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MoneyHub welcomes new KiwiSaver scheme

Released: Thursday 9 August

MoneyHub welcomes new KiwiSaver scheme aiming to offer market-beating returns with fixed monthly fees

MoneyHub, the financial product comparison website, has published a detailed guide to the newly launched JUNO KiwiSaver scheme. Managed by boutique fund manager Pie Funds, JUNO KiwiSaver’s fee-free funds for savers with under $5,000 saved is a KiwiSaver-first. The scheme is offering three funds with fixed monthly fees, a departure from the standard percentage-of-fund-size approach of other schemes. Despite the fee initiative, many potential fund switchers will be watching the performance of its three funds before making a move.

Senior Researcher Christopher Walsh comments:

“There are a number of features in the JUNO scheme that will be unfamiliar to existing KiwiSaver members. Most schemes have two fees - an annual fee, and a management fee. JUNO KiwiSaver instead has ONE fee, and it's in dollar terms, not as a percentage of a fund balance. This means members pay a fixed amount per month (or nothing if the balance is below $5,000)”.

“The three funds offer different risk profiles – the fixed-interest leaning Conservative fund and Balanced fund, to the more equity-focused Growth fund. The funds are actively managed and run by Pie Funds' investment managers, not by JUNO KiwiSaver itself. The idea is that the investment managers will regularly pick undervalued equities, anticipating that their share price will go up in the short to medium term. This has more risk but also has the potential for greater returns”.

“We want to make it clear that everyone has their own objectives for their KiwiSaver money, and low fees are only one factor when deciding. Depending on an individual’s KiwiSaver balance, other funds on other low-fee platforms can have cheaper management fees, with an example presented in the table below.

BalanceJUNO KiwiSaver Annual FeeSimplicity Annual FeeSuperLife Annual Fee
$5,000$60 (1.20%)$46 (0.91%)$61 (1.21%)
$15,000$60 (0.40%)$77 (0.51%)$122 (0.81%)
$40,000$180 (0.45%)$154 (0.39%)$274 (0.69%)
$100,000$600 (0.60%)$340 (0.34%)$640 (0.64%)
$500,000$600 (0.12%)$1,580 (0.32%)$3,080 (0.62%)

“JUNO KiwiSaver and its fixed fee structure ultimately creates a fee-sweet-spot for newbie employees with low balances, as well as those with significantly sized balances wanting low fees. Those with medium sized balances may find lower fees elsewhere”.

“The investment managers of each JUNO KiwiSaver fund will be actively looking to investment in a small number of companies they believe the market has mispriced relative to the companies’ outlook, taking a position that the share price will rise”.

“New entrants to the KiwiSaver market are relatively rare – they lack any performance data or track record. In the case of JUNO KiwiSaver, the entire scheme will be managed by Pie Funds' investment team which currently has $860m of investor money under management”.

“Running a KiwiSaver scheme is an expensive operation and MoneyHub estimates JUNO KiwiSaver would need to attract around 15,000 members with an average balance of $20,000 before it itself makes a profit. As such, we are probably going to hear a lot more from the promoters of the scheme as it chases an aggressive target with revenue solely coming from relatively low fixed member fees”.

MoneyHub’s guide to the JUNO KiwiSaver scheme will be updated on a regular basis, but in similar style to other KiwiSaver guides, performance data would not be included.

More: JUNO KiwiSaver Review


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