayed diagnoses of cancer show that not enough care is taken in all cases. From that point the only way is up. Fortunately the incidence of this kind of malpractice by either doctors or financial advisers is rare.

Doctors don’t offer disclosure documents.

I can’t think why. Many of the same issues of qualifications, scope of service, training, conflicts of interest, and so on apply as much to medical professionals as they do to financial advisers. I am resolved to ask my doctor some hard questions next time I see him.

They give almost no written statement of advice – imagine if your prescription consisted entirely of the brand name of a product, the recommended sum insured, and an illegible squiggle. You have to press hard for a rationale, or to get your doctor

They don’t monitor the product through implementation.

It is entirely up to the client to implement and report issues. to give up details of alternatives. It is a rare doctor who admits to any kind of doubt, let alone opening up a set of broadly equivalent options for consideration.

They switch drugs without comparing the features and benefits. Some of those features can be significant. I’ve seen doctors prescribe drugs which include a “higher risk of death” as a disclosed possible side effect, without ever mentioning it.

They don’t monitor the product through implementation. It is entirely up to the client to implement and report issues. In financial services, most advisers take responsibility for implementation, to a greater or lesser degree,

and carry some of the risk that goes with that process. That includes, for example, the risk that the client may complain about the loss of benefits from an old contract if they were advised to cancel it too early during the replacement process.

The differences centre on how much of the advice process is disclosed to clients.

I am sure you could find more, or find fault with the comparison. But it is worth remembering that some of the standards being applied to financial advice are demanding: They generally require more attention to communicating the reasons for recommending products in writing, and that is something which is not common to all professions and can be difficult to achieve effectively.

That doesn’t mean I’m campaigning for lower standards from financial advisers.

In fact, there is much to be learned from the medical model. But perhaps not quite as much as is sometimes thought. On the other hand, if your financial practice looks more like an old-fashioned doctors with an “I know best” attitude and a one-size-fits-all approach, maybe you should think again.

That may have been okay in the days before the consumerist revolution and recent reform of the financial sector, but it won’t do in the medium term.

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PAA NEWS

Make some noise: The value of advisers

Highlighting the value of what we do will be vital this year.

{ BRUCE CORTESI }

T

he value of quality advice can’t be underestimated, whether it’s helping a client secure the right home loan, designing a wealth strategy, or protecting them, their family or their business.

There’s no denying that advisers are up against stiff competition from direct providers with big marketing budgets and large sales teams. But that aside, every client is an opportunity to increase awareness of the value that advisers bring to the table. And in simple terms, more awareness equals more business.

2014 is set to be an economy of note with both challenges and opportunities across all areas of advice. How can these be maximised to highlight the value of advisers?

It’s all about perspective When the economy is on the up, people feel more secure and less motivated to need insurance. This is a generalisation, but it’s a pattern we’ve seen many times. Add to this that the underlying cost of insurance is expected to increase this year, and it’s clear that highlighting the value of insurance advice is going to be especially important in 2014.

026

“Obviously clients won’t pay for something they feel they don’t need. This is particularly the case when the economic outlook is positive as people tend to be more optimistic about how they would deal with adversity,” says Andrew Hay, Director at Apex Advice.

“In helping clients choose the appropriate amount of insurance, advisers need to put more emphasis on the emotional aspect of the consultation – really understand what motivates someone and what their emotional needs are rather than process and product selling.”

Excelling at connecting with what clients need and what motivates their insurance choices means working with your own strengths. That’s not simply about the insurance area, but more importantly, it’s about the attitudes, motivations, life stage and needs of the people you deal with.

“Clients are certainly more informed and they have more options these days as to where they can purchase commodity products,” says Hay. “When dealing with today’s clients you simply have to have a value proposition as well as a point-of-difference, otherwise why wouldn’t they choose direct or on-line options?”

Clearly defining your value proposition is not only effective for new business acquisition, it will also play a bigger role at review time this year. The combination of increasing premiums and economic confidence will drive a greater focus on re-advising clients – taking them through changes in terms and conditions, helping assess the cover they have and reengaging them in the value of protection.

“Review time is a key opportunity to reinforce the role and value of an adviser, to make your clients aware of your value proposition and unique abilities and to give them a reason to refer friends, family and colleagues,” says Hay. With a strong economy impacting the number of new insurance clients and increasing premiums forcing retention issues, this year definitely demands business planning specific to these areas.

What is your value proposition? Are you considered an expert in this market, for this segment of clients? How will the review process work both for your business and your clients’ needs? What are the ongoing opportunities you have to highlight the value you bring to the table?

WWW.GOODRETURNS.CO.NZ

ASSET ISSUE 129 .indd 26

31/01/14 5:17 pm

PAA NEWS

Borrowers’ need for information has always been a key opportunity for advisers.

The double edge sword of KiwiSaver KiwiSaver is growing up. This year we’ll see an increasing number of accounts reaching sums that require the support of broader investment advice.

“As KiwiSaver balances grow, the value of investment advice is becoming more apparent to account holders,” says David Isaacs, an AFA with Allfinanz. “While this may not be widespread yet, we do expect to see more clients motivated to seek advice about their existing fund and options,” says Isaacs.

“This is an opportunity for advisers to highlight the value of quality advice.

Consumers are increasingly interested in this area – which KiwiSaver has been instrumental in – and are looking for more sophisticated vehicles and along with it, more sophisticated advice.”

While KiwiSaver accounts with some time behind them present an opportunity this year, how to efficiently offer quality KiwiSaver advice for new account holders remains a challenge.

By September, 2013, IRD figures showed that 2.2 million New Zealanders had joined KiwiSaver, an increase of nearly 109,000 accounts since March.

While the rate of increase has declined, there is still considerable momentum and demand for advice exceeds the number of advisers available.

A powerful opportunity to win new client relationships and highlight the value delivered by advisers, absolutely. But one that needs to be supported by a different approach than meeting every client individually.

There’s real hunger for information about KiwiSaver, says Isaacs, and people are actively researching their options. “The availability of quality information online to compare funds has been highly effective in improving consumer understanding of their KiwiSaver options.”

“The challenge is how to offer personalised advice en masse, or in other words, manage the time investment for your own business.

Allfinanz offers Class Advice online at kiwiselect.co.nz. In going through the process, people are able to educate themselves and make informed choices that suit their level of comfort with different fund types.”

ASSET ISSUE 129 .indd 27

Highly graphical and relatively jargon free, the dedicated KiwiSaver website www. kiwiselect.co.nz has effectively translated the traditional advice approach online. While additional support is available, customers can assess their options online in easily understood language and through a series of questions, identify the fund which suits their risk profile, comfort levels and saving goals.

So the question is: How can you turn the time challenge into an opportunity for new business and a vehicle to highlight the value of adviser knowledge? What approaches can you employ to time-efficiently offer quality KiwiSaver advice, and establish new client relationships with the potential to become broader accounts?

It’s not a transaction: Relationship value of mortgage advisers Far from a transactional relationship, quality mortgage advice sets clients up for medium and long terms success. This year we will continue to see LVR playing out in the headlines as well as a focus on interest rates.

These two issues alone are clear opportunities to highlight the value of advisers.

With the OCR forecast to increase by up to two percentage points, no doubt we’ll see interest rates in the headlines regularly.

The danger for borrowers in this kind of environment is the tendency to get stuck on that single number – the interest rate - rather than assessing the true cost of their loan.

“Advisers have a real opportunity to show borrowers the benefit of the consultancy approach rather than basing their decision singularly on the rate offered,” says Karen Mooney.

“We know as advisers that the biggest opportunity for a borrower to get the most cost-effective loan is in how it is structured to meet their short and long term goals.”

It’s about the fundamentals We’d all like a flash, big budget marketing campaign to get the inbox pinging and the phone ringing. But the good news is that if spending big on marketing this year is not a possibility, your business will grow as long as the fundamentals are done right.

