ASSET OCTOBER 2020 by ASSET

Adviser's ethical investment journey Where are the claims being paid out? Embracing industry changes

OCTOBER 2020 | WWW.GOODRETURNS.CO.NZ

Clean and green: HOW CLIENTS CAN ACCESS E N V I R O N M E N TA L LY- F R I E N D LY I N V E S T M E N T S

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02 | ASSET OCTOBER 2020 Ltd is the issuer. Past performance is not a reliable indicator of future performance. The PDS, Morningstar and advertising disclosures are at www.generatewealth.co.nz/pds.

Contents | October 2020

Clean and green Daniel Dunkley looks at how clients can access green investments. Is demand being met and how do ESG-focused investments perform?

How active is your KiwiSaver provider? Chris Douglas on the key findings of MyFiduciary’s FMA-commissioned report into active management within KiwiSaver.

UP FRONT 04

EDITORIAL

FEATURES 12

It’s time for financial advice to shine.

KIWISAVER Michael Lang: the financial future for NZ lies with entrepreneurs.

STRATEGI Small FAPs still have the same regulatory and compliance obligations.

NEWS ‘Day of reckoning coming’; Time running out for registration; Climate risk reporting welcome; FMA’s Covid response.

PROFILE Mindful Money CEO Barry Coates on their ESG work and the NZ ‘appetite for change’.

INSURANCE Joanna Mathers looks at where nib claims money is being paid out.

REGULARS 28

What will be the future options for low-risk investors? 30

PRACTICE MANAGEMENT Russell Hutchinson on embracing the current industry changes.

PROFILE Nilesh Mistry talks to ASSET about his return to NZ to ‘give back’.

INVESTMENT COMMENTARY

MORNINGSTAR Morningstar data.

MEET THE MANAGERS As part of the virtual roadshow event we meet some of this year’s managers.

PEOPLE Eat My Lunch to Simplicity for Lisa King; New chair at Tahito; and more. WWW.GOODRETURNS.CO.NZ | 03

UP FRONT | EDITORIAL

Work out your value proposition

he past few months have been a time for financial advice to shine. First there was the March market upheaval, which served as a reminder to many people that investments aren’t a one-way bet. Then interest rates kept on falling, putting pressure on those with money in the bank to do something else with those funds – but what? Advisers who were on hand to offer guidance and help clients stick to their path have been invaluable. The Financial Services Council recently tried to put a clear number on the value that advisers add. Its research found that financial returns for New Zealanders who get financial advice are 4% better than the returns of those who don’t. Financial advice clients also save 3.7% more money and travel six times more. While we’re not jetting off on international holidays at present, that’s a pretty appealing proposition.

But still only about 20% of people were getting advice, the FSC found, and 40% did not know what the benefit would be in doing so. The FSC noted that there’s a perception that only wealthy people with lots of money should have a financial adviser. While it may be true that some advisers do not see the financial benefit in helping people with small amounts of money to invest, others are coming up with business models that work just as well for those who are in the accumulation stage of life as for those who are working out their decumulation strategies. Data such as this should be the starting point for wider industry conversations about what financial advice could do for New Zealanders. There’s increasing concern that with no end to low interest rates in sight, people will take on even more risk to chase returns, even when they cannot afford to. Rather than delivering information about the problems with that to the

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04 | ASSET OCTOBER 2020

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group of engaged consumers who arguably would have been more likely to seek financial advice anyway, there should be efforts made to broaden the message of the solutions available with the help of an adviser. The Financial Markets Authority has a role, which it seems to be taking to with increasing interest, in delivering messages about the importance of advice. But the key will lie with advisers themselves. Work out your value proposition, what you can offer your clients, and make clear to anyone who asks the real benefits of seeking financial advice from a professional. The faster the industry can shake off any negative connotations that linger as the result of news headlines or pre-regulation problems, the better off everyone will be.

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UP FRONT | KIWISAVER

SPONSORED CONTENT

The opportunity set of a lifetime

‘‘

Kiwis are clueless, careless and deluded about money and retirement savings.” This is how our media interpreted the Commission for Financial Capability’s recent financial survey. For many New Zealanders who work in the financial advice industry, such articles make for depressing reading, and are all too common. There is no disputing however that New Zealand has fallen behind financially. We could have adopted KiwiSaver in 1992 but chose not to. Right now, saving for retirement is compulsory in Australia at 9.5%, but only optional in New Zealand at 6% (or less). The average Australian has around $145,000 in their Superannuation Scheme, while the average KiwiSaver member has around $20,000. This represents the opportunity of a lifetime. One of the more remarkable pieces of news this year was the story that SpaceX had successfully sent astronauts into space. While that has been done before, this time was different. SpaceX is a private, for-profit enterprise, and was able to do it faster, cheaper and more safely than NASA. As Armstrong might have said, “One small step for space exploration, one giant leap for commercial enterprises”. In SpaceX’s achievement lies a message of hope for us all. It is easy to lay blame for what should be done at someone else’s doorstep: Government should have made KiwiSaver compulsory; MBIE should have disbanded the default KiwiSaver oligopoly years ago, and so on. But the truth is, the investment industry should look to itself, not others for the solution. SpaceX showed private enterprises have the power to change the future – better than any government or regulatory authority can. If Sir Michael Cullen could help New Zealand accumulate an additional $70 billion in a decade, then imagine what a difference 24 licensed KiwiSaver managers and 9,000 financial advisers could make, if they really want to.

New Zealand’s financial future lies with entrepreneurs, not government writes Michael Lang.

Here are some of the financial needs that New Zealanders have raised with us which commercial enterprises could start to solve: a an attractive way to save more into KiwiSaver, without having the money locked up, so that families can save more but not lose the option of accessing their funds should they wish to; b ways to accelerate the building of wealth through KiwiSaver, without putting their retirement savings at risk (something along the lines of paying down a mortgage on a house over time generates a higher return on equity than buying the house outright); and c more investment options in retirement now that interest rates are close to zero, which has negatively impacted term deposits, bonds and endowment schemes.

Despite the market distortion of default KiwiSaver providers, a perceived focus by the FMA on fees over the benefits of quality financial advice, service and ultimately client outcomes, and the hand-wringing of the Commission for Financial Capability, New Zealanders should know we will get there. And when we do it is unlikely to be because of a single government or regulatory decreed solution (be that ever lower fees or balanced funds for all). On the contrary, our best chance of solving New Zealanders’ savings shortfall is to encourage strong and profitable market participants who innovate, experiment and compete rigorously (on a level playing field) for a share of the $725 billion prize, which is what our market will look like when we catch up to Australia. Welcome to one of our most exciting and important marketplaces since New Zealand decided to deregulate. A Michael Lang is Chief Executive of NZ Funds and his comments are of a general nature.

WWW.GOODRETURNS.CO.NZ | 05

UP FRONT | SPONSORED CONTENT

Small FAP governance: practical tips Taking a practical and proportionate approach to governance and director duties will serve small FAPs well, according to Strategi Group executive director David Greenslade. Small FAP governance: What not to do

• How do I hold meetings with myself and why draft reports to myself?

Sometimes size doesn’t matter. A financial advice provider (FAP) with only one person on its board still has legal obligations to comply with the multitude of legislation that applies to all companies, just as a large FAP would.

• How do I get time to do all this governance stuff and still make a living? • Do I need a board and if so, how to make it work?

• Expanding your engagement with the right compliance provider so they attend your board meetings and help challenge you in the governance space.

Where the obligations lie

Answering these questions: What not to do

• Asking your accountant or lawyer to sit in on your board meetings.

The first thing Greenslade advises clients, is NOT to do any of the following things.

• Establishing an advisory board as the business starts to grow. (This might evolve into a formal board later.)

• Ignore the issue, thinking the problem is going to go away.

Greenslade believes selecting the right director or business adviser is critical to governance success. He says quality beats quantity and having one person who ticks all the boxes for competence, knowledge and skill is usually better than having a number of people who add little extra value other than warming a seat. Once you decide to be a business owner, then you must take reasonable steps to meet your responsibilities as a director, Greenslade warns. This applies to licensed FAPs and to authorised bodies which are effectively unlicensed FAPs. Firstly, business owners need to know just what their obligations are and then act to implement simple, yet effective, solutions to meet them. Both Strategi and the FMA have a range of good material for business owners that can help you on your way. A

The Financial Markets Authority (FMA) expects FAPs to have an oversight body – the board – responsible for overseeing compliance with licence obligations, Greenslade says. Really small businesses might have a one-person board, while larger entities might have several board directors – one or more of whom would be independent. Whatever category the business falls under, it still must comply with the relevant legislation for companies, which includes the: • Companies Act 1993 • Fair Trading Act and Consumer Guarantees Act • Privacy Act (remember it changes on December 1, 2020) • Health and Safety at Work Act. Furthermore, and in addition to those obligations that befall any company, the director and board have responsibilities in relation to financial services legislation and operating a FAP that need to be attended to as well.

Challenges for small FAPs Strategi frequently fields the following common questions from small business owners. • How do I achieve independence and oversight if I am the director, manager and adviser?

06 | ASSET OCTOBER 2020

• Appoint your spouse to the board to make up numbers. • Appoint people who do not meet the “fit and proper” test. • Build a structure and set of documents you don’t intend to follow. • Have a complicated business structure.

What you should do Greenslade recommends taking a practical and proportionate approach to governance and this begins with focusing on yourself first. The most important step for FAPs is upskilling yourself as a director. This could involve attending comprehensive governance courses held by the likes of the Institute of Directors or Governance NZ. Alternatively, it might be undertaking governance modules on Radar, or attending the Strategi Institute Governance Course for Small FAPs.

Get good quality help Engaging with business mentors and business advisers can also help to provide some formality and structure

around periodic board meetings (especially if the board is only one person), Greenslade says. He suggests the following ideas.

Strategi Group is the leading provider of compliance and training services for the New Zealand financial advisory industry.

For more information, visit www.strategi.co.nz

UP FRONT | NEWS

Ratings agency welcomes climate risk reporting Requiring New Zealand’s financial sector to report on its climate change risk has been welcomed by ratings agencies. About 200 of the country’s big financial organisations will be required to disclose how exposed they are to climate-related risks. The rule will apply to any bank, credit union, fund manager, insurer or building society with more than $1 billion in assets. “What gets measured, gets managed – and if businesses know how climate change will impact them in the future they can change and adopt low carbon strategies. Covid-19 has highlighted how important it is that we plan for and manage systemic economic shocks –

and there is no greater risk than climate change,” Minister for Climate Change James Shaw said. Ratings agency Moody’s said it was a positive move because it would make institutions that were not already doing so assess the impact of climate-related financial risks on their business. That was likely to increase the visibility of such risks in the government and risk frameworks of the institutions, it said. It could also provide them with new ways of assessing the risks and having a standard set of reporting would also allow investors to better understand the impact of the risks across different financial institutions.

“Many large businesses in New Zealand do not currently have a good understanding of how climate change will impact on what they do,” Shaw said. Businesses covered by the requirements will have to make annual disclosures, covering governance arrangements, risk management and strategies for mitigating any climate change impacts. If businesses are unable to disclose, they must explain why. Other countries are considering requiring climate risk reporting but New Zealand is the first to make it mandatory in the financial system.

WWW.GOODRETURNS.CO.NZ | 07

UP FRONT | NEWS

Day of reckoning could be messy: Zollner Low interest rates are compressing pricing of risks and a “day of reckoning” at some point could be messy, ANZ chief economist Sharon Zollner says. Zollner addressed the Financial Advice NZ conference in September. She said very low interest rates had forced people to take a “remarkably relaxed attitude to risk”. “Actual risks are really elevated but priced risks are not.” Some people were taking on too much risk, she said. “Are we putting off the day of reckoning by trying to save every investor, every firm?” Debt was at record highs and “going vertical”, she said.

Zollner said the full economic impact of Covid on New Zealand would only be felt over the coming months as support such as the wage subsidy scheme was wound back and the gap left by international tourism became apparent. While the economy had been able to return to something closer to normal the outlook was challenging, with investment and spending weaker. She said the support seen all over the world in fiscal and monetary policy had been a “huge step away from capitalism”. It had been estimated that as many as 15% of companies in some countries were only operating because the cost of capital was so low.

Those “zombie companies” were blocking the potential for new firms to come in and take their place, as would normally happen in a recession that caused businesses to fail. There was no measurement of the impact on the economy that would have, she said. New Zealand would have to look to improved productivity to drive growth, she said. The only other options were more people – migration has ground to a halt – or faster use of the world’s resources, which was unpalatable from an environmental point of view.

Time is running out for 2,000 unregistered advisers The FMA warned that the clock is ticking for advisers who had not yet gained transitional licences for the new financial advice regime. The new financial advice regime will come into action on March 15, 2021. That is also the date by which financial advisers will need to have completed the application for their transitional licences. Speaking at September’s Financial Advice NZ conference, representatives of the FMA said that more than 2,000 advisers were still deciding their

08 | ASSET OCTOBER 2020

futures and had yet to begin applying for their transitional licence. FMA director of market engagement, John Botica, had this advice for advisers. “Be proactive. There isn’t a lot of time to make decisions. It is time to be courageous in new business structures.” The cut-off date is five months away, but the FMA is recommending that “advisers should have a plan in place by the end of the year”. Applications are being processed by the FMA over a timeframe of around

10 business days. Over half of the licences so far awarded have been to single adviser businesses. The application is processed fully online and will be asking advisers to provide details of business governance, client obligations and digital systems. Botica states that “if [advisers] are acting with their clients' best interests then they are already there”. The FMA has asked anyone with questions to get in contact sooner rather than later. “Now is the time to take control and make decisions with the way you run your business.”

