Building on its popular share-trading app, Sharesies now offers a KiwiSaver product that allows you to pick and choose your KiwiSaver investments. But the added flexibility does come with added risks and fees. Canstar reveals what you need to know about Sharesies KiwiSaver before you invest your retirement savings.
Sharesies KiwiSaver: How does it work?
When you sign up to Sharesies KiwiSaver you pick a main base fund. At least 50% of your money has to be allocated in your base fund.
The rest of your cash you can invest across a selection of close to 100 NZX-listed companies and exchange-traded funds (ETFs), to a max of 5% of your money in each pick.
Sharesies KiwiSaver: Base funds
You get to choose one of three base funds, either Conservative, Balanced or Growth. These are in keeping with the three basic KiwiSaver fund profiles, which reflect different levels of risk and return.
Currently, there’s only one base fund each for the Conservative and Balanced profiles. However, there are three Growth funds to choose from.
The base funds are offered by SuperLife, Pathfinder and Pie Funds – three financial management companies that are also KiwiSaver providers.
Conservative Base Fund
Sharesies Smartshares Conservative Fund: invested in the SuperLife Conservative Fund. Fee: 0.47% p.a.
Balanced Base Fund
Sharesies Smartshares Balanced Fund: invested in the SuperLife Balanced Fund. Fee: 0.50% p.a.
Growth Base Funds
Sharesies Pathfinder Ethical Growth Fund: invested in the Pathfinder Ethical Growth Fund. Fee: 1.32% p.a.
Sharesies Pie Global Growth 2 Fund: invested in the Pie Global Growth 2 Fund. Fee: 1.52% p.a.
Sharesies Smartshares Growth Fund: invested in the SuperLife Growth Fund. Fee: 0.51% p.a.
Sharesies KiwiSaver: Self-select
These investment options include a who’s who of big Kiwi companies, from banks and energy providers, to food and entertainment firms, telcos and property groups. There’s also a wide choice of Smartshares ETFs, covering global and domestic markets.
As we mention above, the amount of your KiwiSaver you can attribute to any of your own picks is limited to 5% of your total balance.
Simple, right? Well, yes and no. Before you sign up, you need to take a long, hard look at the risks, and costs, of managing your own KiwiSaver investments.
→Related article: What is an ETF?
Sharesies KiwiSaver: What are the risks
As Sharesies points out: “You aren’t guaranteed to make money, and you might lose the money you start with.”
Yes, all KiwiSaver investments involve risks. But they are, in the most part, risks managed by financial professionals who invest other people’s money for a living.
Investing your hard-earned money in a company without first thoroughly researching the market and the firm’s finances is not advised.
To help minimise risk, Sharesies does put in place guardrails.
For a start, you have to invest at least half your money in a professionally managed base fund.
And while Sharesies’ regular investment app gives access to thousands of companies across NZ, US, and Australian stock exchanges, Sharesies KiwiSaver limits your choices to fewer than 100 quality NZ stock options.
But just because you can choose your own KiwiSaver investments, doesn’t mean you should, unless you have a very good understanding of what you’re doing, and plan to play a proactive, and ongoing, role in managing your self-select investments.
Sharesies KiwiSaver: What are the fees?
KiwiSaver providers are heavily regulated and the Financial Markets Authority does its best to ensure KiwiSaver fees remain as low as possible. This is reflected by the fees charged by Sharesies’ base fund providers (as shown above), which are in line with those of other KiwiSaver funds.
However, while most KiwiSaver members pay just one set fee per annum on each of their funds, Sharesies KiwiSaver members could face multiple fees.
In addition to a flat fee on both the base portion and the self-select portion of their fund, a Sharesies KiwiSaver member pays a transaction fee every time they buy or sell self-select investments.
Sharesies charges an admin fee of 0.15% of the balance of annual picks, plus individual transaction fees of 1% up to $1000, and 0.1% of any sum over $1000 ($1 per $1000).
While the fee structure is fine if you’re not self-selecting very often, if you’re buying and selling regularly, especially small amounts up to $1000, your fees could quickly add up.
Also, it’s worth noting that even if you don’t plan to sell your self picks in the short term, you might have your hand forced. If one of your own picks falls out of line with the balance of stocks in your portfolio and hits 10% of the value of your total investments for 90 days, or 15% of your total balance, you must realign your investments so their value drops back within the 10% threshold.
Sharesies KiwiSaver: The verdict
Taking an active role in your KiwiSaver is never a bad move. However, it always pays to do your research, to balance returns against risk and to fully understand the fees you’re paying, as they can seriously impact your long-term returns.
If you’re happy to accept higher risks and fees to chase higher returns, that’s up to you. After all, it’s why KiwiSaver funds come in different flavours: from conservative to high-growth (and risk).
But if you’re used to using Sharesies to chase short-term, uninformed gains on the stock market, following the same investment plan of action through Sharesies KiwiSaver could end up costing you dearly in retirement.
Compare KiwiSaver Providers with Canstar
If you’re comparing KiwiSaver funds, the comparison table below displays some of the products currently available on Canstar’s database for a KiwiSaver member with a balance of $50,000 in a Growth fund, sorted by Star Rating (highest to lowest), followed by company name (alphabetical) – some may have links to providers’ websites. Use Canstar’s KiwiSaver comparison selector to view a wider range of retirement funds. Canstar may earn a fee for referrals.
To read more about our latest KiwiSaver Awards click this link or to compare KiwiSaver providers, click on the button below.
About the author of this page
This report was written by Canstar’s Editor, Bruce Pitchers. Bruce has three decades’ experience as a journalist and has worked for major media companies in the UK and Australasia, including ACP, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.