These are the things that we’ve heard a hundred times: Accessibility, trust, integrity, professionalism and communication etiquette.

We’ve heard them a hundred times because they continue to be the things that make for successful client relationships. While the year is still gearing up, perhaps take a moment and assess whether you’d do anything differently in 2014 and how you can consistently measure up to your client expectations in these areas.

Our role is about people, after all. Getting the fundamentals right is non-negotiable if you want to highlight the value you offer.

your business, your future, your choice

Independent thinking for advisers by advisers

• Advocacy at the highest level (Government) • New CPD portal, with structured learning capacity • Business training for advisers • PAA Friendly Guides for Advisers • ASSET magazine and Mortgage Mag (monthly) • Monthly newsletters, and industry updates • Industry conference in Auckland – May 16-17 2013 • Regional meeting programme • National Roadshows • Professional Indemnity Programme and Group Life Cover • Seven holiday homes And a dedicated team to assist you Website: www.paa.co.nz

Professsional Advisers Association Inc, PO Box 911 335, Victoria Street West, Auckland 1142 Phone: 0800 275 722, Fax: 0800 275 712 Email: admin@paa.co.nz

31/01/14 5:17 pm

INVESTMENT

{ INVESTMENT }

CONTINUED GROWTH AHEAD BY: Andrew Bascand

E

conomic indicators finished 2013 with a flourish and little has changed in recent weeks with strong reports of Christmas shopping, especially on-line. The IMF have also upgraded the 2014 global growth outlook. With indicators improving, the Fed has begun to taper, bond yields are moving a little higher, and investors are still rotating out of cash into riskier assets.

Figure 1 : Inflows into equities are accelerating

Source: CLSA

028

Corporate balance sheets are strong with high levels of cash, and we expect an increase in investment and employment to continue. Equity markets are likely to see increasing merger and acquisition activity and further IPOs. For Australasian equity investors the toughest call is the outlook for the Australian economy and the Australian equity market.

The recovery in Australia is patchy, typical

The impact of looser monetary policy in Australia is taking longer to lift business and consumer confidence, and Australia’s fiscal position continues to leave less room to manoeuvre. of economic turning points. The outlook for China is important for Australia and there continues to be a wide dispersion in views on the outlook for Chinese growth.

The impact of looser monetary policy in Australia is taking longer to lift business and consumer confidence, and Australia’s fiscal position continues to leave less room to manoeuvre than say in New Zealand . Not surprisingly, the Australian equity market reflects current poor business confidence but were Australian business confidence to improve there is room for a lift in Australian equity valuations.

WWW.GOODRETURNS.CO.NZ

ASSET ISSUE 129 .indd 28

31/01/14 5:17 pm

INVESTMENT

Figure 2: A rise in Australian business confidence should lift Australian equity returns

Many commentators, including ourselves, have noted that New Zealand equity valuations are extended. Our own composite equity valuation indicator for New Zealand is above average, but well beneath previous peaks. Our conclusion is that it is harder to expect significant equity market gains in New Zealand without strong earnings growth.

What to look for in 2014 In 2014 we think investors will look for global growth to accelerate without evidence of inflation. In addition, on the global stage: ★ Yellen’s stewardship will be watched closely.

Markets expect further moves to transition policy away from quantitative easing. ★ Corporate balance sheets are healthy and rising house prices are improving household and bank sector balance sheets. ★ Housing construction and employment in the US are likely to accelerate. Investors should expect strong residential investment in the US and better employment data. A strong US economy should support other economies.

Turning to NZ, the things to watch in 2014 for equity investors are: ★ The economy has plenty of momentum.

Significant Official Cash Rate increases are

expected (125 basis points). Interest sensitive sectors like property and utilities have partly reflected a rising interest rate environment but consumer sectors may also need to consider higher rates. ★ A pick up in the global economy ought to continue to be good for exporters and companies exposed to trade.

Similarly, investors need to watch carefully tail risks in China and Europe. Very low equity volatility suggests little pricing for potential flare-ups as we move through 2014. ★ The New Zealand dollar has been relatively stable against the US dollar in 2013, but has appreciated sharply against the Australian dollar creating a headwind for New Zealand companies with large Australian businesses like Fletcher Building. Currencies are notoriously hard to predict, but the tight range in the kiwi seems unlikely to stay, and the New Zealand dollar looks stretched against the Australian dollar. ★ 2014 will see a further big pick up in construction activity. This is likely to be sustained for a number of years despite the RBNZ’s LVR restrictions. In our opinion the market has yet to fully appreciate the scale of the acceleration in construction activity. ★ Finally, 2014 is the election year with a result that is currently too close to call.

This election matters across a number of sectors and investors need to consider what is expected and the probability of change. At the margin global investors may typically be sellers potentially creating investment opportunities as they over-react to uncertainty.

Andrew Bascand is Managing Director & Portfolio Manager at Harbour Asset Management: a leading fund manager with extensive professional investment experience managing funds for government institutions, corporate superannuation funds, multi-nationals, charities, banks and insurance companies.

029

ASSET ISSUE 129 .indd 29

31/01/14 5:17 pm

INVESTMENT

{ KIWISAVER }

WORKING WITHIN THE RULES

Being a registered financial adviser isn’t stopping Matt Phillips from helping clients understand KiwiSaver. BY: Amanda Morrall

Q

uiz your average KiwiSaver on their balance and you’re likely to be greeted by blank stares.

But that’s just the tip of the iceberg when it comes to

030

investor ignorance.

Seven years on and $16 billion later many still don’t know or understand which type of fund they are invested in, who is managing their money and how, what they are paying in fees and importantly how those fees over time

will eat away at their hard-earned savings.

“Most of them are in something they just don't understand,’’ says Matt Phillips, of Top Half Financial Services Ltd. While Phillips and his business partner mother Peggy have only just expanded into

WWW.GOODRETURNS.CO.NZ

ASSET ISSUE 129 .indd 30

31/01/14 5:17 pm

INVESTMENT

KiwiSaver, it was apparent from the start that the knowledge gaps were huge and from an advisory perspective a challenge or opportunity.

While Phillips concedes investors need to take greater interest in and responsibility for their savings, he blames providers themselves for not doing a better job of it — pulling in high fees in many cases for little return, other than an average one.

“My clients aren’t fools or idiots but no one has explained it to them.’’

Yes, the basics are well understood; contribution rates, employer contributions, and member tax credits. But the finer points that could make big differences to bottom lines remain obscure.

The provision for using KiwiSaver money as a deposit on a first home is a prime example.

“You have young people in growth funds and yet when you ask them whether they are looking to buy a house with some of their money they aren’t even aware of risk profiling.’’

It’s the kind of conversation Phillips looks forwarding to having with clients when he’s able to give personalised investment advice as an authorised financial adviser.

To date, his discussions with new and existing KiwiSaver clients have been general in nature given he can only give class advice as a registered financial adviser.

To some extent, that’s restricted the nature of the information he can share and discuss with clients but where possible, Phillips has attempted to make smarter and better informed investors of his clients.

Until recently, Phillips’ focus within Top Half has been on insurance and mortgages. While they remain a core part of operations, the mother and son duo decided KiwiSaver had grown too big to ignore and decided to move into the retirement savings space.

Philips said being able to provide a full service to clients was important. "It's better for clients to say it's all taken care of than giving them split alliances, banks will definitely cross sell [other products]."

He said, so far, the compliance side of KiwiSaver was proving trickier than the advice-giving portion. Anti-money laundering legislation in particular was adding to the workload. "It's not giving the advice but getting the right documentation."

Their decision to align themselves with Generate was personal and professional.

Phillips was acquainted with a board member for Generate and the company offered

While a fan of Generate, Phillips also favours the passive management approach, chiefly because of the lower fees associated with index trackers. support services for registered advisers.

“Generate has a dedicated channel that supports registered financial advisers dealing with KiwiSaver.”