FMA details Covid-19 response A formal warning given to a financial adviser in May who recommended all clients urgently move their investments to low-risk funds was intended to send a message to the industry about the Financial Markets Authority’s expectations. The FMA has released an information sheet detailing how it has dealt with the Covid-19 crisis so far. It said the information was designed to help financial services entities understand its approach and consider ways to improve their own response. “The FMA’s overall objective throughout this period has been to ensure continuity of markets and services in a way that is fair, efficient and maintains confidence in the financial sector. We have worked in conjunction with other regulators to actively engage with market participants across a broad range of sectors.” The FMA had been making weekly calls to key market participants, it said, including KiwiSaver and fund managers, DIMS providers, advisers, smaller banks and dispute resolution schemes. It said it had seen most entities handle

the shift to remote working during lockdown well although some found their business continuity plans were not fit for purpose because they had not considered a lockdown environment. Most entities FMA dealt with were dealing with call volumes twice or three times the normal rate during lockdown. Many insurers dealt with a spike of customers trying to work out what cover they had and how the pandemic would affect it. “This raises the question of how much customers truly understand their policies.” Financial advisers provided additional client reporting, and increased customer contact, with video calls replacing faceto-face meetings. There was a surge in KiwiSaver fund switching when markets wobbled in March. The FMA said many were not open to advice. But it said an adviser who sent a bulk email urging clients to switch needed to be acted upon. “The adviser failed to clarify that the email provided ‘class’ financial advice, had limitations, and may not be appropriate for all clients. The adviser also failed to recommend that clients

first discuss their personal circumstances and goals with an adviser before acting on the advice. Our decision to issue a warning recognised the need to urgently deal with the matter and send a message to the industry about our expectations for providing suitable advice in extreme market conditions.” Non-English speakers had been a target of misconduct during the crisis, the FMA said. “In April we successfully requested the removal of two advertorials a financial adviser had posted on Chineselanguage social media platform WeChat. These articles cited the cost of Covid-19 hospitalisations in China (in New Zealand dollars) and recommended people living in New Zealand, especially young children and the elderly, get health insurance to avoid the same financial risk. The advertorials failed to mention that in New Zealand, emergency treatment and testing for Covid-19 is free, as it is covered by the public health system. Regardless of the target audience, financial market participants should not be using Covid-19 as a marketing tool.” A WWW.GOODRETURNS.CO.NZ | 09

UP FRONT | PEOPLE

Eat My Lunch founder, Lisa King joins Simplicity The founder of Eat My Lunch and New Zealander of the Year finalist, Lisa King has found a new home at Simplicity. King has joined Simplicity as consulting brand director, focusing on growing the Simplicity brand and presence across New Zealand. King believes that business should have a social purpose. She has been admiring Simplicity’s progress for a number of years, and believes the company has the potential to revolutionise the finance sector in New Zealand. “I love Simplicity’s mission and values which absolutely align to my own,” says King. “It’s an opportunity for me to be part of another purpose driven organisation that will have a massive impact on the lives of so many Kiwis.”

Former AMP Capital man joins Salt Salt beefs up its team with the appointment of a former AMP Capital manager. Salt Funds Management has appointed Greg McMaster as its head of client partnerships. Salt has made significant commitments to its research-driven investment process over the last year. By hiring Greg, the company is now looking to emphasise its client-centric business model, with high service levels and quality investment products. Salt sees significant growth opportunities in the New Zealand market and McMaster adds widely-acknowledged expertise in marketing, client partnerships and commercial capability, the company says. “Greg becomes available to us at an opportune moment and we are delighted to add his extensive experience in maintaining and growing strong partnerships with a wide set of clients.” “Salt is keen to utilise Greg’s skills to further increase our engagement with our client base, allowing us to constantly be aware of our clients’ needs and their desired investment outcomes in these difficult and volatile times.” said Paul Harrison, managing director. McMaster has spent more than eight years at AMP Capital where he was, most recently, head of clients. 010 | ASSET OCTOBER 2020

Kiwi Invest reveal new asset allocation strategist Kiwi Invest has brought on former Sanlam Investments head of portfolio construction, Peter Urbani, as its new asset allocation strategist. Urbani has been working with Kiwi Invest since the end of June but Covid-19 lockdown restrictions have meant that he has been working remotely out of Cape Town. He hopes to join the physical New Zealand offices by the end of this year. Urbani’s previous role at South African global asset manager Sanlam has seen him heavily involved with top level multi-asset portfolio construction and manager selection. At Kiwi Invest he will be driving the build of their asset allocation framework and working with the investment team to scope and implement improvements to their portfolios. Some of the highest priority topics are allocation to Australasian equities, fixed income benchmarks and decarbonisation.

New head of life for Asteron Life Suncorp New Zealand has today announced the appointment of Grant Willis into the newly established head of life role. Willis will oversee the core functions of Asteron Life, including sales, operations, product, pricing, claims and client servicing. He commences the role immediately, moving from his current position executive manager – life, in insurance solutions. Willis has a professional background in life and general insurance, banking and funds management, holding senior roles at a range of companies including AIG NZ, Colonial Fiji (a subsidiary of CBA), ASB and Sovereign before coming to Asteron Life in 2011.

Tahito announces AIA chief strategy officer as chair Chief strategy officer of AIA New Zealand, Angela Busby has been appointed chair of Tahito Limited. Busby has more than 25 years of experience in financial markets – leading teams and developing strategies. Prior to joining AIA New Zealand, Busby held roles as chief people and culture officer at Sovereign, managing principal of ASB Securities and general manager of Aegis. Tahito provides ethical and sustainable investment services. It has a unique way of measuring companies using Maori ancestral knowledge combined with sophisticated ESG data capture technology and strong financial analysis. Tahito is a subsidiary of the Investment Services Group.

FMA appoints director of investment management The Financial Markets Authority has turned to a local funds management firm to find its director of investment management, Paul Gregory, chief operating officer at Pie Funds. Gregory was director of external communications and investor capability before moving to Pie Funds in 2017. He has also been manager of the portfolio intelligence function at the New Zealand Super Fund. In his new role, he will lead the regulator's focus on and regulation of the retail investment management sector, including KiwiSaver. “This new position reflects this sector’s importance to the FMA. Paul has been living and breathing retail funds management in his prior role and I am delighted to take advantage of his passion for getting the best investor outcomes from fund managers and KiwiSaver providers," said FMA chief executive Rob Everett. Gregory will begin in the role in November. A

Keep up with the news at

goodreturns.co.nz/people-events WWW.GOODRETURNS.CO.NZ | 011

FEATURES | PROFILE

Harnessing the ‘appetite for change’ Mindful Money CEO Barry Coates has a singular focus: educating and enabling investors to invest in a more positive future for the world. BY DANIEL SMITH

ith the rising popularity of sustainable investing it is easy to forget where this kind of thinking all started. One man who hasn’t forgotten is the founder and CEO of Mindful Money, Barry Coates. He remembers where it started because he was there. His career has been a long line of projects that have used finance to champion sustainability and social good. The latest iteration may be his most powerful tool for change yet. Coates explains that: “Mindful Money is a charity we established in order to try to shift investment funds from what could be euphemistically called ‘bad stuff’ to the ‘good stuff’.” Its goal sounds 012 | ASSET OCTOBER 2020

relatively simple, but the wider impacts of the project represent a revolutionary change in the way investors consider the social impacts of their investments. This is a change that Coates has been pushing for almost his entire career: “These really big concepts have been around for a long time. I was involved in ethical investing in the UK in the early 1990s after what was called the Earth Summit in 1992, where the whole sustainability movement originated from. I've been waiting for it to become wildly popular, and it hasn't done so. Until now.” Recent years have seen a change in the waters around sustainable investing that Coates puts down to the research finally

catching up to what ethical investors have known for years: “When the research came in it showed that it is really important to consider systemic risk, which is not priced accurately by the market. This kind of approach said that, ‘well, actually, if a company has bad environmental performance, that's a financial risk as well as an environmental risk’.” Equating social and environmental risks with financial risks has now entered the mainstream. Coates points to the European Union now having regulations on sustainable investing, the New Zealand government has announced that managed funds over $1 billion must

“As far as we know, there is no initiative around the world that does what we do. And we do it for free.”

“What we're trying to do is we're trying to provide information that gives back the empowerment to individual investors.” declare climate risk reporting, and the RIAA and Mindful Money 2019 report found that eight out of 10 New Zealanders expect their KiwiSaver or other investments to be invested responsibly and ethically. But Coates warns: “There’s a big difference between people saying they are doing it and people actually doing it. Mindful Money is one of the ways that the public can sort out the wheat from the chaff.” This chaff-sorting is done by bypassing the financial rhetoric that keeps a lot of retail investors from engaging with their funds, Coates tells me that all of the complicated terminology can leave retail investors feeling disempowered. “What we're trying to do is we're trying to provide information that gives back the empowerment to individual investors. To be able to say to them that where you put your money has consequences.” If the first step is financial literacy the second step is research. Coates is realistic with the amount of time that an average investor can afford to spend analysing the ins and outs of their funds. To aid this, the Mindful Money website has been developed as a free-to-use interface where investors can access all the information they need at the click of a button. “It shows people what is in the

portfolios of all the funds, categorised by the issues that people choose to avoid. Say for example, they want to avoid funds with fossil fuels, tobacco, alcohol, gambling and pornography. We categorise investments in every one of 670 funds registered in New Zealand alongside these parameters.” The aim of Mindful Money is not to lambast investors, but to present what Coates calls “radical transparency”. The transparency is radical because the information shown is stuff that a lot of fund managers may not be revealing to investors. “As far as we know, there is no initiative around the world that does what we do. And we do it for free. If you have transparency then for most people, what they want to do is avoid the really bad stuff.” This approach reflects Coates’ belief that most people do not want to be investing in “bad stuff” and once they are shown the impact their investments are having in the real world, we will see a real change. The desire to enact social change has deep roots in Coates. After graduating from university he worked for Volunteer Service Abroad in the Pacific and ended up working for the Samoan government, becoming the country’s economic development coordinator from 19781981. Of his time in Samoa Coates says: “It was a really wonderful thing to do in a fabulous country. I was the only white man playing rugby, and I played fullback. So I'm lucky to be alive.” After returning from Samoa and working in the financial sector, Coates went to Yale to complete a master’s degree in management. After this period of study his work in the world of sustainability really kicked off. He was a member of the World Wildlife Fund delegation to 1992’s Earth Summit, what many activists see as the modern call to action over many of the issues we are facing today. After a long stint at

Fairtrade Australia and New Zealand, Coates became the executive director of Oxfam for ten years. After this he worked with the University of Auckland in developing their sustainability programme. Coates says that after being in a “position of wanting to change politics from the outside for many years, I decided I would try to change things from inside”. He became a member of the Green Party from 2016-2017. Of the time Coates says that: “When I didn't get into politics for the last election, I wasn’t really disappointed. Politics is a tough game, and it gave me time to do the Mindful Money initiative which I'm really enjoying. I think it's all about knowing where you can make a difference.” Making a difference is still at the forefront of Coates’ mission. When asked his proudest career moment he tells me that “the issues of climate finance, and the way that climate change is kind of an issue of equity as much as just environmental sustainability. I’m quite proud that I played a role in getting that message out there.” You would think that an entire career trying to get people to act on climate change would make you a bit cynical. Coates is anything but. He says that regarding the precarious future faced by our generation he’s “not pessimistic, just nervous”. But these nerves haven’t dampened his spirit, with a laugh he tells me, “there’s got to be hope. I just read this book by Jonathon Porritt called Hope in Hell. It’s given me a degree of optimism.” Coates is positive that out there in the wider community there is a “real appetite for change”, he hopes that Mindful Money will help investors connect that appetite to their portfolios and start investing for a more positive future for the world. A WWW.GOODRETURNS.CO.NZ | 013

LEAD

Clean and green: how clients can access environmentally-friendly investments Investor trends are changing, with environmentally sustainable choices increasingly popular. Which product providers are meeting demand, and do green choices impact returns?

n May, mining giant Rio Tinto blasted a 46,000-year-old Aboriginal site in Juukan Gorge, Western Australia, in search of iron ore. Despite pleas to preserve the sacred and archaeologically-significant site, the miner proceeded to destroy the cave. Precious items linked to Aboriginal heritage, including artefacts and objects documenting early human history, were lost forever. Following the blast, public outrage grew. Pressure mounted on shareholders to hold Rio Tinto executives accountable. After months of scrutiny, the mining company’s long-standing chief executive Jean-Sébastien Dominique Francois Jacques was forced to resign in September, along with executives Chris Salisbury and Simone Niven. The ousting of Rio Tinto’s chief executive was heralded by environmental, social and governance (ESG) proponents as a watershed moment for the ethical investment movement. ESG had claimed a major scalp, and with it, shockwaves rippled through corporate boardrooms. As the scandal underlined, environmental matters are more important than ever in 2020. In line with global trends, Kiwis are becoming increasingly environmentallyconscious. According to the Responsible Investment Association of Australasia’s latest annual report, released in September, about 94% of New Zealand 014 | ASSET OCTOBER 2020

BY DANIEL DUNKLEY

investors have a commitment to some form of ethical or responsible investment vehicle. According to RIAA, New Zealanders have shifted from simply screening out environmental and social harms to considering broader active ESG factors when investing, be it in KiwiSaver or into non-pension investment vehicles. RIAA says there has been a significant increase in responsible investment activity, including all ESG-related funds. The responsible investment market in New Zealand was worth $153.5 billion in 2019, representing over half of professionally managed funds, according to the association. Impact investing grew thirteen-fold to $4.74 billion in 2019, with green, social and sustainability bonds accounting for 88% of those products. Green bonds enable capital-raising for projects with environmental benefits. The bonds are typically issued by corporates, banks or governmental bodies, and pay interest to investors, backed by the assets of the issuer. A host of Kiwi Impact funds launched over the past year, including the Purpose Capital Impact Fund, which raised more than $20 million to invest in regenerative agriculture on dairy farms, green housing, and social improvement through horticulture projects. The PCIF fund was backed by The Tindall Foundation, K1W1, WEL Energy Trust, BayTrust and TECT. However, the

vehicle is out of reach for most ordinary investors, with a minimum contribution of $100,000. There are a growing number of investment options with environmental features across KiwiSaver, managed funds, and ETFs. Product providers are expanding their range of green investment options to meet growing demand. Which providers offer climate-friendly investment options? How will the green investment market evolve? Do environmentally-focused investments sacrifice returns? And what are the challenges for advisers broaching the topic? RIAA’s Simon O’Connor says the sustainable investment market is “maturing” in New Zealand, driven by an increased regulatory focus, and official bodies such as the Sustainable Finance Forum. He says environmental and social factors are increasingly underpinning investment decisions and investor pressure across Australasia. O’Connor says ESG is going beyond exclusions and placing active scrutiny on companies and their behaviour: “There’s much more focus on the impact responsible investors can have. Broadly, we’re seeing more engagement and shareholder action, going beyond negative screens, and starting to influence corporate behaviour.”

