Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
New Zealand’s investment market: the full picture
(Pictured: David Chaplin)
The KiwiSaver scheme, New Zealand’s incentivised retirement savings system, has reached about NZ$17 billion (A$14.9 billion) in assets covering 2.2 million members, according to a research report by David Chaplin. But recent growth has slowed.
Chaplin, a specialist journalist who this year launched a funds management research firm studying both retail and institutional markets in New Zealand, says: “Many people have opinions on KiwiSaver today, very few possess the facts. This report – ‘Six years on the Road’ – aims to add a little more information to the mix.”
Chaplin says: “Based on a forensic examination of the annual reports and financial statements of 38 KiwiSaver schemes over the year to March 13, the study… provides a detailed view of KiwiSaver trends across metrics including funds under management, membership, fees, returns and transfers between schemes.
“This year, too, a new measurement compares schemes across the proportion of ‘non contributing members’, which became a regulatory reporting requirement for the first time over 2012-2013.”
The full report, covering: member and funds under management trends; fees and expenses; investment returns; scheme transfers etc, is available for purchase at NZ$250 (A$219.00 plus GST (if applicable). For information, email: [email protected]
The KiwiSaver report supplements Chaplin’s recently published report and database for New Zealand’s 1,800 registered financial advisers.
Viewed together, the reports show that the New Zealand retirement savings market is growing, slowly, but probably needs some impetus from the Conservative Government to get to the stage where there’s a significant reduction in dependence on the social security system for New Zealand retirees.
The latest report says: “Despite the still-healthy monthly net member increases (up 15,602 from August 31 to the end of September and almost 22,000 over the previous month) the overall pace of growth has slowed.
“The number of net new members signing on to KiwiSaver has steadily declined every year since the regime launched in 2007. From the stellar first year sign-up of 716,637 members, the annual membership increase has fallen from almost 384,000 in 2008-2019 to just 180,399 over the 12 months ending June 30, 2013.
“The dwindling numbers of fresh sign-ups has sparked competition among KiwiSaver firms for existing members: the transfer market remains hot, with the default schemes again typically the biggest losers in this game.
“Increased competition, combined with new regulations that came into force last year, have also fueled the first real decline in KiwiSaver scheme numbers covered by this study.
“In the previous five annual periods the number of schemes included in this report hovered between 41-43: this year only 38 schemes have made the list, despite one new entrant (IwiInvestor) joining the study group.”