On the technical criteria, including performance, fees, and fund selection, Phillips is confident Generate is a good choice.

Once Phillips becomes certified as an authorised financial adviser, it is possible Top Half will broaden its scope of affiliated providers. At this stage, Phillips hasn’t decided what to do with his qualifications, assuming he clears the final AFA hurdles.

Regardless of his decision, Phillips does have some set views on KiwiSaver.

He believes contribution rates should be raised in line with what they are in Australia (9% moving to 15%). He wants to see KiwiSaver become compulsory as a means to address potential retirement saving shortages and as a way to lower fees.

“The more who adopt it the better because the fees will go down.’’

It’s a promise that some of the bigger KiwiSaver providers made early on but which

has yet to materialise.

With fees taking up an increasingly larger chunk of personal savings over longer periods of time (by some estimates $70,000 over a working life) it will undoubtedly become a bugbear for astute investors.

Generate, an actively-managed KiwiSaver scheme, charges fees of 1% across the range of its funds. It’s not the cheapest but nor is it the highest and fees can’t be considered in isolation from performance and other factors.

While a fan of Generate, Phillips also favours the passive management approach, chiefly because of the lower fees associated with index trackers. Assuming he becomes authorised as an adviser and moves into KiwiSaver in a bigger way, it’s something he plans to look into for the sake of clients.

As for Top Half’s profit take on KiwiSaver, Phillips is candid. For each client they enrol into the Generate scheme, the firm earns $40. On top of that there’s a trailing commission of 0.2% of account balances.

Prior to going into business with his mother in 2011, Phillips worked as an international risk specialist for the Bank of New Zealand. He started his career in the financial services sector in 1999, working as a financial adviser for TTG Wealth Management in Hong Kong.

Like most who have travelled and worked abroad, it’s helped to give him a broader perspective on investments and also the role of property in one’s portfolio, still the presiding focus still for many New Zealanders.

On that note, Phillips sees a healthy place for KiwiSaver, not to the exclusion of property as an investment, but as a complement or rather supplement.

“Even if you have a lot of property I think you should still have KiwiSaver. Property does go up. But also with property if you have two mortgages or even one mortgage -- if things go badly you have a lot of debt and it should be treated differently.’’

PERFORMANCE IS: Generate KiwiSaver Current Month Scheme Fund

3 month

6 Month

Conservative

-0.22%

0.66%

1.85%

Growth

-0.14%

2.79%

4.76%

Focused Growth

-0.01%

4.53%

6.22%

Keeping New Zealand financial advisers strong 0800 88 22 88 031

ASSET ISSUE 129 .indd 31

31/01/14 5:17 pm

ASSET ADVISER

{ MANAGED FUND PERFORMANCE TABLES } Latest 1 Yr 3 Yr 5 Yr Size Morningstar Transaction Return Return Rating Return $M Overall Exit Price %

Name

New Zealand Insurance Fund Cash AMP KiwiSaver Cash Fund 1.3289 2.70 2.84 3.10 AMP Prem PSS OnePath NZ Cash 1.4312 2.74 2.96 3.07 AMP PSS Select Cash 1.3583 2.48 2.64 2.71 ANZ KiwiSaver-Cash 1.1811 2.81 3.03 2.81 Aon KiwiSaver OnePath Cash 13.8725 2.40 2.62 2.78 Aon KiwiSaver Tyndall Cash 12.7912 3.00 3.26 3.42 ASB KiwiSaver Scheme's NZ Cash 1.2763 2.90 2.65 2.70 Asteron Rtrmnt Savings Plan Deposit 9.8844 3.56 3.30 3.22 Asteron Super Yield Deposit Fund 9.9082 3.56 3.31 3.22 Asteron Superplan 2000 Capital Fund 2.0752 3.37 3.32 3.41 Asteron Superplan Capital Fund 2.4837 2.83 2.79 2.88 FC KiwiSaver Scheme's NZ Cash 1.2751 2.90 2.64 2.69 Grosvenor KiwiSaver Enhanced 1.3526 2.96 3.30 3.38 Income Fund Mercer KiwiSaver Cash -3.05 3.16 3.57 Mercer Super Trust KiwiSaver Cash -3.01 3.10 3.51 OnePath KiwiSaver-Cash Fund 1.2697 2.86 3.11 2.97 SIL 60s + Sup Cash Fund 1.99 2.21 2.41 2.56 SIL Cash Plus 1.99 2.21 2.41 2.56 OneAnswer KiwiSaver-Cash Fund 1.231 2.66 2.91 2.62 Staples Rodway KiwiSaver Conservative -2.89 2.98 2.84 TOWER KiwiSaver Preservation 2555.95254 3.16 3.14 3.21 Westpac KiwiSaver-Cash Fund 1.2386 2.90 2.81 2.95 New Zealand Insurance Fund Cash Non-PIE Fidelity Life Cash Portfolio 3.1048 1.79 1.66 1.78 New Zealand Insurance Fund Equity Region Asia Pacific Asteron Superplan 2000 Far East Fund 1.0403 -0.90 -4.12 5.05 Asteron Superplan Far East Fund 1.5227 -1.65 -4.84 4.29 SIL 60s + Sup Pacific Basin Share 1.6668 -0.80 1.10 6.06 SIL P/R Pacific Basin Fund 1.6668 -0.80 1.10 6.06 New Zealand Insurance Fund Equity Region Australasia Aon KiwiSaver Milford 2.1738 19.69 16.15 -Asteron Superplan 2000 Trans Tasman 2.9297 17.31 12.73 12.61 Fund Asteron Superplan Trans Tasman Fund 3.7438 16.39 11.96 11.86 Grosvenor KiwiSaver Socially Responsible 1.2183 5.93 4.60 -Grosvenor KiwiSaver Trs-Tasm Sm 1.0949 -5.34 -3.67 -Coms Shr Mercer Super Trust KiwiSaver Shares -24.74 11.69 12.70 Mercer Super Trust KiwiSaver -22.28 14.58 13.82 TransTasman Milford Active Growth KiwiSaver 2.2052 20.02 16.30 15.28 NZ Guardian Trust GIFs - Small Companies 4.0977 12.84 5.99 15.94 OneAnswer KiwiSaver-Australasian Share 1.1869 18.10 14.50 12.87 Smartshares Smartkiwi Growth Fund 0.91391 7.20 5.36 8.47 New Zealand Insurance Fund Equity Region Emerging Markets Asteron Superplan 2000 Emerging Mkt Fd 1.3154 -6.74 -4.41 8.68 Asteron Superplan Emerging Markets 1.0952 -7.54 -5.15 7.87 Fund TOWER FreedomPlan-Emerging Markets 2.13206 -3.15 -6.60 7.15 TOWER FuturePlan-Emerging Markets 2.13206 -3.15 -6.60 7.15 New Zealand Insurance Fund Equity Region Europe Asteron Superplan 2000 European Fund 1.9503 29.11 13.00 10.53 Asteron Superplan European Fund 2.3163 28.28 12.23 9.78 New Zealand Insurance Fund Equity Region North America Asteron Superplan 2000 Nth Amrn Fd 1.8357 31.93 11.99 11.76 Asteron Superplan North American Fund 2.6246 31.05 11.23 10.99 New Zealand Insurance Fund Equity Region Australasia AMP Prem PSS OnePath NZ Shares 1.6503 17.87 14.54 13.10 New Zealand Insurance Fund Equity Region NZ Asteron Rtrmnt Savings Plan NZ Equity 2.7667 17.39 12.56 13.13 Asteron Superplan 2000 NZ Shares Fund 2.3486 17.40 12.78 12.66 Asteron Superplan 2000 NZ Smaller 3.5096 11.52 5.73 16.75 Compns Asteron Superplan NZ Shares Fund 2.1222 16.41 11.93 11.84 Asteron Superplan NZ Smaller Compns Fd 3.168 10.74 5.01 15.97 SIL 60s + Sup NZ Share Fund 3.7879 18.42 14.80 12.91 New Zealand Insurance Fund Equity Region NZ Non-PIE Fidelity Life NZ Shares Portfolio 4.3047 7.94 4.00 8.96 New Zealand Insurance Fund Equity Region World AMP Prem PSS FD Intl Share Fund 1 Value 0.9282 23.41 7.08 6.20 AMP Prem PSS FD Intl Share Fund 0.9711 22.01 7.69 5.60 3 Growth Asteron Rtrmnt Savings Plan Intl Eqty 2.1029 26.47 9.13 7.93 Asteron Superplan 2000 Aggressive Fund 1.5739 12.21 6.04 7.55 Asteron Superplan 2000 Global Fund 1.712 25.79 8.66 7.76 Asteron Superplan Aggressive Fund 1.4937 11.45 5.39 6.85 Asteron Superplan Global Fund 2.0343 24.64 7.78 6.90