“We’re seeing more engagement and shareholder action, going beyond negative screens, and starting to influence corporate behaviour.” _ Simon O’Connor

Which funds are available? Most sustainable and green investment initiatives are part of broader ESG funds. More funds than ever are offering an environmental and sustainability component to their investment vehicles, as more Kiwis ask for eco-friendly and non-harmful savings options. Not-for-profit KiwiSaver provider Simplicity has long been outspoken about environmental issues. The firm excludes investments in fossil fuels, and rules out companies that contravene the principles of the UN Global Compact under environmental issues, as well as human rights, labour and anti-corruption. KiwiSaver provider Generate is another investment manager to offer

ESG investing options. The firm, which operates unit trusts alongside pension funds, takes an ESG approach across its range of products. Generate conducts ESG due diligence on potential investments. Its strategy: “Promotes consideration of investments that are expected to have a positive realworld impact,” and prefers investments “that have positive findings regarding ESG issues where all other factors are equal.” Generate conducts due diligence on the “quality and functioning of the natural environment and natural systems”, including pollution, resource depletion, use of toxic chemicals, and the endangerment of animal species. Booster, meanwhile, offers socially responsible investment options on KiwiSaver and non-KiwiSaver funds, with moderate, balanced and growth vehicles. The funds feature ESG-informed fixedincome allocations. Nic Craven, senior manager – research at Booster, said the company offers standard exclusions but looks at all harmful effects of a company’s operations. For example, it rules out Z Energy, a producer and distributor of fossil fuel products. Craven said Booster’s approach was “evolving”, and from last year, ESG performance had begun to inform its non-SRI investment approach: “We source data on ESG and compare companies to their peers,” Craven said. According to Craven, millennials drive a big portion of the company’s ESG market. “We also see a lot of women in their late 30s and 40s. That makes sense because they are mums, socially-aware and thinking about the future of the planet.” Craven doubts pure environmental impact funds will become a mainstream feature of the NZ investment space any time soon, given the small size of our domestic market. Mint Asset Management is another investment manager that incorporates ESG throughout its product range. The firm has a New Zealand SRI Equity Fund,

offering Kiwi institutional investors the chance to back environmentally-friendly and socially-conscious domestic names. David Boyle, head of sales and marketing at the firm, says Mint scores companies based on a range of criteria, with environmental, social and governance among the main considerations. “We think ESG principles will become increasingly important, and that’s why ESG is a big part of our scoring system.” Boyle said the New Zealand-only SRI fund would be offered to retail investors by the end of the year. “Clients are looking for investments that reflect their standards and values, and we’re seeing more demand from investors,” Boyle added. Meanwhile, Pathfinder’s CareSaver ethical KiwiSaver fund also boasts environmentally-friendly credentials.

“We think ESG principles will become increasingly important, and that’s why ESG is a big part of our scoring system.” _ David Boyle

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LEAD

CareSaver invests in companies on ESG metrics, avoiding industries that cause “environmental harm” and focusing on those “that have a positive impact on our planet”. It says it engages with companies to influence corporate behaviour. Investment heavyweight Russell Investments has developed environmental and wider ESG initiatives over decades. For retail investors, the firm offers a Low Carbon Global Shares Fund and a Low Carbon Australian Shares Fund, which are weighted towards companies with strong green credentials. The firm also offers an Australian responsible investment ETF. Alister Van Der Maas, managing director for Russell in New Zealand, says demand for environmental and other ESG funds has grown over the past three to four years, and adds the firm is developing more products with an environmental component. The environmental aspects of ESG were “getting a lot more attention across the client base”, he said.

016 | ASSET OCTOBER 2020

Van Der Maas said retail and institutional investors were keener than ever to access environmental funds, but as each investor had different needs and demands, these specific requirements meant it was difficult to find products that were the right match. “Everyone has a different understanding; therefore, at product level, everyone wants a different product,” he said. He added it was difficult for product providers to design completely-bespoke environmental products to suit each investors’ specific requirements, unless they were very large institutional investors with separate custody relationships. At retail level, he said different individual preferences made it tough for advisers to find the right fit for their clients. He said it was a challenging area for advisers. “An adviser might be looking at this issue, thinking what do I do? It’s hard, even for institutional investors. Institutional investors are still grappling

with what is the right thing to do, and what they need to do. Most people are trying hard, and that’s a step in the right direction. For advisers, having the conversation with clients is an important step.” Van Der Maas says advisers should hold ESG conversations with clients at the discovery process. “The [adviser] research process should incorporate responsible investing,” he says. “Understand what your client is thinking about responsible investing. What does the issue look like for them? Can you find a fund that meets their objectives?” He expects broader engagement from Kiwi fund managers with NZX companies on environmental topics in the coming years. “There could be more shareholder engagement on this,” Van Der Maas said. “The likes of NZ Super, ACC, and the larger asset managers are becoming more active. I would think they are going to become more active as regulation and political pressure come to bear.”

Performance and the future

“Most people are trying hard, and that’s a step in the right direction. For advisers, having the conversation with clients is an important step.” _ Alister Van Der Maas

For all of their social benefits, do environmental funds sacrifice performance? What does the latest evidence suggest? The RIAA report suggests environmentally-focused funds performed strongly through the Covid financial crisis. While a growing body of evidence indicates environmental, social and governance funds outperform benchmarks in short and long-term performance. For the first time in New Zealand, responsible investment manager financial performance has been reported for one, three, five and ten-year time horizons. RIAA compared NZ responsible investment fund averages against Morningstar’s multi-sector KiwiSaver index, with the results showing responsible strategies matched or outperformed the benchmark on all but the ten-year horizon. RIAA’S O’Connor expects more dedicated environmental, climate change, and sustainability fund offerings to emerge in line with consumer demand. He believes there will be more positive, active environmental funds in the years to come. “We’re very early in that journey,” O’Connor says. “And that will be the next evolution in responsible investing.” He adds: “Mirroring global trends, we will see more positively-screened

sustainable funds start to emerge. Investors may get more passive index funds with environmental themes. Funds that are not just about avoiding harm but delivering positive change.” RIAA also expects growth in environmental fixed-income products. Green bonds are already popular in New Zealand according to the association’s annual report. Regional banking giants have hopped on the green investment bandwagon. In August, ANZ launched an A$1.25 billion bond linked to the United Nations’ Sustainable Development Goals, the first bank-issued bond of its kind in Australia. The bank launched its first green bond in June 2015. Westpac has also issued green bonds and climate bonds. In June last year, the lender raised A$860 million from European investors to support “climate change solutions”, attracting more than 1 billion in interest from investors. Green bonds are expected to grow in prevalence across the region, opening up more investment opportunities to KiwiSaver managers and asset managers across the country. “Fund managers might allocate 1015% of their fixed income allocation to green bonds, giving them exposure to thematically green assets,” O’Connor said. “That will help mainstream asset managers with their fixed income allocation and allow KiwiSaver managers to incorporate more green investments into their portfolios.” A

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INSURANCE

Hips and knees We examine nib claims data to help understand where the money is being paid out: namely orthopaedics.

y the year 2036, it’s projected that 23% of New Zealand’s total population will be 65 years of age or over. The figure is astonishing, especially given that the most recent demographic data reveals that just 12% of Kiwis are within this age range today. There’s no doubt we live in an ageing society, health insurance claims reflect this. We’ve delved into nib’s claims data and discovered that orthopaedics accounted for $38 million for the 2019 calendar year. Their most expensive claims category (making up 25% of all claims). 018 | ASSET JULY 2020

BY JOANNA MATHERS

And it was hip and knee replacements that led the pack: each procedure making up one-third of the overall total of orthopaedic claims. The majority of claims for all orthopaedic procedures covered by nib (87%) were made by people over 40. While there is little gender difference between claimants (there is almost an exact 50/50 split between male and female), claims for orthopaedics are growing. In the past year (year ending December 19) there has been an approximately 3% rise in claims and payments made for such procedures.

Rob Henin is the chief executive officer for nib New Zealand. He says that the number of claims for hip and knee procedures is indicative of an ageing population, a population that wants to stay healthy and active. “Older people want to play with their grandkids, play golf, and run half marathons in their 60s. This is directly influencing the type of procedures people are having, and the long-term prognosis for these people.” Advances in technology and materials have meant that hip and knee replacements are more successful and

“Older people want to play with their grandkids, play golf, and run half marathons in their 60s.”

funds, but New Zealand patients have been exempt due to ACC laws. The development of ceramic implants has been a huge boost for those seeking hip replacements. Henin says that ceramic is hard, strong and smooth, and less likely to suffer from wear and tear than the metal and plastic implants that had become the norm. He continues to say that partial knee replacements (which has quicker recovery time) are also increasing in popularity, especially with younger people who don’t want to spend too much time off their feet. As the population continues to age, Henin expects claims in this area to increase. “We expect there will be more claims. In addition, as obesity rates continue to increase this puts additional stress on joints so members may start to have these problems at an earlier age.” The future for nib (and other leading health insurance providers) is likely to turn towards prevention, with programmes developed for clients that help them stay fit and healthy for longer. Henin explains that within the orthopaedics sector, there are already a number of nib programmes that are targeted towards people in this area. “Our hip and knee programme is for members who have osteoarthritis and are overweight, or our other orthopaedic programmes help members who have developed pain in these joints. We are helping members identify these problems early so they can look to improve their health and benefit from these health programmes.” A

“As obesity rates continue to increase this puts additional stress on joints so members may start to have these problems at an earlier age.” there are simpler solutions for people who are needing help. Henin says that there are two key advances that have made life simpler for sufferers of hip and knee problems: the movement from metal to ceramic hip implants and the development of partial knee replacements. Metal on metal hip implants (in which a metal ball and cup slide against each other during movement) have been the subject of international controversy over the past decade. Implants by hip joint replacement company DePuy were found to be faulty and withdrawn from the Australasian market in 2010. The implants broke down and leaked toxic metal into the patients: DePuy’s parent company Johnson and Johnson ended up settling multiple international court cases with US$2 billion-plus in

2019

% of total claims

% of total events

Hip

6.4%

0.4%

Knee

5.5%

0.4%

Other orthopaedic

4.1%

0.6%

Shoulder

1.4%

0.1%

Spine

3.3%

0.1%

nib claims data During the 2019 calendar year (CY19), the most expensive claims category was orthopaedics (such as hip and knee replacements) with $37.6 million in benefits paid on behalf of members for such treatment. •

This represented 21% of all claims benefits paid during the period.

•

This was followed by general surgery at a total cost of $31.4 million.

On average, orthopaedic related treatments cost almost $18,000 per claim. This is second only to cardiology claims ($18,900). •

The average cost for a hip replacement is $22,600 while knee replacements cost around $24,400.

Members aged over 40 are more likely to claim for orthopaedic treatment, accounting for 87% of orthopaedic claims during CY19. •

There is no real difference between gender with claims split almost 50/50 between male and female.

There was an approximate 3% increase in both the number and cost of orthopaedic claims year on year (CY18 vs CY19). In general, over the past four years to December 2019 there has been: •

a 16% or $27 million increase in total claims benefits paid by nib

•

approximately 37% or almost 50,000 increase in the total number of claims made by members.

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FEATURES | KIWISAVER PROVIDERS

How active is your KiwiSaver provider? Chris Douglas explains the findings of MyFiduciary’s FMA-commissioned report into active management within KiwiSaver. BY CHRIS DOUGLAS

Are KiwiSaver providers true to label?

n August MyFiduciary published a report commissioned by the Financial Markets Authority (FMA) into the level of active management employed by KiwiSaver providers. This is part of the FMA’s wider focus on value for money in KiwiSaver, which includes examining different investment styles and how higher fees are justified for services such as active management, responsible investment and financial advice. The MyFiduciary report looked at one of these factors – the level of activeness employed by KiwiSaver providers. In this article, Chris Douglas, one of the report's authors, provides an overview of the key findings and what it means for investors and advisers. 020 | ASSET OCTOBER 2020

In short, most are, but not all. The focus of our analysis was to uncover whether there were any KiwiSaver schemes that are described as active but aren’t really, and whether they charge “active” fees for a quasi-passive product. We found that most providers who claim to be taking a “passive” investment approach are in fact showing a low level of activeness based on the measures that we use. However, a number of providers who describe themselves as “active” are not materially more active than passive options. MyFiduciary’s “Analysis of Active versus Passive Management in KiwiSaver” report examined 31 KiwiSaver providers. We reviewed disclosure documents to uncover what providers stated was their investment philosophy and compared this to their actual portfolios. We measured the activeness of their portfolios in four ways.

01 The degree to which actual asset allocations deviate from their target or strategic asset allocations. 02 The active share of the New Zealand and international equity portfolios. 03 The tracking error (deviation of returns relative to the benchmark) of the underlying sector exposures for each KiwiSaver scheme. 04 The number of asset classes employed within the KiwiSaver scheme. There is no perfect measure of activeness, especially when doing broad cross-sectional analysis of this type. The above factors are all wellknown gauges of “active risk” across asset allocation and underlying sector/ fund exposures. The methodology was designed to be transparent and intuitive.

“There is no perfect measure of activeness, especially when doing broad crosssectional analysis of this type.”

“We found no significant relationship between the level of active management employed by KiwiSaver providers and the fees they charge.” For example, unlisted or alternative investment exposures tended to higher active scores from this framework, which is appropriate given the high level of analysis required. This report was solely focused on the degree of active management and fees charged and did not include the cost of providing advice, an assessment of quality or skill, or delve into the impact of socially responsible investment frameworks. An overall “value for money” measure would take these factors into account.

