The logical approach to KiwiSaver planning
The majority of KiwiSaver schemes have just one investment manager, with just one investment approach, creating, in our opinion, unreliable and random outcomes. Through our Provider, we use up to six top investment managers, simultaneously and side by side, each with different philosophies, styles and methods, spreading your expertise risk and capturing more opportunities. The diagram below illustrates this:
At Fusion Investing, we believe the expertise of multiple managers working for you, eliminates the risk of any one manager derailing your retirement plans.
You are years old and earn $ a year.
Your personal contributions are % and
your current KiwiSaver balance is $
Upgrading to a Multi-Manager Strategy costs nothing and gives you all the above benefits
Upgrading your KiwiSaver account to a Multi-Manager Strategy is done on-line and costs nothing. It usually takes a minute or so. We will design you a personalised account where your risk profile is accurately assessed and incorporated. This design is provided in writing with reasons and rationale. You will be fully aware of the managers, funds, fees, past and likely future performance before you make any changes.
Lower risk means better outcomes
With single-manager strategies, you have no control over your managers' results. With a Multi-Manager Strategy however, you're in control. When we judge by performance, any single investment manager could be top, bottom or anywhere in between. With multiple managers, covering most major investment philosophies, the result closely follows the industry median result. Statistically, 50% of all managers must under-perform the average but with a Multi-Manager Strategy, the chances of all your managers being poor performers is very low.
Fusion Investing is about avoiding under-performance and giving you a reasonable return, rather than chasing "stars" and risking a poor one.
If we project forward, using the last five years' performance figures, choosing a below average performer could cost you a lot of money. Our Multi-Manager Strategy greatly reduces the chance of this happening.
You are years old and earn $ a year.
Your personal contributions are % and
your current KiwiSaver balance is $
Reducing Relative Performance Risk
KiwiSaver is a long-term investment, with many providers and managers to choose from. Inevitably, some will deliver poor returns compared to their peers, failing their investors. We call this "Peer Performance Risk" (PPR). If you use just one fund manager, you can't avoid this risk, but with multiple managers, we believe you can virtually eliminate it.
Our Multi-Manager Strategy (MMS) simultaneously uses a selection of up to six managers with different styles and philosophies. Each is given the same portion of your funds to manage. The chances of all your managers underperforming the industry average is very low. So we can say our Multi-Manager Strategy has virtually "Zero Peer Performance Risk" over longer time frames. We know what the historic average underperformance is (Morningstar KiwiSaver Surveys), and if we project these historic figures forward to your age 65, we can estimate what your dollar "advantage" could be with multiple managers.
We can't engineer specific returns, that's impossible, but we can prevent below industry-average returns. ie. If the average industry (say) Growth Profile return is 7.5% p.a. over the next 20 years, that's what a Growth Profile Multi-Manager-Strategy should deliver, or very close to it.
Remember, in a universe of single managers, there will be "winners" and "losers". At Fusion, we call this "gambling".
Of course, if you're confident your current manager will remain an above-average performer for the rest of your life, you don't need MMS. But if you think they're "infallible", do you remember Prudential, Tower, National Mutual, Spicers and Huljich? Once household names, but where are they now? We've already seen several managers change since KiwiSaver started, and it's certain there will be more changes. If you don't want to be watching managers and performance statistics for the rest of your life, MMS is a great solution so you can get on with life with one less worry.