032

60.85 4.49 2.32 161.10 3.18 1.26 256.05 3.69 5.20 3.68 28.25 8.73

-------------

15.93

--

9.53 2.14 1.56 2.70 1.51 19.25 17.71 22.26 202.19

----------

3.72

--

1.16  10.64  3.15  3.15  66.73  2.79



17.65   8.93 3.68



1.65



1.68



198.14  9.34  15.83  19.91  0.48  2.30



1.95  22.83  1.79 14.52

---

1.55 13.26

---

4.71



1.42 0.60

 

1.79



1.14  3.68  21.09  1.72



5.44



5.23



3.74 0.55 1.51 4.82 18.26

    

Name

Latest 1 Yr 3 Yr 5 Yr Size Morningstar Transaction Return Return Rating Return $M Overall Exit Price %

FC KiwiSaver Scheme's Active High 1.1071 27.87 9.34 9.21 Growth FC KiwiSaver Scheme's Global Sustain 1.5964 27.25 10.06 11.26 Grosvenor KiwiSaver International Share 1.326 25.51 8.33 -Mercer Super Trust KiwiSaver Global -25.64 10.27 11.87 NZ Guardian Trust GIFs - Global Equity 1.5512 26.22 8.98 9.05 SIL 60s + Sup International Share Fund 2.2386 25.79 10.95 9.46 SIL International Share 2.2386 25.79 10.95 9.46 OneAnswer KiwiSaver-Intl Share 1.1599 26.43 11.51 9.96 OneAnswer KiwiSaver-Sustainable 1.1987 21.00 7.28 6.30 Growth TOWER FreedomPlan - Int'l Companies 2.32088 20.52 6.00 10.20 TOWER FuturePlan - Intl Companies 2.32088 20.52 6.00 10.20 TOWER KiwiSaver Equity 3044.72377 17.24 6.47 9.51 New Zealand Insurance Fund Equity Region World Non-PIE Fidelity Life Aggressive 2.5359 11.68 1.76 7.07 Fidelity Life International 1.8576 18.80 3.52 5.56 New Zealand Insurance Fund Equity Sector Global - Real Estate Mercer Super Trust KiwiSaver Real Assets -13.97 8.88 12.13 OneAnswer KiwiSaver-Intl Property 0.9672 5.69 9.16 14.96 New Zealand Insurance Fund Equity Sector NZ - Real Estate MFL Property Fund 2.7701 12.93 14.27 14.59 OneAnswer KiwiSaver-Australasian Prpty 1.194 11.15 14.55 12.26 New Zealand Insurance Fund Global Bond AMP Prem PSS Blackrock Global Fixed Int 1.6387 1.45 4.94 6.00 AMP Prem PSS PIMCO Global Fixed 1.8706 0.45 7.55 10.00 Interest AMP Prem PSS SSgA Global Fixed 1.6267 1.70 5.17 4.63 Int Index Asteron Rtrmnt Savings Plan Intl Fx Int 2.851 2.55 5.41 6.14 Asteron Superplan 2000 Global Bond Fund 2.5543 2.03 5.02 6.21 Asteron Superplan Global Bond Fund 2.4163 1.97 5.01 6.19 Mercer Super Trust KiwiSaver Fixed Intr -2.18 5.10 7.76 OneAnswer KiwiSaver-Intl Fxd Int 1.4028 0.08 4.65 4.43 New Zealand Insurance Fund Miscellaneous Fidelity KiwiSaver-Options Kiwi Fund 5.06266 9.18 6.92 13.14 Westpac KiwiSaver-Capital Protect Plan 1 1.6071 20.72 10.15 10.50 Westpac KiwiSaver-Capital Protect Plan 2 1.4426 20.71 10.15 -New Zealand Insurance Fund Miscellaneous Non-PIE Fidelity Life Options Portfolio 3.9023 6.01 4.34 10.17 New Zealand Insurance Fund Mortgages Non-PIE Fidelity Life Mortgage 3.6174 3.12 2.72 3.06 New Zealand Insurance Fund Multisector - Aggressive AMP KiwiSaver LS Aggressive Fund 1.1107 15.51 7.97 9.21 AMP PSS DynamicMkts Growth 1.4262 14.89 7.60 8.27 AMP PSS Select Growth 1.3445 15.30 7.72 8.41 Aon KiwiSaver Russell Lifepoints 2045 5.9431 22.42 10.90 14.10 Brook Professional KiwiSaver Growth 1.4596 18.43 8.79 8.72 Fund Brook Professional KiwiSaver Growth 1.4596 18.43 8.79 8.72 Fund Fidelity KiwiSaver-Aggressive Kiwi Fund 3.40566 14.58 7.13 9.88 Fisher Funds Growth KiwiSaver Fund 1.4392 19.82 8.26 15.73 Grosvenor KiwiSaver Geared Growth Fund 1.3751 14.61 5.98 -Grosvenor KiwiSaver High Growth Fund 1.0878 14.79 6.07 6.95 Mercer KiwiSaver High Growth -18.63 9.51 11.64 Mercer Super Trust KiwiSaver High -18.77 9.55 11.40 Growth TOWER FreedomPlan - Growth 2.17347 12.83 6.05 8.18 TOWER FuturePlan - Growth 2.17347 12.83 6.05 8.18 TOWER KiwiSaver Growth 1.24692 14.01 8.38 10.12 New Zealand Insurance Fund Multisector - Aggressive Non-PIE AMP PRP Dynamic 1.6494 13.55 6.06 6.75 New Zealand Insurance Fund Multisector - Balanced AMP KiwiSaver LS Balanced Fund 1.2661 10.39 7.22 7.80 AMP KiwiSaver LS Moderate Balanced 1.2738 8.74 6.43 6.99 Fund AMP KiwiSaver TOWER Balanced Fund 1.3187 9.34 6.72 8.15 AMP PSS DynamicMkts Balanced 1.5053 9.74 6.68 6.94 AMP PSS Lifesteps Consolidation 1.4602 8.11 5.92 6.22 AMP PSS Lifesteps Progression 1.5198 9.90 6.79 6.99 AMP PSS Select Balanced 1.457 9.90 6.77 6.98 ANZ KiwiSaver-Balanced 1.3325 12.33 9.56 9.50 Aon KiwiSaver OnePath Balanced 18.3509 11.82 9.50 11.94 Aon KiwiSaver Russell Lifepoints 2025 6.6009 13.58 9.30 12.24 Aon KiwiSaver Russell Lifepoints Bal 6.4676 16.63 9.93 12.93 ASB KiwiSaver Scheme's Balanced 1.2596 12.43 8.11 8.94 Asteron Rtrmnt Savings Plan Mgd Neutral 2.5119 12.88 8.93 8.34 Asteron Super Yield Managed Fund 12.7272 13.93 9.06 8.42 Asteron Superplan 2000 Balanced Fund 2.0043 12.75 8.54 7.66

3.02



5.85 4.04 1.73 5.94 12.18 12.18 22.85

      