Key findings We found no significant relationship between the level of active management employed by KiwiSaver providers and the fees they charge. This finding was robust to differences in scale, differing risk profiles, and various measurements we have used for activeness. We expected the less active providers would have lower fees, on average, than the most active providers. Active management is more expensive to deliver, it requires larger investment teams carrying out the research and portfolio management, and targets a higher return compared to a passive index-tracking approach, which

can be out-sourced or implemented inhouse with much lower costs. Fees should be more reflective of the underlying investment approach, but this is not always the case in KiwiSaver. We also believe fees should have fallen across the KiwiSaver universe. The cost of investing has fallen over the last 10 years due to technology and system enhancements, especially for index replication strategies, plus providers have also benefited from generous government contributions which increase their funds under management and their revenues. Many KiwiSaver providers have reached a scale where they can pass on these benefits in the form of lower fees. The introduction of Simplicity and Juno, the two cheapest KiwiSaver providers on different ends of the active and passive spectrum clearly illustrates what is possible. But fees remain sticky and slow to come down. Further to this, the cost of most cash funds and many conservative funds are too high. With interest rates now so low, and a weighted average fee of 0.7% for conservative funds, many of these KiwiSaver schemes will be delivering a negligible return (and potentially negative returns when and if rates begin to rise) after fees and taxes are taken into account. We also believe the underlying costs that are involved with being a KiwiSaver provider should be more transparent and open to scrutiny. The government regulator has every right to push for this given the importance of KiwiSaver to New Zealanders’ retirement incomes. Part of this could involve periodically benchmarking all material costs of a default provider’s supply chain so that the total fee can be tested to ensure that providers are earning a fair and not excessive rate of return on their equity. This is not communism by stealth, but acknowledges the privileged position of default providers, and ensures they operate to a higher level of transparency so investors can have confidence they are paying a fair and reasonable fee.

Final thoughts There has been a lot of discussion and debate on fees within KiwiSaver, but it is important to have an informed debate and understand how much active risk KiwiSaver providers are taking on. And this is not about a “race to the bottom” on fees or measuring whether active will beat passive in the future. If a manager is on the passive end of the spectrum, it should not be charging active-level fees. There is some disappointment that this report hasn’t “named and shamed” providers. All the data is included at the end of the report and it is quite easy to see where each provider sits. However, the most active provider is not necessarily the best, or the best value for money. All it means is that they are the most active, for better or worse. A key message is that if a provider is more expensive than their peers, they better be providing a high value active product or be doing something special to justify their fees. Fees are the one constant that will eat away at returns, markets will ebb and flow over time, but the price you pay to your KiwiSaver provider will have a certain and measurable impact on the future value of your retirement savings. It is a big deal too, especially in a low return environment where every basis point counts. This is best illustrated by looking at the impact a high fee can have. If your fund achieves a gross return of, say, 4% but has fees of 1%, that is 25% of your return eaten up in costs before compounding. Over 30 years 4% pa turns $100 into $324; net of that 1% fee the value after 30 years is just $243. The 1% fee has reduced the total return on the original $100 by 36%. So, if you are paying above average, make sure you are getting value for money, because even small differences in fees can have a big impact. Chris Douglas is a Principal of MyFiduciary an independent investment consultant to Advisers, Charities, Foundations, Māori and iwi organisations. A WWW.GOODRETURNS.CO.NZ | 021

FEATURES | PROFILE

Sky’s the limit with right focus After a globe-trotting career Fisher Funds’ Nilesh Mistry has returned to NZ to ‘give back’.

hen not working, Nilesh Mistry, chief operating officer of Fisher Funds can be found tweaking his hi-fi sound system. Running wires from his speakers, changing the angle for a better sound boost, switching the needles on his vinyl record player to improve the audio quality. He is forever chasing that impossible goal of the ultimate sound reproduction. When asked if he is getting close to perfection Mistry replies, “you can never get close, but I think I’m in a pretty good spot”. The use of technology to strive for 022 | ASSET OCTOBER 2020

BY DANIEL SMITH

perfection is a character trait that has coloured Mistry’s journey throughout his career. Mistry joined Fisher Funds in May of this year. The global situation during his first five months in the role has been tumultuous to say the least. But Mistry knows about working through times of crisis. He was deeply involved in the US banking sector during both the 9/11 attacks and multiple global financial crises. The issues thrown up by a global pandemic have been handled by Mistry’s singular focus: “First and foremost, focus on the wellbeing of [y]our staff. That's

the most important thing. Get that right and then the rest of the business will follow.” After finishing a degree in electrical engineering at Wellington’s Victoria University, Mistry moved to Sydney to work for Channel Seven – rolling out an emerging technology platform. In the early 90s Mistry joined NatWest Markets in a role providing technology services on the market trading floor. Mistry says that: “During that time, I was blown away by the use of technology. The NatWest global platforms really helped me develop a deep interest in

“The key thing is just to have clarity around the strategy for the business during these times.”

“First and foremost, focus on the wellbeing of [y]our staff. That's the most important thing. Get that right and then the rest of the business will follow.” understanding real-time data exchange and financial markets in general.” During Mistry’s tenure, NatWest was acquired by Salomon Smith and later merged with Citicorp. He says: “The exposure and experiences provided by working under a large US multinational at quite a young age really set the course for the rest of my career.” After a short stint at Westpac, Mistry relocated to Singapore to join JPMorgan Chase in overseeing the technology needs for emerging markets throughout Asia, followed by being appointed their CTO for the entire Asia APAC region. “I was very fortunate to work with some of the smartest people in the industry, I experienced many cultures and got to work in over 15 markets across the Asia Pacific region.” Then from Asia to The Big Apple. Mistry relocated again to New York, helping JPMorgan Chase develop their retail banking platform as their digital CTO. These are memories he holds dear. “Ultimately, that was the best experience

I ever had working for the best bank in what I would regard as the best city in the world.” Mistry then relocated back to Singapore to build and lead the Asia Pacific region for worldwide technology, partnering with some of the largest multinational companies in the world to provide technology services. “This was really a unique opportunity where I was able to bring over 20 years of experience working on the buy side and transition my career to the sell side.” Finally after 20 years of globe-trotting, Mistry made the decision to relocate permanently back to New Zealand and join Fisher Funds. “I really wanted my children to grow up in New Zealand. But more importantly, I wanted to give back as well. So I'd spent over 20 years outside of New Zealand and I felt that there was a lot that I can give back to New Zealand.” Using skills learnt through decades in the financial sector to give back to his country is key for Mistry, who says that his whole career has been defined by strong values. “I have a strong sense of purpose. Purpose to get the best out of others and also to give back. My values are based on trust and honesty. So whenever I start a new role or [am] assessing opportunity, [I] always reference these core values to ensure that there's strong alignment. I feel that this approach has always served me well.” These values have been applied to Fisher Funds as they have been navigating the choppy waters of 2020. Mistry says that: “The key thing is just to have clarity around the strategy for the business during these times. Obviously, when there is a crisis it will impact different parts of your business.

When I look at Covid, it has forced us to have quite a flexible workplace with the various lockdowns that we've experienced. So just making sure that there's clear communication and clear strategy so people can get on with their work.” The nature of the pandemic response and the way that businesses have had to drastically alter the way they function have actually played into Mistry’s strengths with his focus on technology. He says that: “In terms of bringing the teams together, and collaborating, technology has been key. I feel that it is challenging, working from home. But if you've got the right tools in place and the right team you can overcome it. Having a real open communication has been paramount during this time.” For Mistry, Fisher Funds’ “track record of beating markets in good times and bad, and the firm's commitment to providing high-quality advice for all Kiwis” have come to the fore during this pandemic. He points to their commitment to full active management and their investment team using the opportunity of falling prices to add new investments to portfolios and increase returns. But Mistry says that financial gains aren’t everything for a business facing crisis mode, “what I felt was really important and a real differentiator, was the firm's advice and communication stream that enabled clients to make good decisions during these stressful times”. When asked about his proudest career moment, Mistry points towards his team’s achievements. He’s not one to rest on his laurels and discuss “proud moments” as though they are a thing of the past: he’s returned to New Zealand to give back. In his role at Fisher Funds he plans to do so. A WWW.GOODRETURNS.CO.NZ | 023

FEATURES | MEET THE MANAGERS

The great reset Heathcote Investment Partners’ Clayton Coplestone on what you can expect from this year’s virtual Meet the Managers events and why it is important for industry participants to attend.

his year’s Meet the Managers Roadshow has been replaced by three virtual events – each running from 10 am to 12 pm on Tuesday 20, Wednesday 21 and Thursday 22 October. Each of these unique virtual events will have five presenters from 15 different investment managers and will attract a total of six structured education credits … and the timing could not be better! There is no doubt that 2020 will be remembered as the year of mixed fortunes. Unlike some events, the Covid implications continue to remain unclear and ill-defined, forcing the financial services industry to have a rethink about everything. Covid is a rule changing event where capital may need to be redeployed and strategies recessed with some only working by accident the way the stopped clock sometimes tells the right time. 024 | ASSET OCTOBER 2020

Throughout the year markets have excelled – discarding companies whose models no longer work and moving that capital to new companies whose business models show more promise. Public policy quite rightly is focused on minimising the damage, which is only a small distance from a policy of reducing change. Markets, in contrast have been required to embrace change, supporting business models that work, and starving those that do not. It is more important than ever for the industry to make sure that client portfolios are well positioned to avoid the failures and enjoy the success stories. 2020 is not a year for complacency, nor a year for continuing with outdated models and processes. Investors and markets will continue to be nimble and harsh against those investment strategies that have failed to meet expectations.

During all of this, preservation of capital has also returned as a topic of conversation, with many strategies proving vulnerable to the unpredictable gyrations of the March 2020 volatility. Meet the Managers attendees will once again be exposed to five punchy presentations from our smorgasbord of 15 unique managers – each with their own perspective. Due to the deliberately fast pace and volume of information, each of the three events will run for two hours before attendees reset for the next day. Topics will include portfolio construction, value investing, property, Australasian investing and the always popular ESG – and that’s just day one. Over three days of presentations attendees will be challenged to consider new investment methods and strategies aimed at enhancing portfolio outcomes. Are you ready for the great reset? A

FEATURES | MEET THE MANAGERS

Q&A with Maple-Brown Abbott Global Listed Infrastructure Despite the decline in interest rates and economic uncertainty, the global listed infrastructure sector has lagged behind global equities year to date. Portfolio Manager Justin Lannen sheds some light.

Why invest in listed infrastructure? We believe that infrastructure offers multiple attractive characteristics to a portfolio, namely lower cashflow volatility, inflation pass-throughs and attractive dividend yields relative to broader equities. Historically infrastructure has provided downside protection versus global equities during market weakness and also portfolio diversification. There are substantial capital investment requirements into infrastructure assets which should fuel future earnings and dividend growth.

How has Covid-19 challenged the infrastructure sector? Whilst infrastructure assets have historically behaved more defensively in a downturn, the pullback in markets this year was somewhat unique in being caused by an infectious disease. As a result of this challenge there have been specific impacts on certain infrastructure assets, especially within the transportation subsector. Airports are facing severe headwinds with passenger volumes collapsing. Historically speaking the impact of other exogenous events such as 9/11 has typically proven to be short-lived, however this time seems to be different, or at least long-lived. Toll-roads also initially saw weak traffic numbers following the lockdowns, resulting in stock price volatility. Tollroads that link airports or CBDs continue to face pressure, but other roads are benefiting from the working from home movement and a reluctance to use public transport.

How does your strategy differ from other listed infrastructure managers? At the core of the Maple-Brown Abbott strategy is a tight definition of what to include in our stock universe. We only invest in infrastructure assets that we believe possess the strongest combination of low volatility and inflation protection. Such businesses must additionally provide essential services, have notable strategic positions, possess a high barrier to entry and long-dated predictable cashflows. Within our investment process, we also ascribe a high weighting to the environmental, social and governance (ESG) position of the company. Our dedicated ESG Analyst reflects the importance we place on this aspect and mirrors the increasing importance that investors globally now assign to this facet of a companyâ€™s performance. Additionally, we strictly adhere to stated capacity limits which ensures our agility and liquidity to take advantage of market opportunities. Coupled with our strong alignment in ownership interests from the founding principal partners sets us apart from other investment managers.

What opportunities & risks do you currently see? A perpetual concern to the infrastructure sector is that of regulatory and political risk. Given the essential nature of infrastructure assets, they can become political footballs. Similarly, it is critical to understand the regulatory construct

that scaffolds a business over short and long-term time periods. To manage these risks, we assess the quality of service and value for money being provided, and therefore the â€œsocial licenceâ€? standing of the company. Secondly, we analyse the historical decisions of the regulator to evaluate its track record as a balanced and consistent regulatory body. Macroeconomic risks are always a concern. Our proprietary Macroeconomic Advisory Committee which includes the expert perspective of external parties helps us consider unintended macroeconomic consequences. Covid-19 continues to present a unique set of challenges to the transportation sector and we remain cautious in this space, notwithstanding recent stock weakness. In contrast, we see opportunities in regulated water, gas and electricity infrastructure assets. These companies tend to have the least economic sensitivity and are well positioned in the event that the Covid-19 economic recovery is drawn out. The ongoing decarbonisation shift is favourable for companies that are strategically placed from an environmental perspective to benefit from increased investment. More generally, we view the infrastructure asset class as having a long-term favourable outlook. In our opinion, in this very low-yield environment such long-dated, stable income streams will be keenly sought by investors looking to match their future liabilities. A

Disclaimer This article has been prepared by Maple-Brown Abbott Limited ABN 73 001 208 564, Australian Financial Service Licence No. (AFSL) 237296, to provide general information about Maple-Brown Abbott Limited and the Maple-Brown Abbott Global Listed Infrastructure Fund (Fund). The information in this article is neither financial advice nor an offer of financial products and should not be relied upon as a substitute for detailed advice from your authorised financial adviser. Past performance information given is for illustrative purposes only and should not be relied upon (and is not) an indication of future performance. Units in the Fund are offered in accordance with the trans-Tasman mutual recognition regime, which allows the offer of Australian financial products in New Zealand if certain requirements are satisfied.Investors wishing to make an application for units in the Fund should obtain a copy of the current Product Disclosure Statement and prescribed warning statement for the Fund from the offer register at www.business.govt.nz/disclose, and seek independent professional advice before making any decision to invest.

