Saturday, October 4, 2014

'Ethical' Kiwisaver schemes

See update re. Koinonia at end of post

The Kiwisaver scheme to which Martin currently belongs is being closed down, so we're on the hunt for a replacement.  Ideally we'd like to invest in a scheme that invests in something socially positive, but if we can't have that then at least we want to exclude investments in things that are really harmful.  To see what our options are I've been trawling all the Kiwisaver schemes that pitch themselves as 'ethical'.  I thought I'd share what I'd found here in the hope of saving someone else some work.

All the 'ethical' schemes exclude investments in alcohol, tobacco, gambling and armaments except Craig's Investment Partners' 'Balanced SRI' Fund (which only aims to "have a diversified portfolio of investments that are deemed to be environmentally and socially sustainable") and OneAnswer's 'Sustainable Growth' Fund (which excludes investments in tobacco, gambling and armaments but allows investments in alcohol).  I've listed any other 'ethical' criteria the various schemes employ under their names below, along with what kind of investment they are, what their past returns have been like and what fees they charge.  Note that for 'past returns' I'm listing the returns to end March 2014, after tax (at the maximum rate) and fees.

Fidelity Life's Ethical Kiwi Fund
NB: This fund appears to no longer be accepting new members.
  • No additional ethical criteria.
  • A medium risk balanced' fund investing 60% in shares and 40% in fixed interest.
  • Past returns: 5.8% per annum over the last five years (9.2% over the last three).
  • Fees: $3.03 per month plus 1.16% and up to 0.065% per year.

SuperLife's Ethica
  • In addition to alcohol, tobacco, gambling and armaments it excludes investments in pornography and fossil fuel extraction.  It also excludes investments where it sees the activity behind the investment having negative social/community outcomes, damaging the environment or violating UN standards on human rights, health and safety or child labour.  Investments in activities that would be illegal in NZ are also excluded.
  • A medium-risk 'balanced' fund that's 60% shares and property and 40% cash and bonds.
  • Past returns: 6.3% per annum over the last five years (5.0% over the last three).
  • Fees: $2.75 per month plus 0.23% and approx 0.50% per year.

Grosvenor's Socially Responsible Investment Balanced Fund
  • No additional ethical criteria.
  • A medium-risk 'balanced' fund that's 50-70% shares with the balance in fixed interest and cash.
  • Past returns: I can't find these - the disclosure statement only lists the 'growth' fund, as does 'Sorted', so I think this may be a new fund.
  • Fees: $3 per month plus 1.17% per year.

Craig's Investment Partners' Balanced SRI Fund
  • Aims to "have a diversified portfolio of investments that are deemed to be environmentally and socially sustainable".
  • A medium-risk 'balanced' fund that's 60% shares and 40% cash and fixed interest.
  • Past returns: 5.4% per annum over the last five years (4.7% over the last three).
  • Fees: 1.25% entry fee plus up to $30 and 1.25% per year.

Grosvenor's Socially Responsible Investment Growth Fund
  • No additional ethical criteria.
  • A high-risk 'growth' fund that mostly invests in New Zealand and Australian shares.
  • Past returns: 5.2% per annum over the last three years.
  • Fees: $3 per month plus 1.17% per year.

OneAnswer's Sustainable Growth Fund
  • In addition to tobacco, gambling and armaments it excludes investments in nuclear power, pornography and fur.  It does not exclude investments in alcohol.  It only invests in companies which it sees as being in the top 50% of their class in terms of environmental, social and governance policies and transparency.
  • A high-risk 'growth' fund with at least two thirds of the funds invested in shares and/or transferable securities.
  • Past returns: 5.8% per annum over the last five years (2.5% over the last three).
  • Fees: $2 per month plus 1.62% per year.

Amanah
  • In addition to alcohol, tobacco, gambling and armaments it excludes investments in money-lending, pornography and pork.  It also takes into account "environmental, social, and governance considerations" in its investments and is Shari'ah compliant.
  • An 'aggressive' fund investing in equities, debt-free real estate and cash.  It will only invest in companies with a low level of debt (no 'high-gearing'.)
  • Past returns: the fund has only been in existence since late March 2014.  Between then and end June 2014 it lost 4.9%.
  • Fees: $2.70 per month plus 1.78% and 15% on any returns above 8% per year. 

Update from September 2016

I wasn't looking at restricted schemes when I did this post two years ago.  However, since then Koinonia, whilst still restricted, has become much more open: anyone who self-identifies as Christian can join.  Here's what I've found about it.  For consistency, I've given returns to end of March 2014 (the same as for the rest of the post), although that means I can only give three-year returns and not five-year returns as the older data is no longer easily accessible.