1.92



3.20  28.97  35.82  2.60  0.87  0.94 5.08

 

440.62  8.61  2.23



2.50  8.20



1.20  1.00  1.49  1.21   2.16 69.13 10.63 9.07

----

22.21

--

2.71

--

154.84  3.73  32.54  7.16  7.43



7.43



17.38  665.69  3.30  76.14  41.71  8.94  7.80  76.18  115.75  105.98



419.78  250.68  16.20  2.91   7.88 3.78  49.21  608.68  13.68  8.75  35.49  383.29  14.60  19.31  8.81 

Latest 1 Yr 3 Yr 5 Yr Size Morningstar Transaction Return Return Rating Return $M Overall Exit Price % Asteron Superplan Balanced Fund 2.5776 11.85 7.63 6.82 63.30  Brook Professional KiwiSaver Balanced Fd 1.3801 13.25 6.75 6.36 2.03  Brook Professional KiwiSaver Balanced Fd 1.3801 13.25 6.75 6.36 2.03  FC KiwiSaver Scheme's Active Balanced 1.2446 13.09 7.56 8.49 26.18  Fidelity KiwiSaver-Balanced Kiwi Fund 6.86238 8.85 6.36 6.68 107.14  Fidelity KiwiSaver-Ethical Kiwi 2.71986 14.59 8.79 8.63 11.24  FirstChoice KiwiSaver Scheme's Balanced 1.2569 12.42 8.10 8.94 25.75  Grosvenor KiwiSaver Balanced Fund 1.3067 6.97 5.80 6.42 109.91  Mercer Super Trust KiwiSaver Moderate -11.44 7.47 9.17 36.52  Milford KiwiSaver Balanced 1.436 16.31 12.02 -- 29.31  OnePath KiwiSaver-Balanced 1.2805 11.20 8.79 8.48 18.15  OneAnswer KiwiSaver-Balanced 1.3461 12.41 9.60 9.61 249.53   Smartshares Smartkiwi Balanced Fund 1.08184 2.91 4.32 6.44 6.92 TOWER FreedomPlan - Balanced Fund 3.08488 8.36 6.21 6.95 11.23  TOWER FuturePlan - Balanced 3.08488 8.36 6.21 6.95 135.95  TOWER KiwiSaver Balanced 3635.82001 9.76 7.12 8.24 343.11  Westpac KiwiSaver-Balanced Fund 1.2848 11.42 8.21 8.57 541.33  Westpac Retirement Plan - Balanced Port 2.7789 10.05 6.90 7.47 95.37  New Zealand Insurance Fund Multisector - Balanced Non-PIE Fidelity Life Balanced 3.4842 7.45 4.71 6.18 41.34  Fidelity Life Ethical Portfolio 2.4637 11.98 6.16 6.60 0.80  New Zealand Insurance Fund Multisector - Conservative AMP KiwiSaver Default Fund 1.3205 5.78 4.68 5.03 1174.52  AMP PSS Select Income 1.5321 -0.62 4.17 4.09 2.67  ANZ KiwiSaver-Conservative 1.3361 5.21 6.38 6.32 305.89  Aon KiwiSaver Russell Lifepoints Cnsrv 7.3561 6.94 8.28 10.45 56.13  ASB KiwiSaver Scheme's Cnsrv (Default) 1.3545 4.84 5.41 5.67 1876.73  Fidelity KiwiSaver-Capital Guarant Kiwi 2.55619 3.84 4.43 4.52 37.11  FirstChoice KiwiSaver Scheme's Conserv 1.3523 4.84 5.40 5.65 85.00  Fisher Funds Conservative KiwiSaver Fund 1.2576 7.16 6.77 -- 211.98  Mercer KiwiSaver Conservative (Default) -7.37 6.36 7.86 757.46  OnePath KiwiSaver-Conservative (Default) 1.3528 4.98 6.47 6.35 712.37  OneAnswer KiwiSaver-Conservative 1.3486 5.26 6.44 6.42 259.29  Smartshares Smartkiwi Conservative Fund 1.29428 6.65 5.29 4.98 3.02  TOWER FuturePlan - Capital Protected 1.15111 1.50 1.82 1.94 33.73  TOWER KiwiSaver Cash Enhanced 1.35559 4.43 5.60 5.89 483.57  (Default) New Zealand Insurance Fund Multisector - Conservative Non-PIE Fidelity Life Conservative 3.7234 3.76 4.17 5.22 37.85 -New Zealand Insurance Fund Multisector - Growth AMP KiwiSaver LS Growth Fund 1.1622 13.59 7.62 8.59 331.72  AMP KiwiSaver OnePath Balanced 1.4292 14.63 10.33 10.93 82.16  Plus Fund AMP KiwiSaver Tyndall Balanced Fund 1.2594 12.24 7.94 8.82 12.40  AMP PSS Lifesteps Growth 1.4396 13.29 7.36 7.79 1.08  ANZ KiwiSaver-Balanced Growth 1.3147 16.14 11.02 10.97 488.74  ANZ KiwiSaver-Growth 1.2883 19.85 12.44 12.39 897.08  Aon KiwiSaver Russell Lifepoints 2035 6.289 18.16 10.17 13.19 7.74  Aon KiwiSaver Russell Lifepoints Growth 6.2565 20.68 10.77 13.72 13.81  Aon KiwiSaver Tyndall Balanced 12.9296 11.91 7.90 8.90 3.65  ASB KiwiSaver Scheme's Growth 1.1932 16.97 9.18 10.15 368.57  Asteron Rtrmnt Savings Plan Mgd Growth 2.4665 16.31 9.60 9.07 26.21  Asteron Superplan 2000 Dynamic Fund 1.9388 15.62 8.96 8.25 2.04  Asteron Superplan Dynamic Fund 2.2269 15.32 8.30 7.56 18.59  FC KiwiSaver Scheme's Active Growth 1.1929 18.12 8.60 9.49 26.64  Fidelity KiwiSaver-Growth Kiwi Fund 6.65024 12.16 6.90 7.29 47.49  FirstChoice KiwiSaver Scheme's Growth 1.1901 16.97 9.17 10.15 21.72   Forsyth Barr KiwiSaver Balanced Port 1.2029 5.24 4.87 5.30 8.77  Forsyth Barr KiwiSaver Growth Portfolio 1.1343 7.34 5.18 5.81 7.82 Grosvenor KiwiSaver Balanced Growth 1.2404 10.20 5.87 -- 43.80  Mercer KiwiSaver Balanced -13.30 8.10 10.28 49.74  Mercer Super Trust KiwiSaver Active Bal -13.40 8.11 10.12 53.92  Mercer Super Trust KiwiSaver Growth -15.50 8.74 10.56 5.05  OnePath KiwiSaver-Balanced Growth 1.2443 14.87 10.00 9.55 21.20  OnePath KiwiSaver-Growth 1.207 18.61 11.19 10.56 18.72  SIL 60s + Sup Balanced Fund 3.0755 14.51 10.28 10.45 422.11  SIL Balanced Plus 3.0755 14.51 10.28 10.45 75.88  OneAnswer KiwiSaver-Balanced Growth 1.3307 16.25 11.14 11.13 230.44  OneAnswer KiwiSaver-Growth Fund 1.3007 19.94 12.49 12.54 164.81  Staples Rodway KiwiSaver Balanced -13.92 10.40 10.25 16.92  Staples Rodway KiwiSaver Growth -11.87 8.05 9.16 8.97  Westpac KiwiSaver-Growth Fund 1.2683 14.88 9.63 9.78 322.44  Westpac Retirement Plan - Dynamic Port 3.0144 13.59 8.58 8.81 99.26  New Zealand Insurance Fund Multisector - Growth Non-PIE Fidelity Life Growth 3.2148 11.05 4.86 6.62 13.82  New Zealand Insurance Fund Multisector - Moderate AMP KiwiSaver LS Conservative Fund 1.4068 4.71 5.45 5.52 160.77  AMP KiwiSaver LS Moderate Fund 1.3252 6.97 6.00 6.29 168.63 