WWW.GOODRETURNS.CO.NZ | 025

FEATURES | MEET THE MANAGERS

Invest in a sustainable future The world faces many challenges. How you invest shouldn't be one of them. Invest with a manager that thinks like you do. Invest in a sustainable future. Alphinity believes that investing shouldn't mean you need to compromise either your values or your returns. The Alphinity Sustainable Share Fund offers a diversified portfolio of ASXlisted companies that demonstrate a commitment to sustainable, socially responsible enterprise. Our portfolio invests in companies that have strong environmental, social and governance (ESG) characteristics and offer attractive prospective returns. Where possible, these companies also contribute to achieving the UN Sustainable Development Goals. 026 | ASSET OCTOBER 2020

We invest in listed Australian companies that “do good” and “do it well”. We have anchored the notion of “doing good” around the UN Sustainable Development Goals, and “doing it well” around positive ESG practices. Companies whose activities are inconsistent with the goals are excluded from the fund such as fossil fuels. Our Sustainable Share Fund Compliance Committee includes two highly reputable independent experts who ensure the fund stays true to label and adjudicates on the many grey areas. As active owners, we regularly engage with CEOs and Chairs of companies to assess how they meet the requirements of

the fund, and to encourage them in areas in which we can see potential for the companies to improve. We use the same disciplined investment process for which Alphinity is highly regarded by fund ratings organisations: we look for quality, undervalued companies exhibiting “earnings leadership”. By this we mean companies that are in an earnings upgrade cycle, as we’ve found these have the best prospects for outperformance. Deep fundamental analysis is supported by objective quantitative data to provide strong risk management. The fund has delivered consistent outperformance and a high information ratio over the past decade. We have shown that you can invest in companies that “do good”, “do it well” and still earn competitive investment returns. A

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MEET THE MANAGERS Bringing Investment Professionals Together

Meet the Managers is now an Online Event for October 2020 • Visit our new website providing you current & greater accessibility to our funds

• Our representation of some of the best Fund Managers provides solutions for NZ Financial Advisers & Intermediaries

• We continue to support the industry with educational CPD credited events

• We excel in linking our Fund Managers to NZ advisers

"In providing investment solutions that are best-in-class, Heathcote Investment Partners not only invest in their own exceptional people, but foster partnerships with standout fund managers and other financial experts around the globe to ensure you get the best result for your clients"

Clayton Coplestone

Mike Ruetsch

Visit us today to register Heathcoteinvestment.com

WWW.GOODRETURNS.CO.NZ | 027

REGULARS | INVESTMENT COMMENTARY

Where to for the role of defensive assets in a diversified portfolio? David van Schaardenburg discusses the future of investment bonds and alternative options for conservative investors going forward.

he financial impact from Covid-19 is forcing investors and their advisers to confront a range of issues and scenarios that most never imagined could occur. As central banks pursue unconventional monetary policies aimed at limiting the depth of impact of the Covid-19 induced recession now upon us, one of these issues is the record low interest rates on defensive assets like bonds and cash. Return is the reward for delaying consumption, otherwise known as saving. But when long-term investor return forecasts for an asset class are close to zero then it’s not unreasonable to expect rational investors to choose to allocate their funds to other asset classes. This, in part, could explain why investments like property and equities performed better in the last few months than was expected in March as the globe went into Covid-19 induced shutdowns. Over the last decade bond markets both globally and in New Zealand have been a stellar performer returning consistently between 4% and 8% per annum with an annual average (pre-tax/fees) return between 5% and 6%.1 A great return for a relatively stable lower risk asset class 028 | ASSET OCTOBER 2020

forming a large part of a defensive and balanced investor portfolio. However, a chunk of that return was derived from the capital gains made as bond yields fell, getting us to where we are today. With forecast returns on investment grade bonds looking close to zero or worse for the next decade, what worked yesterday is probably not going to work tomorrow. Consider this: •

The most commonly used global bond benchmark – as at June 30, 2020, the Barclays Global Aggregate Bond Index when hedged back to NZ dollars has a pre-tax yield of 1.07%. It has a duration of over seven years.

•

Similarly, the NZ Corporate Bond Index has a yield of 1.00% pre-tax with a duration close to three years.

While this prospect must be highly concerning for bond fund managers, advisers managing asset allocation for clients no longer have the luxury of allocating to bonds with the expectation this asset class (after costs) will deliver a low risk return well above bank term deposits even as the latter reaches record low levels.

It is also a concern for KiwiSaver members who are in funds which allocate on average 48% of their KiwiSaver account to bonds and cash2, according to Morningstar. This is not just a New Zealand issue. The traditional 60/40 equities/bond “balanced” portfolio commonly used in the US as a benchmark for retirement investing is set to have lower future returns with retirees having to look at other options to position the 40% defensive portion of the portfolio to get returns back up to an acceptable level.

What are the potential solutions? 01 Sooner rather than later, bond fund managers are going to be forced to take an axe to their management fees. Defensive managed fund management costs range from 0.3% to 1.6% per annum averaging at 0.89%3. So, for many investors, in the absence of capital gains from bond yields falling further, there won’t be much left for bond fund investors post the deduction of management fees.

“With forecast returns on investment grade bonds looking close to zero or worse for the next decade, what worked yesterday is probably not going to work tomorrow.”

“Sooner rather than later, bond fund managers are going to be forced to take an axe to their management fees.” 02 It’s expected bond managers may offer more risky portfolios (from a credit perspective) than their return benchmarks plus increasingly allocate to hybrid and structured debt. This does have volatility and liquidity implications which we clearly saw in March 2020 when the spread between higher risk debt issues widened out leading to many bond funds materially underperforming their benchmarks in Q1 2020. 03 The aggregate size of active positions in bond funds can be expected to increase including duration relative to benchmarks and greater concentration of individual positions. 04 Investors can purchase bonds directly rather than invest in this asset class through managed funds, with their financial adviser’s help. Implications for investment advisers of near zero investor returns from defensive assets being:

01 Advisers will need to be able to demonstrate how the fee they are charging clients is adding value. 02 Client appetite for defensive assets will continue to decline. 03 The need to find higher risk substitutes for bond funds within the client’s risk appetite. 04 A sound knowledge base and expertise required to understand and analyse the additional risks of corporate and other types of bonds. The global financial crisis (GFC) exposed a wide gap in understanding the inherent risks in structured debt investments between investment managers, investment advisers and investors. Nobody wants to see a similar repeat of the investor losses experienced then. However, free lunches in investing are rare so for increased forecast returns, more investment risk is likely to be required. This is an important discussion to have with your financial adviser.

What are potential substitutes for the role that low risk bond allocations have traditionally played in a diversified portfolio? 01 Stay with bonds but take on more credit risk by moving out beyond investment grade bonds. This can add 2% to 4% to ongoing income yields but carries more risk of defaults and return volatility. These risks can be better managed through a diversified high yield fund than investing directly.

02 High yield shares. As an example, the Smartshares S&P/NZX 50 High Dividend Index ETF had a trailing 12-month gross dividend yield of 5.87% at July 31, 2020 with net of charges gross yield of 5.33%. Dividends can go up and down as will share values so not the same stability as you’d expect from investment grade bonds. 03 The traditional Kiwi income favourite – property. An equal weighted NZ listed property portfolio as at August 1, 2020 is forecast to deliver a pre-tax yield of 5.5% for a 33% top rate tax payer. This comes with some uncertainty on dividends and property valuations in a Covid-19 world but they do have the potential to grow income over time. It seems inevitable the conservative end of investors, working with their advisers, are going to have to seriously consider taking on more investment risk or conversely take on the risk of locking themselves long-term into a very low portfolio return. At the end of the day, as previously mentioned there is no free lunch. Higher yield equates to higher risk. If you have any questions relating to this article or investment in general, contact the Findex wealth advice team at www.findex.co.nz A David van Schaardenburg is a Senior Partner, Wealth Management at Findex. An Adviser Disclosure Statement is available on request and free of charge. www.goodreturns.co.nz/disclaimers

Barclays Global Aggregate Bond Index hedged to NZ Dollars. Bloomberg NZ Bond Credit 0+ Yr Index. Both indices for decade 30/6/2010 to 30/6/2020. Source: Morningstar KiwiSaver survey June 30, 2020 3 Source: Sorted Smart Investor 1

WWW.GOODRETURNS.CO.NZ | 029

REGULARS | PRACTICE MANAGEMENT

Changing the way we do business The idea of change can fill us with dread. But embracing current industry changes will help you realise a new vision for your business. BY RUSSELL HUTCHINSON

usiness is hard, change is harder. To run your own business takes a special combination of skills. You had to learn many of them in the crucible of experience. In the insurance industry, perseverance, resilience, and in sales and advice – a willingness to speak uncomfortable truths to clients strongly enough that they listen, but not so loud that they close their minds. These conditions tend to create a certain kind of person – opinionated, self-sufficient, and good with people. I like insurance people. I also know that having found an approach that works, it can be darned hard to change.

030 | ASSET OCTOBER 2020

Change is harder because you inevitably end up breaking things that work before you rebuild them in new ways that work better. You don’t want to go around breaking things all the time, or you’ll never get anywhere. Anyone who has ever come back from a conference with a great idea to change their business and discovered that in six months of trying that the idea is now just a memory, knows exactly what I am talking about. People that you work with don’t want to change either – they have their ways – and they can’t see how good it would be if you managed to implement the change you want. All they see is the work. What we do right now is fine, they say.

Change is also necessary. The context for our businesses is changing, so we must too. The most important aspect of that changing context is our market: potential clients, closely followed by the legal and regulatory requirements for our sector, and then by the changes that our partners in the value chain (insurers and other important suppliers) are making in their businesses. As my kids are just leaving home, I have been doing a lot of reflecting on where the time went. Gradual changes around me have been thrown into sharp relief. Both my oldest kids can drive, and drive well, while it seems like only yesterday that they needed us parents to help them

“Few people are objective in assessing their own strengths and weaknesses – which is one good reason to get someone else to take a dispassionate look at what you are doing in your business.”

these key facts from research about the implementation of good governance:

“The context for our businesses is changing, so we must too. The most important aspect of that changing context is our market.” do everything. The way the marketplace changes is just like that. Very gradually, then seemingly, all at once. We get an opportunity to get ahead of marketplace changes if we read and respond to the small changes as they happen, we get a difficult, hard to swallow serving of change if we wait to be hit by it all at once. But whenever it comes, one must change. If you have ever struggled to make effective change in your business then you should be interested in good governance. If you weren’t expecting that it is probably because most of the talk about governance at the moment is framed in a conversation filled with “you must” and “you should”. It is true that certain minimum standards of governance are expected by the regulator for the industry as new advice law is implemented in March next year. But how much upside you enjoy from that will depend on how much you really want the change. There are good reasons to want good governance. A colleague who runs an advisory board business gave me

•

67% revenue growth was enjoyed over the three years following the establishment of an advisory board

•

5.9% productivity improvement was experienced over the same period

•

24% higher sales were made by companies with advisory boards compared to those without over a 10-year period

•

86% of leaders said advisory board members’ role was a significant factor in their success.

Why do boards have such an effect? If you do not run a board process it is easy to see the costs and the hassle, and hard to see how they can help much. Easy to think that you’ll spend ages explaining your business to people that don’t know much, hard to see how they can really help. They aren’t even going to be doing much of the work! Just a lot of talking, writing reports, and keeping another set of records. Even having just one other person involved can help a lot. Even having just one governance meeting each year can provide valuable, quantifiable benefits to your business. How does that happen? The answers can perhaps be found in habits research. Habits are hard to form, and hard to break. Healthy, productive habits are particularly difficult to change. An author, Gretchen Rubin, has been collating and summarising research into habits and change for some years now, and published her results. In her view self-knowledge – knowing what kind of manager you are, for example – helps to enable change. You will know what changes you find easy, and what you

will find hard. If you know in advance, that, say, people management is a challenge, you may seek special help in making changes in that area. But how do you get self-knowledge? Few people are objective in assessing their own strengths and weaknesses – which is one good reason to get someone else to take a dispassionate look at what you are doing in your business. But there is more: monitoring, scheduling, and accountability are identified as three of the pillars of creating a new habit – or in our case, change in the way business is done. Once again, governance is built to create an effective structure for exactly these things. Rubin’s research also identifies slippery slopes that lead people to fail in acquiring a new habit, or skill, such as looking for loopholes, distractions, and the role of inconvenience and convenience. Designing new management processes and ensuring their effective implementation meets exactly the same challenges. Another person can help by spotting the gaps in our planning, perspective, or selfmanagement to enable achievement of otherwise unattainable goals. That is how businesses with advisory boards achieve outperformance. Although it may be a requirement of the new regime, I think I could add a further item to Rubin’s list: willingness. The forced change looks like an arid and unforgiving place to try and grow a new business. The willing change, one motivated by the desire to realise a new vision for the business – now that looks like something where “new” could grow into “great”. A Russell Hutchinson is director of Chatswood Consulting and Quality Product Research, which operates Quotemonster. WWW.GOODRETURNS.CO.NZ | 031

REGULARS Name

MorningLatest 1Yr 3Yr 5Yr Size star Transaction Return Return Rating Return $M Exit price % Overall

MorningLatest 1Yr 3Yr 5Yr Size star Transaction Return Return Rating Return $M Exit price % Overall Westpac KiwiSaver-Capital Protect Plan 5 2.393 11.83 10.66 10.45 19.41 --

1.5561 1.54785 1.63902 1.53544 1.4938 15.83898 14.93766 1.5227 1.2072 1.5618 2.8344 3009.6699 --1.0016 -1.4421 2.2975 1.0487 1.4521

NZ Insurance Miscellaneous Non-PIE

NZ Insurance Cash AMP KiwiSaver Cash Fund AMP NZRT Cash Fund AMP Prem PSS OnePath NZ Cash AMP PSS Select Cash ANZ Default KiwiSaver Scheme-Cash Aon KiwiSaver ANZ Cash Aon KiwiSaver Nikko AM Cash ASB KiwiSaver Scheme's NZ Cash BNZ KiwiSaver Cash Fund Booster KiwiSaver Enhanced Income Fidelity Life Super-Super Cash Portfolio Fisher TWO KiwiSaver Scheme-Presv Kiwi Wealth KiwiSaver Scheme Cash Mercer KiwiSaver Cash Milford KiwiSaver Cash NZ Defence Force KiwiSaver Cash OneAnswer KiwiSaver-Cash Fund SIL 60s + Sup Cash Fund Summer New Zealand Cash Westpac KiwiSaver-Cash Fund

