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Q.        I came across an article you wrote in 2012 in answer to a reader’s question, "Are there any KiwiSaver schemes that invest in gold?" In your answer you explained that it would not be prudent to invest solely in any one asset class but you did not specifically name any KiwiSaver funds that invest in gold.  Where you able to find any KiwiSaver funds that allow for purchase of bullion or allow investors to purchase something like the Sprott ETF, Europacific Gold Fund, or a royalty company such as Franco Nevada?

A.         There could certainly be a proportion of gold in some KiwiSaver schemes, but the weighting will be modest and you therefore will not find it in quarterly disclosure statements which require fund managers to list the top 10 assets. 

A higher risk fund with more exposure to international shares, including mining stocks, would be one way to invest in gold, along with other minerals and resources. There are problems associated with gold as an investment as the price can fluctuate sharply over short time periods and gold bullion does not generate any income. KiwiSaver Schemes are managed along ‘prudent person’ guidelines which may allow for just a modest allocation to gold as part of a well-diversified portfolio.

It sounds like you would like more exposure to gold than you will get from your average KiwiSaver fund. You would also like a fund that allows investors some input into where their money goes. The only KiwiSaver Scheme that I am aware of that allows investors to choose individual stocks is Craigs Investment Partners KiwiSaver Scheme. Their kiwiSTART Select Investment Options allows investors to choose up to 6 individual stocks and 10 funds from a range of 160 Australasian and global shares and funds. The list of available assets is available on Craigs’ website along with the investment statement. 

The 160 funds and shares does include gold stocks such as Market Vectors Gold Miners (an index fund of around 40 companies that mine for gold or silver) and SPDR Gold Shares(the largest physically backed gold exchange traded fund in the world). 

I asked a former colleague who now works as an adviser for Craigs about their kiwiSTART Select Investment Options KiwiSaver Scheme. He replied, “If someone wishes to join our Scheme he or she would have to discuss it with a Craigs’ adviser. Craigs believes that a portfolio should consist of a number of holdings across a variety of industries and economies. While the KiwiSaver Self Select allows a single holding in any of the available securities we would not recommend it as a strategy.”
 
A look through their application form reinforces this. Investors are asked to ‘contact a Craigs Investment Partners Adviser to discuss a self-selected Portfolio.’ You are also asked to provide a reason for your choice of investments such as country exposure, industry exposure or currency exposure.
 
Craigs’ KiwiSaver Scheme was set up for clients who want some input into their KiwiSaver investment direction. This type of DIY structure is popular overseas, particularly Australia, where they have taken it further, allowing investors to create their own retirement schemes (at a cost). It is not cost effective for KiwiSaver fund managers to offer too many options to investors and DIY is unlikely to become widely available until KiwiSaver has been running for longer and balances become much larger than they are at present – closer to the value of a house rather than the value of a car. Tax and regulatory changes would also be required. 
 
Hawkes Bay Today 24 February 2015

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838 or go to www.peak.net.nz. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to
shelley.hanna@peak.net.nz