Name

WWW.GOODRETURNS.CO.NZ

ASSET ISSUE 129 .indd 32

31/01/14 5:17 pm

ASSET ADVISER

For more information visit www.morningstar.co.nz

Latest 1 Yr 3 Yr 5 Yr Size Morningstar Transaction Return Return Rating Return $M Overall Exit Price % AMP PSS DynamicMkts Conservative 1.5377 3.83 4.75 4.64 0.76  AMP PSS Lifesteps Maturity 1.4662 3.88 4.78 4.65 2.82  AMP PSS Lifesteps Stability 1.5099 6.14 5.45 5.53 4.70  AMP PSS Select Conservative 1.5276 3.87 4.78 4.70 10.45  ANZ KiwiSaver-Conservative Balanced 1.3404 8.75 8.06 8.00 312.77  Aon KiwiSaver Russell Lifepoints 2015 7.0124 8.50 8.37 11.06 4.15  Aon KiwiSaver Russell Lifepoints Mod 6.9925 11.65 9.13 11.73 9.72  ASB KiwiSaver Scheme's Moderate 1.3149 7.70 6.68 7.39 520.51  Asteron Rtrmnt Savings Plan Mgd Conserv 2.4813 7.44 7.53 7.07 2.08  Asteron Superplan 2000 Conservative Fund 2.03 6.94 7.11 6.55 2.45  Asteron Superplan Conservative Fund 2.2687 6.21 6.28 5.64 5.56  FC KiwiSaver Scheme's Active Cnsrv 1.3403 7.92 6.37 7.06 6.80  Fidelity KiwiSaver-Conservative Kiwi Fd 6.89622 4.67 5.91 6.25 45.58  FirstChoice KiwiSaver Scheme's 1.3044 7.68 6.67 7.37 20.24  Moderate Grosvenor KiwiSaver Conservative Fund 1.3396 2.42 5.59 5.79 37.36  Mercer Super Trust KiwiSaver Conserv -7.33 5.83 7.72 2.31  OnePath KiwiSaver-Conservative 1.3206 7.97 7.66 7.44 6.41  Balanced OneAnswer KiwiSaver-Conservative Bal 1.3529 8.76 8.11 8.13 86.98  TOWER KiwiSaver Conservative 1.40219 5.35 6.12 7.19 77.35  Westpac KiwiSaver-Conservative Fund 1.3245 5.12 6.25 6.36 1149.17  New Zealand Insurance Fund NZ Bonds AMP Prem PSS OnePath NZ Fixed Interest 1.5685 -2.49 5.10 5.16 2.21  Asteron Rtrmnt Savings Plan NZ Fixed Int 2.7105 0.31 6.46 5.58 1.29  Asteron Superplan 2000 NZ Bond Fund 2.3471 -0.17 6.05 4.86 1.54  Asteron Superplan NZ Bond Fund 2.9967 -0.20 6.10 4.87 6.70  SIL 60s + Sup NZ Fixed Interest 2.4626 -2.79 4.63 4.81 164.71  OneAnswer KiwiSaver-NZ Fixed Interest 1.3726 -2.31 5.10 5.29 5.64  SIL NZ Fixed Interest 2.4626 -2.79 4.63 4.81 6.86  Westpac Retirement Plan - Accum Port 2.9621 0.20 2.80 3.12 20.84  New Zealand Insurance Fund NZ Bonds Non-PIE Fidelity Life NZ Fixed Interest 3.5247 0.56 3.28 3.82 0.56  New Zealand Insurance Fund Unlisted and Direct Property - NZ Asteron Rtrmnt Savings Plan NZ Property 3.3271 ---- 0.90 -Asteron Superplan 2000 Property Fund 1.7948 4.72 10.52 15.43 1.11 -Asteron Superplan Property Fund 1.5807 4.10 9.53 14.27 1.73 -TOWER FreedomPlan - Property Fund 3.83548 13.26 6.15 5.48 0.91 -TOWER FuturePlan - Property 3.83548 13.26 6.15 5.48 7.73 -New Zealand Insurance Fund Unlisted and Direct Property - NZ Non-PIE Fidelity Life Property Portfolio 3.9593 11.18 9.57 6.70 0.72 -New Zealand OE Cash AMP Capital Cash Advantage Fund 1.2993 3.39 3.50 3.54 246.28 -AMP Capital NZ Cash Fund 1.60403 3.15 3.32 3.54 3500.53 -AMP Prem PUT OnePath NZ Cash 1.2692 2.61 2.87 2.96 4.55 -AMP PUT Select Cash 1.2239 2.39 2.56 2.62 3.93 -ASB Cash Fund -3.15 3.18 3.26 496.80 -Public Trust Cash Management Fund 1.2195 2.02 2.15 2.46 23.35 -TOWER Cash Fund 1.1916 2.43 2.48 2.62 16.71 -Westpac Cash Plus Trust 1.2393 3.05 3.08 3.14 51.26 -New Zealand OE Cash Non-PIE AMP UT NZ Cash 1.7222 1.71 1.75 2.16 1.93 -New Zealand OE Equity Region Asia Pacific Non-PIE AMP UT Asian Shares 1.4828 15.56 3.92 8.90 1.43  New Zealand OE Equity Region Australasia AMP Capital Equity Opportunity 1.6231 14.37 11.66 14.25 27.16  Brook Alpha Fund 3.6165 25.25 7.69 10.46 16.75  Brook Tasman Fund 1.2464 26.47 12.14 13.68 7.38  Devon Alpha Fund 1.3585 29.15 11.80 -- 55.22  Devon Trans-Tasman Fund 2.8889 20.48 9.89 12.05 75.78  Harbour Australasian Equity 1.5115 23.14 13.67 -- 57.97  Milford Active Growth 2.2014 19.78 16.22 15.24 692.40  Milford Trans-Tasman 1.7133 18.52 15.52 16.71 223.03  Mint Australia NZ Active Equity 1.6283 26.73 16.86 16.36 25.78  OneAnswer SAC Equity Selection 1.7183 16.96 13.89 12.16 15.76  Blueprint Australasian Shares 1.2118 17.07 9.05 -- 18.81  Pie Australasian Growth Fund 3.2361 25.93 23.04 38.57 51.79  Tyndall Aggressive Australasian Equity 1.286 14.54 9.29 12.10 1.43  Tyndall Small Companies Fund 1.445 12.19 6.21 -- 0.64  New Zealand OE Equity Region Australia AMP Capital Australian Share Fund 2.04895 0.52 1.17 9.23 44.11  Devon Australian 1.1402 13.67 4.63 -- 14.81  Fisher Funds Australian Growth Fund 2.625 5.36 2.48 18.45 72.91  Fisher Funds Premium Australian Fund 1.1478 5.68 2.88 18.48 52.20  OneAnswer SAC Australian Share 3.5086 13.87 3.79 12.99 36.14  Public Trust Cash Management Fund 1.2173 2.07 2.20 2.55 23.45 -TOWER Cash Fund 1.1889 2.44 2.50 2.77 16.65 -Westpac Cash Plus Trust 1.2357 3.04 3.12 3.24 51.79 -Name