0.55 0.76 0.70 0.50 1.47 0.91 1.26 1.06 1.45 1.03 0.71 1.26 1.68 1.00 -0.79 1.50 1.26 0.84 1.43

1.18 1.37 1.36 1.16 1.97 1.49 1.75 1.65 2.01 1.59 1.12 1.91 2.29 1.62 -1.44 1.91 1.84 1.17 1.86

1.46 1.65 1.66 1.46 2.15 1.71 2.02 1.94 2.23 1.78 1.18 2.11 2.51 1.91 --2.06 1.96 -2.09

120.58 119.53 2.84 0.76 22.97 7.14 3.33 739.08 244.71 38.29 8.60 34.80 322.50 33.39 21.14 3.27 64.81 1.57 6.09 537.55

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

NZ Insurance Equity Region Australasia Booster KiwiSaver Trans-Tasman Share OneAnswer KiwiSaver-Australasian Share

1.954 2.6642

6.56 14.89

11.53 12.02 10.89 15.22 15.74 43.33

2 4

6.25 -2.22

10.97 3.38

4 3

NZ Insurance Equity Region Australia AMP KiwiSaver Australasian Shares Summer Australian Equities

1.4743 1.252

---

6.51 8.42

NZ Insurance Equity Region NZ AMP Prem PSS ACI NZ Shares AMP Prem PSS ACI NZ Shares Index Fidelity Life NZ Shares Portfolio Fidelity Life Super-Super NZ Share SIL 60s + Sup NZ Share Fund Summer New Zealand Equities

3.7387 3.36862 8.9668 -8.3633 1.5514

14.05 10.79 10.03 6.02 14.61 8.44

14.86 15.22 11.45 11.05 15.33 13.62

15.38 16.38 12.25 11.80 15.94 --

8.16 7.53 1.33 10.95 29.80 15.21

3 3 1 1 4 2

10.20 9.06 8.74 8.51 7.88 26.55 7.97 19.33

12.51 9.18 8.20 10.01 7.26 9.95 9.07 10.08 33.56 8.85 -- 14.32 11.90 9.62 58.56 18.12 11.27 13.57 11.94 9.54 11.31 12.30 -- 20.27

3 2 3 2 4 4 4 4

8.17 10.28

4.71 5.18

3 4

9.84 8.46

NZ Insurance Equity Region World AMP Prem PSS ACI Global Shares Index 2.85379 AMP Prem PSS FD Intl Share Fund 1 Value 1.62967 Mercer KiwiSaver Shares -NZ Defence Force KiwiSaver Shares -OneAnswer KiwiSaver-Intl Share 2.4425 OneAnswer KiwiSaver-Sustainable Int Shr 2.673 SIL International Share 4.6585 Summer Global Equities 1.6104

NZ Insurance Equity Region World - Hedged AMP KiwiSaver International Shares AMP KiwiSaver Passive International AMP Prem PSS ACI Global Shares Index Hdg Booster KiwiSaver International Share FANZ Lifestages KiwiSaver High Growth Fidelity Life Aggressive Fidelity Life International Fidelity Life Super-Sup Intl Fidelity Life Super-Super Aggressive Fisher FuturePlan - Intl Coms Fisher TWO KiwiSaver Scheme-Eq

1.4544 1.5404

8.53 11.21

---

2.73152

13.36

7.63

2.5178 1.45637 4.1097 3.0439 --3.92841 6007.1943

17.80 4.64 2.73 8.02 17.74 11.78 11.16 15.02

11.59 10.15 18.58 8.05 -- 170.70 5.35 5.70 0.44 7.91 6.75 0.35 11.48 9.59 25.98 9.85 8.94 27.23 9.73 8.61 26.92 13.07 12.20 181.06

4 3 1 2 3 3 3 5

NZ Insurance Equity Region World Non-PIE TOWER EnRoute Gold - Intl Companies Fd 24.28014 TOWER Investment Account Int'l 2.21163 Companies

2.06

0.76

-- 5.65 4.29 8.08

5 3

NZ Insurance Equity Sector Global - Real Estate

AMP KiwiSaver Property OneAnswer KiwiSaver-Intl Property

1.1806 1.4397

-7.97 -8.68

6.63 2.62

NZ Insurance Equity Sector NZ - Real Estate MFL Property Fund OneAnswer KiwiSaver-Australasian Prpty Summer Listed Property

4.9082 2.4765 1.3586

-0.05 -3.03 -3.42

7.84 8.08 495.79 12.03 10.77 30.16 10.90 -- 7.72

1 5 3

1.1389

2.80

3.43

1.27

2.59698

2.16

3.36

4.21 3.46

2.1961

2.61

3.45

3.66 6.75

1.9341 1.123

3.88 5.39

4.53 4.27

4.15 3.68 -- 1.01

4 3

1.1397 -2.6628 2.7517

-0.26 2.61 11.79 11.82

1.65 1.96 62.49 3.13 3.01 127.35 10.63 10.43 16.58 10.65 10.44 23.81

NZ Insurance Global Bond AMP KiwiSaver International Fxd Intr AMP Prem PSS PIMCO Global Fixed Interest AMP Prem PSS SSgA Global Fixed Int Index OneAnswer KiwiSaver-Intl Fxd Int Summer Global Fixed Interest

NZ Insurance Miscellaneous Booster KiwiSaver Capital Guaranteed Kiwi Wealth KiwiSaver Scheme CashPlus Westpac KiwiSaver-Capital Protect Plan 3 Westpac KiwiSaver-Capital Protect Plan 4

032 | ASSET OCTOBER 2020

-----

Name

TOWER Vital Fund

2.36

NZ Insurance Mortgages Non-PIE TOWER EnRoute Gold - Fixed Income TOWER Investment Account - Fixed Income

17.84796

0.05

1.76456

0.16

NZ Insurance Multisector - Aggressive

AMP KiwiSaver LS Aggressive Fund 1.8489 AMP KiwiSaver Nikko AM Growth 1.4053 AMP NZRT AMP Aggressive 3.80565 AMP PSS Select Growth 2.0965 Booster KiwiSaver Geared Growth 2.8109 Booster KiwiSaver High Growth 1.9521 Booster KiwiSaver Socially Rsp Inv Gr 2.3908 Fisher FuturePlan - Growth 3.77647 Generate KiwiSaver Focused Growth Fund 2.0182 Kiwi Wealth KiwiSaver Scheme Growth -Mercer KiwiSaver High Growth -Milford KiwiSaver Aggressive 1.1489 NZ Defence Force KiwiSaver High Growth --

4.68 11.39 5.19 4.29 14.29 12.11 18.12 10.21 9.48 11.40 6.60 17.13 6.36

7.59 8.28 385.31 9.26 -- 21.87 7.98 8.62 291.12 7.05 7.74 36.15 12.90 12.01 114.20 10.27 9.54 431.37 13.13 11.34 124.30 9.70 9.14 84.12 10.93 9.81 1005.98 9.30 7.90 1752.43 7.75 8.94 218.28 --- 167.59 7.53 -- 30.18

3 3 3 3 5 4 5 4 4 4 4 -3

3.40 0.90 2.56 6.79 4.45

5.81 1.95 6.04 7.29 6.47

----6.68

1 1 2 3 2

3.88

5.85

5.97 750.13

5.30 4.74 1.14 3.26 3.98 6.95 5.51 8.33 3.50 2.81 3.75 3.87 5.53 5.54 5.66 6.77 6.94 6.13 8.06 8.29 11.30 5.90 8.05 6.92 8.05 9.91 5.07 6.73 4.86 5.54 6.52 7.27 5.90

6.59 6.69 2.17 6.62 6.04 7.60 6.80 8.17 6.00 4.97 5.75 5.82 6.90 6.91 6.81 7.34 7.58 7.57 7.83 8.06 9.55 7.11 7.77 7.67 8.66 8.03 6.25 8.63 6.05 6.94 8.12 7.74 6.48

6.99 6.93 --6.19 7.79 7.23 8.10 -5.23 5.95 6.06 6.79 6.82 7.10 8.07 8.24 7.97 8.46 7.50 8.38 6.61 7.11 7.36 8.35 6.73 6.93 8.91 -6.86 -7.53 6.33

53.22 862.91 3.74 3.62 295.14 92.22 147.63 169.04 5.76 5.95 1.86 46.50 189.77 2740.33 33.78 24.71 204.66 2164.81 541.26 573.90 98.88 3.79 289.06 128.07 974.41 1887.36 450.05 443.73 66.67 628.78 106.98 1741.22 92.01

3 3 1 3 2 4 3 4 2 1 2 2 4 4 4 -5 4 5 3 5 2 3 4 4 3 3 5 2 4 4 4 3

3.40

3.03

---

1.67 2.45

4 3

5.26 3.67 2.39 5.31 5.45 5.46 4.02 4.14 3.25 4.75

5.33 4.63 3.58 5.81 5.66 5.67 5.35 4.75 3.74 5.56

-4.71 3.02 5.33 5.91 5.89 5.36 5.26 -5.19

18.04 1399.45 1.05 1208.98 4.73 79.19 4209.34 887.93 205.01 109.80

3 2 2 5 -5 4 4 2 3

NZ Insurance Multisector - Balanced AMP Ethical Balanced Fund 1.2705 AMP KiwiSaver AMP Global Multi-Asset 1.1358 AMP KiwiSaver AMP Income Generator 1.257 AMP KiwiSaver ASB Balanced 1.3252 AMP KiwiSaver LS Balanced Fund 1.966 AMP KiwiSaver LS Moderate Balanced 1.916 Fund AMP KiwiSaver Mercer Balanced 2.1271 AMP NZRT AMP Balanced Fund 3.47647 AMP NZRT AMP Global Multi-Asset 1.13282 AMP NZRT AMP Income Generator 1.26695 AMP NZRT AMP Moderate Balanced 2.51211 AMP NZRT ASB Balanced Fund 2.48211 AMP NZRT Mercer Balanced 2.86091 AMP NZRT Nikko AM Balanced 3.22283 AMP NZRT Responsible Investment Bal 1.2755 AMP PSS Lifesteps Consolidation 2.03757 AMP PSS Lifesteps Progression 2.1872 AMP PSS Select Balanced 2.10758 ANZ Default KiwiSaver Scheme-Balanced 2.0398 ANZ KiwiSaver-Balanced 2.1301 Aon KiwiSaver ANZ Balanced 29.45102 Aon KiwiSaver Russell Lifepoints 2035 10.78872 Aon KiwiSaver Russell Lifepoints Bal 11.16482 ASB KiwiSaver Scheme's Balanced 2.2269 BNZ KiwiSaver Balanced Fund 1.7641 Booster KiwiSaver Balanced 2.1075 Booster KiwiSaver Socially Rsp Inv Bal 1.668 Fidelity Life Balanced 5.4314 Fidelity Life Super-Super Balanced -Fisher FuturePlan - Balanced 4.91888 Fisher TWO KiwiSaver Scheme-Bal 6073.2421 Kiwi Wealth KiwiSaver Scheme Balanced -Mercer KiwiSaver Balanced -Milford KiwiSaver Balanced Fund 2.5797 NZ Defence Force KiwiSaver Balanced -OneAnswer KiwiSaver-Balanced 2.1603 Summer Balanced Selection 1.342 Westpac KiwiSaver-Balanced Fund 2.1069 Westpac Retirement Plan - Balanced Port 4.2305

15.29 12.76 5.06 28.92 998.33

NZ Insurance Multisector - Balanced Non-PIE Sovereign - Colonial Invstrbds - Beaver 0.4758 TOWER EnRoute Gold - VIP Balanced 28.06643 Fund TOWER Investment Account - VIP Bal Port 2.75612 TOWER VIP Managed Bond 15.85263

NZ Insurance Multisector - Conservative AMP KiwiSaver ANZ Conservative 1.2144 AMP KiwiSaver Default (Default) 1.8346 AMP PSS Select Income 1.95452 ANZ Default KiwiSaver Scheme Cnsrv(Dflt) 1.9749 Aon KiwiSaver Russell Lifepoints 2015 10.68362 Aon KiwiSaver Russell Lifepoints Cnsrv 11.18464 ASB KiwiSaver Scheme's Cnsrv (Default) 2.0093 BNZ KiwiSaver Conservative (Default) 1.4571 BNZ KiwiSaver First Home Buyer Fund 1.2158 Booster KiwiSaver Default Saver 1.3916

Name

MorningLatest 1Yr 3Yr 5Yr Size star Transaction Return Return Rating Return $M Exit price % Overall 1.16048 1.94 2.84 -- 105.10 1 1.27114 1.62 1.50 1.50 17.52 1

FANZ Lifestages KiwiSaver Income Fisher FuturePlan - Capital Prot Fisher TWO KiwiSaver Cash 1.98492 Enhanced(Dflt) Kiwi Wealth KiwiSaver Scheme Cnsrv -Kiwi Wealth KiwiSaver Scheme Default -Mercer KiwiSaver Conservative (Default) -Milford KiwiSaver Conservative Fund 1.9039 NZ Defence Force KiwiSaver Conservative -OneAnswer KiwiSaver-Conservative 1.9294 Westpac KiwiSaver Default 1.3725

5.38

5.73

5.62 725.72

7.81 5.82 4.20 4.31 3.71 4.66 4.58

6.45 5.63 5.12 5.91 4.74 5.29 5.36

5.25 5.23 5.26 6.31 -4.94 5.12

939.98 317.53 1184.15 190.20 7.58 501.43 335.12

4 4 4 4 3 3 3

2.4544 1.3759 1.3789 1.8985 2.1965 2.6834 3.09308 1.37415 1.36452 1.38799 2.18815