Koinonia Income Fund
  • In addition to tobacco, gambling and armaments it excludes direct investments in pornography and beer (but not wine or spirits - it's an Anglican fund and these are used by Anglicans in worship).  They also avoid:
    • companies whose primary purpose is extraction and production of fossil fuels;
    • those with a poor environmental or industrial relations record;
    • those where the management "appears excessively concerned with their own remuneration";
    • those where "the activities of key individuals raise serious ethical concerns". 
  • A low-risk 'defensive' fund that's 100% cash and fixed interest.  35% of funds are invested overseas, where they will not necessarily be invested in accordance with their investment guidelines.  As they say: "Our policy does not preclude investment in certain overseas funds which may not necessarily have the same approach as the Board to ethical investment. For example, tracker funds, alternative strategy funds and certain fixed interest funds.".
  • Past returns: 2.1% per annum over the three years ending 31 March 2014 (note that, for the first year of the period, this was actually a different fund that was wound up and replaced).
  • Fees: 1.5% (no monthly fee).  Note that this fee doesn't seem to be published anywhere: my number is what's given in a number of recent quarterly reports.
Koinonia Balanced Fund
  • In addition to tobacco, gambling and armaments it excludes direct investments in pornography and beer (but not wine or spirits - it's an Anglican fund and these are used by Anglicans in worship).  They also avoid:
    • companies whose primary purpose is extraction and production of fossil fuels;
    • those with a poor environmental or industrial relations record;
    • those where the management "appears excessively concerned with their own remuneration";
    • those where "the activities of key individuals raise serious ethical concerns". 
  • A medium-risk 'balanced' fund that's 50% cash and fixed interest, 25% international shares, 20% Australasian shares and 5% 'alternative assets' (forestry etc.).  45%-50% of funds are invested overseas, where they will not necessarily be invested in accordance with their investment guidelines.  As they say: "Our policy does not preclude investment in certain overseas funds which may not necessarily have the same approach as the Board to ethical investment. For example, tracker funds, alternative strategy funds and certain fixed interest funds.".
  • Past returns: 4.0% per annum over the three years ending 31 March 2014.
  • Fees: 1.7% (no monthly fee).  Note that this fee doesn't seem to be published anywhere: my number is what's given in a number of recent quarterly reports.
Koinonia Growth Fund
  • In addition to tobacco, gambling and armaments it excludes direct investments in pornography and beer (but not wine or spirits - it's an Anglican fund and these are used by Anglicans in worship).  They also avoid:
    • companies whose primary purpose is extraction and production of fossil fuels;
    • those with a poor environmental or industrial relations record;
    • those where the management "appears excessively concerned with their own remuneration";
    • those where "the activities of key individuals raise serious ethical concerns". 
  • A high-risk 'growth' fund that's 40% international shares, 25% cash and fixed interest, 25% Australasian shares and 10% 'alternative assets' (forestry etc.).  50-60% of funds are invested overseas, where they will not necessarily be invested in accordance with their investment guidelines.  As they say: "Our policy does not preclude investment in certain overseas funds which may not necessarily have the same approach as the Board to ethical investment. For example, tracker funds, alternative strategy funds and certain fixed interest funds."
  • Past returns: 4.3% per annum over the three years ending 31 March 2014.
  • Fees: 1.8% (no monthly fee).  Note that this fee doesn't seem to be published anywhere: my number is what's given in a number of recent quarterly reports.

Summary of past returns (after tax and fees) and fees (updated to include Koinonia):



fund type return over 5 years return over three years fixed fee (annual) percentage fee


Koinonia Income defensive ? 2.10% $0 1.5%



Koinonia Balanced balanced ? 4.90% $0 1.7%



Fidelity Life's Ethical Kiwi balanced 5.80% 9.20% $36.36 1.22%



SuperLife's Ethica balanced 6.30% 5.00% $33 0.73%



Grosvenor's SRI Balanced balanced ? ? $36 1.17%



Craig's Investment Partners' Balanced SRI balanced 5.40% 4.70% $30 1.25% + 1.25% entry fee

Koinonia Growth growth ? 4.30% $0 1.8%



Grosvenor's SRI Growth growth N/A 5.20% $36 1.17%



OneAnswer's Sustainable Growth growth 5.80% 2.50% $24 1.62%



Amanah growth N/A N/A $32.40 1.78% + 15% on any returns above 8%

2 comments:

  1. Replies
    1. Hi Caleb. I didn't originally look at Koinonia as it's a restricted scheme. However, since I wrote this it's become a lot less restricted so your comment prompted me to look into it. My findings are in an update at the end of the post.

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