Latest 1 Yr Transaction Return Exit Price % New Zealand OE Equity Region Australia Non-PIE AMP UT Australian Shares 2.2009 -0.76 New Zealand OE Equity Region NZ Brook Premium Share 1.4126 22.40 Fisher Funds NZ Growth Fund 5.1447 20.81 Fisher Funds Premium New Zealand Fund 1.2012 20.25 OneAnswer SAC NZ Share 2.9315 18.60 TOWER Trans Tasman Equity Trust 3.3782 11.87 AMP Capital NZ Shares Fund 2.00625 14.12 AMP Capital Strategic NZ Shares Fund 1.79903 14.67 New Zealand OE Equity Region NZ Non-PIE AMP UT NZ Shares 2.3568 11.50 New Zealand OE Equity Region World AMP Capital Core Global Shares Fund 0.94519 29.49 AMP Capital Core Hedged Global 1.04956 34.87 Shares Fd AMP Capital Emerging Markets Share 0.82669 -0.27 AMP Capital Global Shares Fund 1.90373 29.48 AMP Capital Resp Invest Leaders Gl Sh 1.18211 27.76 AMP Prem PUT FD Intl Share Fund 1 Value 0.9713 23.68 AMP Prem PUT FD Intl Share Fund 1.0011 21.92 3 Growth AMP Prem PUT SSgA Global Shares Index 1.2515 25.63 AMP Prem PUT SSgA Global Shares 1.6389 35.18 IndexHdg ASB EasyFund World Shares Fund 1.0755 26.68 Brook Walter Scott Global Share Fd 1.2594 18.43 Elevation Capital Value Fund 1.3464 24.14 Fisher Funds International Growth Fund 1.3595 23.56 Fisher Funds Premium International Fund 1.3911 23.96 OneAnswer SAC International Share 1.3349 29.22 New Zealand OE Equity Sector Global - Real Estate AMP Capital Global Propty Securities Fd 1.13593 10.18 ASB EasyFund Global Property Fund 0.918 3.48 New Zealand OE Equity Sector NZ - Real Estate AMP Capital Listed Property Secs Fd 1.77451 7.39 ASB NZ Property Trust 1.0573 1.95 Mint Australia NZ Real Estate Investment 1.2129 6.99 OneAnswer SAC Property Securities 2.1073 10.84 New Zealand OE Global Bond AMP Capital Hdgd Gbl Fixed Intrst Fund 1.95669 1.87 AMP Prem PUT Blackrock Global Fixed Int 1.5288 1.28 AMP Prem PUT PIMCO Global Fixed 1.8776 0.96 Interest AMP Prem PUT SSgA Global Fixed 1.5112 1.65 Int Index ASB EasyFund World Fixed Interest Trust 1.0083 -0.49 TOWER BondPlus Fund 1.7892 0.46 New Zealand OE Miscellaneous Fisher Funds Property and Infrastructure 1.4672 16.27 Pathfinder Commodity Plus Fund 0.941 -6.00 Tyndall Income Fund 1.158 3.57 New Zealand OE Mortgages Westpac Home Loan Trust 1 2.27 Westpac Mortgage Investment Fund 1 2.38 New Zealand OE Mortgages Non-PIE AMP PMF - Mortgage Investment 151.6988 0.71 New Zealand OE Multisector - Aggressive AMP Capital Growth Fund 1.97453 14.65 AMP PUT DynamicMkts Growth 1.4537 14.97 AMP PUT Select Growth 1.2887 15.12 Public Trust Growth Priority Fund 1.5752 17.41 New Zealand OE Multisector - Aggressive Non-PIE AMP UT Dynamic 1.7458 14.50 New Zealand OE Multisector - Balanced AMP Capital Balanced Fund 2.0504 10.79 AMP PUT DynamicMkts Balanced 1.4903 9.65 AMP PUT Select Balanced 1.4057 9.69 ANZ Invmt Fds Balanced 1.3156 12.15 ASB EasyFund Balanced 1.1807 11.82 Milford Balanced 1.4297 15.72 Public Trust Balanced Fund 1.7451 10.44 Public Trust Balanced Growth Fund 1.5204 13.19 Public Trust Moderate Growth Fund 1.5157 11.06 Westpac Active Balanced Trust 1.6501 12.30 New Zealand OE Multisector - Balanced Non-PIE Name

3 Yr 5 Yr Size Morningstar Rating Return Return $M Overall -0.16 8.80

1.81

-18.67 18.82 14.90 11.75 12.62 11.68

2.89 -121.37  43.02  35.29  42.09  455.51  383.85 

-18.00 17.85 13.50 12.27 12.45 11.80



9.85 10.39 2.63



8.77



7.25 346.67

14.26 18.01 627.32  -0.83 11.03 9.97 6.82

5.00 12.85 11.44 5.96

94.09  167.73  28.17  2.25 

7.54

5.38

1.80



8.97

6.60

2.92



14.89 14.57 4.54  9.93 8.05 6.79 4.80 5.05 13.69

9.83 -7.27 10.72 11.09 11.98

145.15  47.58  11.33  18.38  31.41  48.93 

10.93 18.08 156.70  6.91 10.42 58.18  14.03 -- 19.93   4.33 -3.71 2.51 12.66 10.33 29.74  14.29 12.32 73.98  4.78 4.74

9.54 166.76  5.89 1.45 

7.64 10.01 2.90  5.19

4.62

3.93

3.85 7.66

-- 19.34  9.31 144.77 



7.82 -- 29.84 -4.22 -- 44.87 6.62 8.70 4.24

----

2.27 2.36

2.45 126.07 2.50 182.31

---

-0.88 -0.56 4.61

--

8.02 8.90 7.53 8.32 7.60 8.26 9.48 10.17

5.24  3.27  12.23  8.19 

7.21

8.36

9.06 

7.53 6.57 6.64 9.23 7.48 11.86 7.57 7.99 7.29 7.91

7.69 6.83 6.88 -8.28 -7.78 8.57 7.91 7.99

28.52  3.84  31.04  42.43  76.75  73.07  4.23  9.61  5.51  103.63 

Latest 1 Yr 3 Yr Transaction Return Return Exit Price % AMP UT Balanced 1.8856 9.19 6.26 AMP UT Balanced - Other 1.6336 9.16 6.24 New Zealand OE Multisector - Conservative AMP PUT Select Income 1.4287 -0.72 4.11 ANZ Invmt Fds Conservative 1.2256 5.01 6.16 ASB EasyFund Defensive 1.2974 4.23 4.77 Public Trust Defensive Fund 1.4971 4.12 5.05 New Zealand OE Multisector - Growth ANZ Invmt Fds Balanced Growth 1.3698 16.09 10.86 ANZ Invmt Fds Growth 1.4048 19.55 12.06 ASB EasyFund Growth 1.1064 16.27 8.48 Diversified Wealth Management Balanced 1.1255 3.14 -0.68 OneAnswer SAC Balanced 2.1951 14.56 10.58 Public Trust Capital Growth Fund 1.7928 15.08 8.83 TOWER Multi Sector Fund 2.4656 9.07 7.22 Westpac Active Growth Trust 1.5494 15.84 9.29 New Zealand OE Multisector - Growth Non-PIE AMP PMF - Active Growth 1.8817 8.42 4.08 AMP UT Legg Mason Balanced 1.4111 4.38 2.95 New Zealand OE Multisector - Moderate AMP Capital Conservative Fund NZ 2.00653 4.31 5.34 AMP PUT DynamicMkts Conservative 1.4961 3.69 4.67 AMP PUT Select Conservative 1.5057 3.86 4.72 ANZ Invmt Fds Conservative Balanced 1.2722 8.33 7.71 ASB EasyFund Conservative 1.2556 5.13 5.26 ASB EasyFund Moderate 1.2385 7.12 6.07 Brook Income 1.0683 9.54 -Milford Income 1.2908 12.96 13.26 Public Trust Conservative Fund 1.5119 8.43 6.53 Westpac Active Conservative Trust 1.5407 4.88 5.43 New Zealand OE Multisector - Moderate Non-PIE AMP PMF - Balanced 2.1989 5.64 3.77 AMP UT Conservative 1.8642 3.37 4.33 New Zealand OE NZ Bonds AMP Capital NZ Fixed Interest Fund 1.53578 -1.04 5.79 AMP Capital NZ Short Duration 1.20083 2.87 3.87 AMP Prem PUT OnePath NZ Fixed Interest 1.4667 -2.63 4.99 Harbour NZ Corporate Bond 1.0193 2.18 5.21 OneAnswer SAC NZ Fixed Interest 1.3828 -2.80 4.55 Public Trust NZ Bond Fund 1.6166 -2.37 4.55 Tyndall Corporate Bond Fund 1.0864 1.78 6.33 New Zealand OE NZ Bonds Non-PIE AMP UT NZ Fixed Interest 1.7109 -1.47 3.57 New Zealand OE Unlisted and Direct Property - NZ AMP Capital NZ Property Fund 1.64086 11.85 5.93 New Zealand OE Unlisted and Direct Property - NZ Non-PIE AMP UT NZ Property 1.3665 10.63 5.12 Name