7.91 8.36 7.04 5.14 7.87 5.70 6.83 8.50 7.35 11.19 4.99

8.26 8.80 8.00 7.45 7.83 7.82 7.22 9.04 8.21 9.34 6.67

7.86 --7.85 7.78 8.19 6.82 ---7.19

282.22 28.98 24.64 774.44 84.85 244.27 283.94 12.89 14.83 14.07 0.18

3 4 2 2 2 2 2 4 3 3 1

2.0864

5.84

7.64

7.71 197.05

2.1067 2.2141 4.1615 21.98094 10.68534 11.26027 2.2453 1.9406 2.1557 5.4461 -2.61 2.1687 1.902 -4.1731 -2.2469 2.2928 5.1385 1.1141 2.2012 4.8854

5.87 5.84 8.12 6.90 7.35 7.27 6.04 10.26 10.58 7.12 10.23 10.70 9.14 6.34 5.79 8.01 5.50 5.85 5.89 6.03 7.76 7.49 6.34

8.16 7.64 10.71 7.72 8.09 8.20 8.22 9.38 9.76 8.59 9.43 10.85 9.14 9.83 6.95 10.71 6.70 7.66 8.20 7.87 -8.59 7.45

8.44 7.71 10.77 7.84 8.97 9.04 9.01 10.12 8.94 7.95 8.31 10.49 9.22 9.13 7.96 10.80 -7.75 8.53 7.79 -8.49 7.39

176.69 2377.24 161.97 11.19 21.18 50.87 3396.10 785.08 388.31 2.32 154.19 2321.65 596.06 771.09 135.37 1721.56 29.63 542.68 465.57 93.76 27.27 1729.73 112.64

4 3 5 3 -4 3 5 3 2 3 5 4 4 2 5 1 4 4 3 -4 3

1.21

4.07 2.72 3.36 5.43 3.02 1.69 3.63 3.92 5.73 1.75 2.39 1.78 5.16 5.16 5.90 6.27 3.94 6.19 5.85 4.56 4.51 4.71 4.34 -4.10 5.18 5.29

5.48 4.56 5.27 6.15 3.96 3.54 5.48 5.58 6.37 3.59 4.39 3.70 6.12 6.12 6.37 6.71 6.00 6.54 6.36 5.83 5.86 6.82 5.31 -5.09 6.14 --

-4.46 5.31 -4.57 3.44 5.52 --3.53 4.47 3.64 5.86 5.87 6.90 7.15 6.39 7.08 5.86 5.55 5.78 6.42 5.70 --5.89 --

18.68 429.31 573.65 28.06 117.44 334.70 175.15 18.88 15.74 3.09 5.76 8.51 72.60 1359.55 23.27 28.72 2036.04 606.67 203.81 991.51 169.83 433.14 159.13 20.06 6.38 217.53 10.15

3 2 3 4 2 1 3 3 4 2 2 2 4 4 -5 4 5 4 3 3 4 3 -2 4 --

NZ Insurance Multisector - Growth AMP KiwiSaver ANZ Balanced Plus AMP KiwiSaver ANZ Growth AMP KiwiSaver ASB Growth AMP KiwiSaver LS Growth Fund AMP KiwiSaver Nikko AM Balanced AMP NZRT AMP Growth AMP NZRT ANZ Balanced Plus AMP NZRT ANZ Growth AMP NZRT ASB Growth AMP NZRT Nikko AM Growth AMP PSS Lifesteps Growth ANZ Default KiwiSaver SchemeBalanced Gr ANZ Default KiwiSaver Scheme-Growth ANZ KiwiSaver-Balanced Growth Aon KiwiSaver Milford Aon KiwiSaver Nikko AM Balanced Aon KiwiSaver Russell Lifepoints 2045 Aon KiwiSaver Russell Lifepoints Growth ASB KiwiSaver Scheme's Growth BNZ KiwiSaver Growth Fund Booster KiwiSaver Balanced Growth Fidelity Life Growth Fidelity Life Super-Super Growth Fisher Funds Growth KiwiSaver Fund Fisher TWO KiwiSaver Scheme-Gr Generate KiwiSaver Growth Fund Mercer KiwiSaver Growth Milford KiwiSaver Active Growth Fund NZ Defence Force KiwiSaver Growth OneAnswer KiwiSaver-Balanced Growth OneAnswer KiwiSaver-Growth Fund SIL 60s + Sup Balanced Fund Summer Growth Selection Westpac KiwiSaver-Growth Fund Westpac Retirement Plan - Dynamic Port

NZ Insurance Multisector - Growth Non-PIE Sovereign - Colonial Invstrbds - Stag

0.5301

NZ Insurance Multisector - Moderate AMP KiwiSaver ASB Moderate AMP KiwiSaver LS Conservative Fund AMP KiwiSaver LS Moderate Fund AMP KiwiSaver Nikko AM Conservative AMP NZRT AMP Capital Assured Fund AMP NZRT AMP Conservative AMP NZRT AMP Moderate AMP NZRT ASB Moderate AMP NZRT Nikko AM Conservative AMP PSS Lifesteps Maturity AMP PSS Lifesteps Stability AMP PSS Select Conservative ANZ Default KiwiSaver Scheme-Cnsrv Bal ANZ KiwiSaver-Conservative Balanced Aon KiwiSaver Russell Lifepoints 2025 Aon KiwiSaver Russell Lifepoints Mod ASB KiwiSaver Scheme's Moderate BNZ KiwiSaver Moderate Fund Booster KiwiSaver Moderate Fisher Funds Conservative KiwiSaver Fund Fisher TWO KiwiSaver Scheme-Cnsrv Generate KiwiSaver Conservative Fund Mercer KiwiSaver Moderate Milford KiwiSaver Moderate NZ Defence Force KiwiSaver Moderate OneAnswer KiwiSaver-Conservative Bal Summer Conservative Selection

1.2368 1.9686 1.9293 1.2559 2.79483 3.1368 2.45786 1.24071 1.25051 1.87642 2.02069 1.96627 1.9938 2.0281 10.63801 11.35906 2.1149 1.6219 1.9679 1.8237 2.0680 1.5311 -1.0964 -2.0484 1.0879

Returns are calculated to 31/08/20. Returns are calculated before tax, 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.com.au. Please note the Morningstar Data in the July issue was incorrect and should be ignored.

For more information call 0800 888 361 Name Westpac KiwiSaver - Moderate Westpac KiwiSaver-Conservative Fund

MorningLatest 1Yr 3Yr 5Yr Size star Transaction Return Return Rating Return $M Exit price % Overall 1.4551 5.70 6.45 6.17 658.83 4 1.904 4.58 5.51 5.29 2903.38 3

NZ Insurance NZ Bonds AMP KiwiSaver NZ Fixed Interest AMP Prem PSS ACI NZ Fixed Interest Fidelity Life NZ Fixed Interest Fidelity Life Super-Super Fixed Int OneAnswer KiwiSaver-NZ Fixed Interest SIL 60s + Sup NZ Fixed Interest Summer New Zealand Fixed Interest Westpac Retirement Plan - Accum Port

4.16 4.09 3.41 2.83 4.88 4.80 4.09 1.34

5.44 5.51 3.98 3.74 6.07 5.98 5.05 2.07

-4.60 3.40 3.35 4.98 4.75 -2.00

5.11 10.68 0.19 1.27 11.49 5.43 9.86 14.65

3 4 1 1 4 3 2 1

0.3857

0.19

1.15294 2.03865 1.64935 1.37792 -2.2072 1.3791 1.0207 1.0385

0.62 0.91 1.10 0.51 0.25 1.30 1.12 1.14 1.73

1.33 1.50 1.75 1.13 0.34 1.86 1.79 -2.23

1.64 1.77 2.04 1.38 0.64 2.11 1.98 -2.50

5.40 6.42 3603.31 2.32 261.88 14.46 26.54 128.23 231.54

----------

NZ OE Cash AMP AIT NZ Cash - UT35 AMP ARS-Cash AMP Capital NZ Cash Fund AMP PUT Select Cash ASB Cash Fund BT Enhanced Cash Fund Fisher Cashplus Fund Milford Cash Nikko AM NZ Cash

NZ OE Equity Region Australasia

AMP AIT Australasian Shrs-Multi Mgr-UT07 AMP ARS-NZ & Australian (multi-manager) AMP ARS-NZ & Australian (Value) AMP NZRT Australasian Shares BT PS Australasian Diversified Share Castle Point Ranger Fund Devon Alpha Fund Devon Dividend Yield Devon Trans-Tasman Fund Forte Equity Trust Harbour Australasian Equity Harbour Australasian Equity Focus Fund Harbour Australasian Equity Income Milford Trans-Tasman Equity Mint Australasian Equity Fd (Retail) Nikko AM Concentrated Equity OneAnswer SAC Equity Selection Pie Australasian Dividend Pie Australasian Emerging Companies Pie Australasian Growth Fund Pie Growth 2 Fund QuayStreet Altum

3.74473

5.59

10.09 10.55 11.03

4.59418 5.50344 1.77317 3.0996 2.3271 1.8007 1.6835 4.0051 1.35884 3.5663 2.188 1.9186 3.3473 3.9816 2.7411 2.706 2.9698 5.0597 7.078 2.5408 1.5589

6.40 11.82 5.52 14.00 19.51 -0.60 -13.72 -4.01 -2.64 16.63 16.90 -1.25 11.72 15.65 14.71 10.21 7.24 36.95 12.97 40.47 11.18

10.68 13.54 10.99 14.80 17.95 6.99 2.22 6.53 -4.26 14.66 13.92 7.40 14.25 16.85 11.58 6.72 12.02 18.57 17.21 23.96 7.99

11.13 12.65 11.51 14.70 16.27 6.65 6.59 8.36 6.61 16.66 15.99 8.15 14.82 16.61 12.97 9.07 14.46 19.07 11.76 21.55 7.92

8.15 5.62 13.34 55.02 142.82 105.93 29.26 70.64 21.49 300.52 16.98 49.81 515.77 291.65 62.22 12.08 128.21 125.17 110.39 306.59 64.05

3 3 3 4 4 1 1 2 1 4 3 2 3 5 3 3 3 5 4 5 2

-1.51 -10.24 10.75 10.98 3.35 -2.71 10.14 -11.62 -2.34

5.97 1.51 13.17 13.38 --14.12 -2.90 3.12

5.08 4.43 11.45 11.62 --12.50 -0.06 4.70

260.08 11.45 70.06 124.92 218.33 115.74 376.99 17.60 52.82

2 3 4 5 --5 1 3

NZ OE Equity Region Australia AMP Capital Australian Share Fund Devon Australian Fisher Funds Australian Growth Fund Fisher Funds Premium Australian Fund Milford Australian Absolute Growth Fund Milford Australian Equities Wholesale Milford Dynamic OneAnswer SAC Australian Share QuayStreet AU Equity

2.8703 1.3162 4.6955 2.0738 1.1753 1.0848 2.2634 3.5481 1.5266

NZ OE Equity Region Emerging Markets AMP AIT Emerging Markets - UT65 AMP Capital Emerging Markets Share

1.54226 1.2755

6.82 8.83

2.73 4.33

5.84 1.53 6.84 67.42

---

1.3596

14.34

6.30

64.01

2.96629 3.76832 3.82862 2.95325 12.747 3.0364 7.729 3.7068 1.9037 4.1366 2.8274 6.5063 3.4693 2.1305

20.00 14.68 14.46 11.29 26.36 26.67 19.36 8.70 3.62 20.10 11.21 14.41 12.91 10.68

17.61 15.43 14.84 15.15 19.98 20.57 17.81 13.78 10.64 20.34 14.08 15.18 15.47 14.50

17.43 15.90 15.27 15.82 19.37 19.65 16.36 16.33 12.99 21.17 16.39 15.92 16.68 15.92

37.78 530.00 3.26 3.28 238.87 181.85 62.89 60.97 280.07 645.38 35.04 61.89 104.86 237.88

4 4 3 3 5 5 2 3 1 5 3 4 4 3

NZ OE Equity Region Europe Pie Growth UK & Europe

NZ OE Equity Region NZ AMP Capital Ethical Leaders NZ Shares AMP Capital NZ Shares Fund AMP Prem PUT ACI NZ Shares AMP Prem PUT ACI NZ Shares Index Fisher Funds NZ Growth Fund Fisher Funds Premium New Zealand Fund Fisher Trans Tasman Equity Trust Forsyth Barr New Zealand Equities Harbour NZ Equity Advanced Beta Fund Milford NZ Equities Wholesale Fund Nikko AM Core Equity OneAnswer SAC NZ Share QuayStreet NZ Equity Russell Investments NZ Shares

Simplicity NZ Share Smartshares NZ Core Equity Trust

MorningLatest 1Yr 3Yr 5Yr Size star Transaction Return Return Rating Return $M Exit price % Overall 1.4268 12.03 --- 407.37 -1.7081 1.45 11.17 14.22 107.02 2

NZ OE Equity Region World 1.209 2.41933 4.5258 -1.9858 3.4845 1.1825 3.48

NZ Insurance NZ Bonds Non-PIE Sovereign - Colonial Invstrbds - Fx Int

Name

AMP Capital Core Global Shares Fund AMP Capital Global Companies AMP Prem PUT FD Intl Share Fund 1 Value AMP Prem PUT SSgA Global Shares Index Elevation Capital Global Shares Fund Fisher Funds Property and Infrastructure Milford Global Select Wholesale Fund OneAnswer SAC International Share Pie Global Growth QuayStreet International Equity Russell Investments Global Shares T.Rowe Price Global Equity Growth

1.81345 1.57913 1.70085 2.46702 1.5792 2.9105 2.4862 2.7718 2.0186 2.3236 2.1503 2.2901

7.54 26.67 9.35 10.73 5.46 -6.18 18.87 7.77 24.98 6.70 4.50 27.07

10.14 8.42 960.62 --- 84.06 10.02 7.18 3.69 12.21 9.09 2.66 3.08 3.90 18.26 9.13 11.13 136.97 19.00 -- 808.58 11.73 9.45 251.73 12.81 11.38 120.67 9.31 6.84 314.29 7.69 6.65 86.80 19.32 14.26 171.37

