You can help create social change based on where your KiwiSaver money is invested.
Many Kiwis, especially younger people, are becoming more interested in the types of companies their money’s invested in.
You might want your money invested in companies that align with your values – perhaps they make an environmentally-friendly product, or look after the staff at their factories well.
Or maybe you just want to avoid investing in things you’re concerned about or don’t agree with, like weapons or fossil fuels.
So, if you’re someone who cares about where your money is invested, how can you find a KiwiSaver provider that suits you, and what other things should you think about?
Check your current provider
If you’re a KiwiSaver member, find out which companies your money’s invested in. This information may be on your KiwiSaver provider’s website. If you can’t find it, call your provider and ask for a breakdown of companies.
Ask for your provider’s ESG policy, if they have one. ESG stands for environmental, social, and governance, and the ESG policy outlines how your provider considers these factors when it picks investments. The policy should also explain why your provider believes considering ESG is important and what benefits it has for you.
Review this every six months or year, as the companies often change. Media exposure and social pressure can also affect what KiwiSaver providers invest in.
Use independent sources
Sorted’s Smart Investor tool shows you the top 10 investments of every fund. Just search the fund your KiwiSaver money’s in, and it will bring up a list. You can also download the full list of investments. You can also view any ESG policies this way – these are filed under ‘key documents’. Keep in mind these won’t be up to date to the day you visit, but will be the most recent update your provider has filed.
Mindful Money also shows you what your fund’s invested in. There’s a tool that helps you find a fund that suits you, based on how you feel about things like investing in palm oil, weapons, or fossil fuels.
Check the performance
The main reason you’ve invested your money, rather than put it in a savings account, is you want to make returns on it. Research has shown that funds can invest responsibly and still make good returns.
If you’ve found a fund which suits your values, do your research. Look at the fund performance over long periods, five years or more, rather than short periods (although you won't be able to do this for newer providers). Providers might advertise how good their returns have been over a quarter, or over a year, but it’s long-term returns that really count. You might want to support companies you believe in, but you probably don’t want to be losing money over the long term either.
A pattern of good performance gives you some confidence, but it may not continue. However, a long period of underperformance may be a clear sign you should look for a provider that can do better - especially if other similar funds have done OK in the same time.
Check the fees
All KiwiSaver providers charge a fee for managing your money. Some providers charge higher fees for funds that focus on socially responsible investing. Check the fees you’re charged and make sure you’re happy with what you’re getting in return.
Follow the media
New Zealand’s media can be a good guide to topical issues in the KiwiSaver investment world, and follow what Kiwis are passionate about.
In 2016, the media exposed many KiwiSaver providers who were investing Kiwis’ money in companies making cluster bombs, landmines, weapons, and tobacco. As a result, many providers withdrew these investments, and there were changes in the KiwiSaver industry around socially responsible investing.
After the Christchurch mosque shooting in March, KiwiSaver providers that invest in firearms were in the spotlight.
In August this year, the NZ Superannuation Fund - which has a very good overall reputation for the thoroughness of its approach to ESG investing - was in the news after a video was released showing rough handling of calves, on one of the farms it owns. This just shows how easy it is for these issues to become problems for even the most careful investors.
Published 18 October, 2019
Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. You can read our Product Disclosure Statement here.. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with an independent financial adviser. All content is correct at time of publication date. Past performance is no guarantee of future earnings.