5 Yr Size Morningstar Rating Return $M Overall 6.79 14.96  6.80 0.87   4.01 4.10 -- 25.62  5.04 113.45  5.28 8.83  --9.38 4.20 10.34 9.23 8.62 9.19

61.45 18.38 19.60 20.99 36.42 3.95 11.27 45.97

       

6.42 17.34 8.74 1.73 5.26 4.57 4.65 -5.82 6.75 --6.93 5.46

 

11.34   1.54 14.35  38.83  284.64  114.66  8.82 -579.27  10.32  88.98 

5.12 34.77  4.38 0.90  5.56 4.32 5.05 -4.75 4.99 --

1536.67  135.90  2.30  112.68  6.90  2.48  111.08 

3.34

0.69 

--

237.36

--

-4.02 2.11

--

Returns are calculated to 31/12/13 Returns are calculated before tax and after fees, except for the non-PIE categories, which are after tax and after fees. For more information about this table and the methodology behind the data, contact helpdesk.nz@ morningstar.com or go to www.morningstar.co.nz © 2012 Morningstar, Inc. All rights reserved. Neither Morningstar, nor its affiliates nor their content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. To the extent that any of this information constitutes advice, it is not personalised and has been prepared by Morningstar Research Limited (a subsidiary of Morningstar, Inc.) without reference to your objectives, financial situation or needs. You should consider the advice in light of these matters and, if applicable, the relevant Investment Statement before making any decision to invest. Neither Morningstar nor Morningstar’s employees can provide you with personalised financial advice. To obtain advice tailored to your particular circumstances, please contact a professional financial adviser.

033

ASSET ISSUE 129 .indd 33

31/01/14 5:17 pm

ASSET ADVISER MORNINGSTAR KiwiSaver Report Dec 2013

Conservative

Moderate

Balanced

Growth

Aggressive

034

WWW.GOODRETURNS.CO.NZ

ASSET ISSUE 129 .indd 34

Per Annum

Member Fee

1 Year

3 Year

5 Year

$/Year

ANZ Conservative

5.2

6.4

6.3

24.00

Brook Conservative

8.3

--

--

30.00

FC Scheme's Conservative

4.8

5.4

5.7

36.00

Fidelity Capital Guarant Kiwi

3.8

4.4

4.5

36.00

Fisher Funds Conservative

7.2

6.8

--

36.00

OneAnswer Conservative

5.3

6.4

6.4

24.00

AMP LS Conservative

4.7

5.5

5.5

36.00

AMP LS Moderate

7.0

6.0

6.3

36.00

ANZ Conservative Balanced

8.7

8.1

8.0

24.00

ASB Scheme's Moderate

7.7

6.7

7.4

30.00

FC Scheme's Active Conservative

7.9

6.4

7.1

36.00

FC Scheme's Moderate

7.7

6.7

7.4

36.00

Fidelity Conservative Kiwi

4.7

5.9

6.2

36.00

Fidelity Asset Class Conservative

--

--

--

36.00

Grosvenor Conservative

2.4

5.6

5.8

39.96

Mercer Super Trust Conserv*

7.3

5.8

7.7

34.20

Milford Conservative

12.8

--

--

36.00

OnePath Conservative Balanced

8.0

7.7

7.4

33.00

OneAnswer Conservative Balanced

8.8

8.1

8.1

24.00

TOWER Conservative

5.4

6.1

7.2

33.00

Westpac Conservative

5.1

6.3

6.4

31.08

AMP LS Balanced

10.4

7.2

7.8

36.00

AMP LS Moderate Balanced

8.7

6.4

7.0

36.00

AMP TOWER Balanced

9.3

6.7

8.2

36.00

ANZ Balanced

12.3

9.6

9.5

24.00

ASB Scheme's Balanced

12.4

8.1

8.9

30.00

Brook Balanced

13.2

6.7

6.4

30.00

FC Scheme's Active Balanced

13.1

7.6

8.5

36.00

FC Scheme's Balanced

12.4

8.1

8.9

36.00

Fidelity Balanced Kiwi

8.8

6.4

6.7

36.00

Fidelity Ethical Kiwi

14.6

8.8

8.6

36.00

Grosvenor Balanced

7.0

5.8

6.4

39.96

Mercer Super Trust Moderate*

11.4

7.5

9.2

34.20

Milford Balanced

16.3

12.0

--

36.00

OnePath Balanced

11.2

8.8

8.5

33.00

OneAnswer Balanced

12.4

9.6

9.6

24.00

TOWER Balanced

9.8

7.1

8.2

33.00

Westpac Balanced

11.4

8.2

8.6

31.08

AMP LS Growth

13.6

7.6

8.6

36.00

AMP OnePath Balanced Plus

14.6

10.3

10.9

36.00

AMP Tyndall Balanced

12.2

7.9

8.8

36.00

ANZ Balanced Growth

16.1

11.0

11.0

24.00

ANZ Growth

19.8

12.4

12.4

24.00

ASB Scheme's Growth

17.0

9.2

10.2

30.00

FC Scheme's Active Growth

18.1

8.6

9.5

36.00

FC Scheme's Growth

17.0

9.2

10.1

36.00

Fidelity Growth Kiwi

12.2

6.9

7.3

36.00

Forsyth Barr Balanced

5.2

4.9

5.3

36.00

Forsyth Barr Growth

7.3

5.2

5.8

36.00

Grosvenor Balanced Growth

10.2

5.9

--

39.96

Mercer Balanced*

13.3

8.1

10.3

34.20

Mercer Super Trust Active Bal*

13.4

8.1

10.1

34.20

Mercer Super Trust Growth*

15.5

8.7

10.6

34.20

OnePath Balanced Growth

14.9

10.0

9.6

33.00

OnePath Growth

18.6

11.2

10.6

33.00

OneAnswer Balanced Growth

16.3

11.1

11.1

24.00

OneAnswer Growth

19.9

12.5

12.5

24.00

Staples Rodway Balanced*

13.9

10.4

10.3

40.00

Staples Rodway Growth*

11.9

8.1

9.2

40.00

Westpac Growth

14.9

9.6

9.8

31.08

AMP LS Aggressive

15.5

8.0

9.2

36.00

Brook Growth

18.4

8.8

8.7

30.00

Fidelity Aggressive Kiwi

14.6

7.1

9.9

36.00

Fidelity Asset Class Growth

4.6

--

--

36.00

Fisher Funds Growth

19.8

8.3

15.7

36.00

Grosvenor Geared Growth

14.6

6.0

--

39.96

Grosvenor High Growth

14.8

6.1

6.9

39.96

Mercer High Growth*

18.6

9.5

11.6

34.20

Mercer Super Trust High Growth*

18.8

9.6

11.4

34.20

TOWER Growth

14.0

8.4

10.1

33.00

31/01/14 5:17 pm

6th Annual

KiwiSaver Report Now available

ASSET Magazine's latest KiwiSaver survey is now available. The survey provides you with clear details of all the retail schemes available in New Zealand. It illustrates all the latest trends and this year features new data.

The report includes details on: ➜ Membership trends and growth ➜ Funds under management ➜ Member balances ➜ Fee analysis ➜ Transfers and withdrawals ➜ Contribution rates ➜ And More

ASSET ISSUE 129 .indd 35

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