3 -2 3 1 3 5 4 5 2 1 5

NZ OE Equity Region World - Hedged AMP AIT Global Equities-Multi Mgr-UT28 AMP AIT Global Infrastructure - UT04 AMP ARS-International Shares (Growth) AMP ARS-International Shares (Passive) AMP ARS-International Shares (Value) AMP Capital All Country Glb Shares Idx AMP Capital Core Hedged Global Shares Fd AMP Capital Ethical Leaders Global Shars AMP Capital Global Listed Infrastructure AMP Capital Global Shares Fund AMP NZRT International Shares AMP NZRT Passive International Shares AMP Prem PUT SSgA Global Shares IndexHdg ASB World Shares BT PS International Diversified Share Fisher Funds International Growth Fund Fisher Funds Premium International Fund Fisher Global Fund Milford Global Equity Nikko AM Global Equity Hedged Pathfinder Global Water Pathfinder World Equity Fund Russell Investments Hedged Global Shares

1.3843 2.88191 2.2712 2.08133 1.64556 1.14334

9.97 -7.36 24.24 12.16 13.85 12.02

6.42 8.09 10.48 3.58 5.78 23.38 16.37 13.92 8.29 8.78 9.33 3.41 6.03 9.05 4.26 --- 53.26

2 2 5 4 2 --

1.68726

10.90

5.48

9.20 589.16

1.85482 1.75617 3.33582 1.77986 1.85019

6.07 -6.00 9.74 10.10 11.21

6.36 3.52 7.98 8.96 10.42

6.65 4.82 9.01 9.41 9.82

3 1 4 4 4

2.75704

13.51

7.15

8.81 4.28

1.9582 2.1207 2.8883 3.0282 6.6505 1.9154 2.2089 2.1884 1.9413

10.30 10.20 20.59 20.80 11.58 19.96 18.08 1.75 3.30

7.98 8.54 539.46 8.03 7.85 55.32 16.88 13.06 67.94 17.23 13.27 217.41 9.64 8.80 113.93 12.91 9.13 796.87 9.03 10.49 44.65 7.23 7.26 28.48 6.41 5.25 6.11

4 3 4 5 3 4 3 3 2

2.1952

8.01

5.19

8.00 87.87

AMP AIT Global Property - UT54 AMP ARS-Listed International Property AMP Capital Global Propty Securities Fd OneAnswer SAC International Property

3.63755 4.16475 1.51603 1.4509

-8.24 -9.07 -9.92 -8.55

5.83 3.16 2.86 2.51

5.59 3.60 3.61 4.11

1.50 4.50 201.09 252.57

4 3 2 3

4.36187 2.68327 5.0334 2.3956 4.3478

-6.00 -9.46 -7.66 -5.05 -3.04

10.28 9.04 9.96 9.39 7.99 8.80 11.28 9.86 11.99 10.73

3.45 169.22 34.82 80.51 153.59

3 2 3 3 4

1.28123 2.16802 2.74176 1.10857 2.64189 1.33291

1.63 1.83 2.65 1.96 2.95 4.27

2.01 2.81 3.49 2.07 3.85 4.15

2.21 2.76 3.41 2.39 3.86 3.86

48.68 6.60 1.52 125.98 104.53 2.24

1 1 3 1 3 3

2.02565

2.67

3.35

3.53 3.41

2.4496 2.4184 1.1195 1.0951 1.3121 1.3803 1.2426

2.37 1.63 4.04 4.14 5.24 3.73 4.83

3.54 3.38 4.11 4.58 5.47 4.38 4.75

3.49 3.86 3.94 -5.10 4.03 4.93

89.08 170.60 68.60 766.96 42.11 1.51 644.10

2 4 3 4 5 3 5

0.75297 0.6568 1.48465 1.1512 1.4347 0.9005 1.4502

2.41 -5.84 --0.45 --1.82 -1.11

2.95 -3.22 -1.79 -2.61 -0.73

-4.05 -1.65 -3.08 --0.11 3.75

6.10 66.53 4.59 3.33 24.33 0.36 65.79

--------

4.05 5.59

6.67 7.70

7.24 60.06 8.25 8.15

1 3

81.57 338.84 61.86 9.14 8.89

NZ OE Equity Sector Global - Real Estate

NZ OE Equity Sector NZ - Real Estate AMP ARS-Listed NZ & Australian Property AMP Australasian Property Index Fund BT Property Fund Mint Australia NZ Rl Estt Invm (Ret) OneAnswer SAC Property Securities

NZ OE Global Bond AMP AIT Fixed Interest Income - UT36 AMP AIT Global Bonds-Multi Mgr-UT13 AMP ARS-International Fixed Interest AMP Capital Global Short Duration AMP Capital Hdgd Gbl Fixed Intrst Fund AMP NZRT International Fixed Interest AMP Prem PUT SSgA Global Fixed Int Index BT PS International Diversified Bond Fisher BondPlus Fund Fisher Funds Income Milford Global Corporate Bond Fund Nikko AM Global Bond OneAnswer SAC International Fixed Intrst Russell Investments Global Fixed Int

NZ OE Miscellaneous AMP ARS-UK Cash AMP Capital Commodities KTAM NZ Australian Long Short Equity Nikko AM Income NZAM Global Growth Pathfinder Commodity Plus Fund Salt Long Short Fund

NZ OE Multisector - Aggressive AMP AIT Aggressive Portfolio - UT31 AMP AIT eInvest - Aggressive - MDF7

2.2622 1.62739

© 2016 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 general advice and has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 and/or Morningstar Research Limited (subsidiaries 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 Product Disclosure Statement (in respect of Australian products) or Investment Statement (in respect of New Zealand products) before making any decision to invest. Neither Morningstar, nor Morningstar’s subsidiaries, 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. Please refer to our Financial Services Guide (FSG) for more information www.morningstar.com.au/fsg.asp

Name AMP AIT Growth Portfolio - UT03 AMP Capital Ethical Leaders Growth AMP PUT Select Growth

MorningLatest 1Yr 3Yr 5Yr Size star Transaction Return Return Rating Return $M Exit price % Overall 2.15854 4.15 6.41 6.82 25.01 1 3.05791 4.86 6.87 7.01 8.90 2 2.00082 4.41 7.05 7.65 17.33 2

NZ OE Multisector - Balanced AMP AIT eInvest - Balanced - MDF5 AMP AIT Moderate Portfolio - UT01 AMP ARS-Balanced AMP Capital Ethical Leaders Balanced AMP Capital Global Multi Asset Fund AMP Capital Income Generator Fund AMP PUT Select Balanced ANZ Invmt Fds Balanced ASB Balanced Milford Balanced Fund OneAnswer MAC Balanced QuayStreet Balanced QuayStreet Socially Responsible Inv Westpac Active Balanced Trust

1.48232 2.07045 2.45659 2.16103 1.29353 1.16469 2.01765 2.0676 1.9305 2.5232 2.0676 2.0736 2.0258 2.5938

4.23 2.55 4.62 3.69 1.16 2.72 3.82 5.52 5.64 6.68 5.52 6.22 5.83 6.78

6.21 4.46 6.64 6.06 2.34 6.40 5.70 6.73 7.03 8.51 6.73 6.90 6.55 7.20

6.50 4.49 6.89 5.87 3.34 7.17 5.90 6.57 7.42 8.70 6.57 6.06 5.64 6.86

39.84 47.33 136.94 60.59 114.56 173.79 38.74 428.30 387.66 882.94 60.49 246.06 50.23 552.62

2 1 3 2 1 3 2 3 3 5 3 2 2 3

1.82029 1.7266 1.8016 1.2057 1.7266 1.9173 1.1874 2.0934

2.43 4.59 3.35 4.23 4.59 4.43 1.31 3.79

3.57 5.09 4.73 6.00 5.09 5.32 4.75 4.63

2.95 4.72 4.74 -4.72 5.17 5.26 4.37

1.82 70.44 154.42 460.04 21.46 99.83 269.06 309.84

1 3 2 5 3 3 3 3

2.22015 1.58037 2.26356 2.2699 2.4245 1.9157 3.8346 4.1424 2.2699 2.4245 3.6136 2.1669 2.5728

4.11 5.02 5.40 5.82 5.84 5.56 6.99 8.43 5.82 5.84 5.84 6.81 6.98

5.72 5.87 74.41 7.13 7.59 11.31 7.57 7.98 49.41 7.47 7.50 269.83 7.98 8.24 153.04 7.69 8.44 124.77 7.52 7.18 11.86 10.76 10.70 1259.28 7.47 7.50 47.33 7.98 8.24 36.58 7.50 7.44 52.21 7.72 6.57 257.73 8.08 7.81 118.46

1 2 2 3 3 3 2 5 3 3 3 2 3

1.32862 1.39799 2.53553 2.62961 1.92437 1.8927 1.8295 1.8475 1.0038 1.7753 1.0956 1.8927 1.7028

2.33 2.84 2.89 1.94 1.81 5.13 3.82 3.38 2.26 0.99 2.31 5.13 5.20

4.21 4.94 4.73 3.81 3.65 5.94 5.50 5.45 5.41 6.62 5.26 5.94 5.95

4.20 5.07 4.65 3.75 3.50 5.63 5.53 5.83 -8.56 5.35 5.63 5.62

9.86 41.77 37.18 6.95 12.17 242.72 796.36 538.80 128.27 2333.69 217.15 23.50 996.67

2 2 2 2 1 4 3 3 3 5 3 4 3

1.33748 2.02191 2.92464 1.85151 1.31947 1.45605 1.7722 1.5271 1.9493 1.9959 1.2059 1.1556 1.2122 1.1565 1.2879 1.9812 1.4382 1.3207 1.1796 1.2804

2.57 3.68 4.16 4.35 2.87 4.22 3.90 4.44 4.18 4.15 4.09 4.77 4.27 5.78 5.32 4.74 4.07 3.73 4.57 1.74

3.56 5.10 5.55 5.78 3.54 5.63 4.41 6.30 5.14 5.14 5.11 5.23 5.52 6.60 6.18 5.93 4.08 5.39 -2.52

3.49 4.19 4.65 4.87 3.50 4.67 4.00 4.93 4.52 4.71 4.64 4.63 5.13 5.40 5.40 4.86 4.18 4.68 -2.47

6.10 10.13 5.28 2344.76 587.06 12.06 147.09 82.76 30.60 202.99 171.96 468.63 808.97 103.01 203.69 15.13 385.82 180.01 342.51 5.71

2 2 3 4 2 3 2 4 3 3 3 3 4 5 5 4 2 3 -1

NZ OE Multisector - Conservative AMP PUT Select Income ANZ Invmt Fds Conservative ASB Conservative Milford Conservative OneAnswer MAC Conservative QuayStreet Conservative QuayStreet Income Westpac Active Conservative Trust

NZ OE Multisector - Growth AMP AIT Balanced Portfolio - UT 02 AMP AIT eInvest - Growth - MDF6 AMP ARS-High Growth ANZ Invmt Fds Balanced Growth ANZ Invmt Fds Growth ASB Growth Fisher Multi Sector Fund Milford Active Growth OneAnswer MAC Balanced Growth OneAnswer MAC Growth OneAnswer SAC Balanced Growth QuayStreet Growth Westpac Active Growth Trust

NZ OE Multisector - Moderate AMP AIT eInvest - Conservative - MDF2 AMP AIT eInvest - Moderate - MDf3 AMP ARS-Conservative AMP Capital Ethical Leaders Conservative AMP PUT Select Conservative ANZ Invmt Fds Conservative Balanced ASB Conservative Plus ASB Moderate Harbour Income Milford Diversified Income Fund Mint Diversified Income OneAnswer MAC Conservative Balanced Westpac Active Moderate Trust

NZ OE NZ Bonds AMP AIT NZ Bond - UT36 AMP AIT NZ Fixed Interest - UT60 AMP ARS-NZ Fixed Interest AMP Capital NZ Fixed Interest Fund AMP Capital NZ Short Duration AMP NZRT NZ Fixed Interest BT Corporate Bond Fund Fisher New Zealand Fixed Inc Trust Forsyth Barr NZ Fixed Interest Forsyth Barr Premium Yield Harbour NZ Core Fixed Interest Harbour NZ Corporate Bond Milford Trans-Tasman Bond Nikko AM NZ Bond Nikko AM NZ Corporate Bond OneAnswer SAC NZ Fixed Interest QuayStreet Fixed Interest Russell Investments NZ Fixed Interest Simplicity NZ Bond Westpac Active Income Strategies Trust

WWW.GOODRETURNS.CO.NZ | 033

TOP 10

As usual it has been a busy month on Good Returns. Here is a list of the top 10 most read stories over recent weeks.

01 FMA releases active-versuspassive report The Financial Markets Authority (FMA) has published an independent report into the passive and active investment management styles used by KiwiSaver providers.

02 Stubbs: Take KiwiSaver fees issue to court The Financial Markets Authority should take court action to set a benchmark for what is an unreasonable KiwiSaver fee, Simplicity founder Sam Stubbs says.

03 Treasury MBIE mull options for KiwiSaver default scheme Treasury wanted a reallocation of KiwiSaver default members so that each default scheme had a similar number of members, a regulatory impact statement shows.

04 Australian banks offloading of wealth businesses continues BNZ parent NAB has agreed to sell its MLC Wealth business to IOOF for A$1.44 billion.

05 Court of appeal backs Asteron Life in battle with former broker Asteron Life has claimed a win in a longrunning legal battle with Dunedin insurance broker Peter Taylor.

Keep up with the news at

GOODRETURNS.CO.NZ

034 | ASSET OCTOBER 2020

06 Deloitte â€“ tricky to compare NZ insurance to other market A new report by Deloitte has raised questions about suggestions New Zealand insurers are offering high commissions and paying few claims by global standards.

07 AMP makes top level changes amid allegations AMP has announced a new chairman and AMP Capital chief executive as the company grapples with allegations of sexual harassment.

08 Advisers to be offered branded investment platforms A new investment platform preparing for launch this year will offer a white-label version for advisers to use with their clients.

09 Nikko reveals new strategy for income investors Low-risk alternative to term deposits or bonus bonds â€“ Nikko AM NZ's new income fund.

10 Bond specialist raises concerns over recent FMA guidelines Hunter Investments managing director, Tony Hildyard says that the FMA guidelines fail to properly explain the risks associated with the sector.

WWW.GOODRETURNS.CO.NZ | 035

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