Investors who take the plunge into KiwiSaver after the scheme opens on July 1 will be taking big decisions based on guesswork.
As of this week there are 20 KiwiSaver providers ready to go. But unless investors go for the plain vanilla default provider, which will generate low returns at very low risk, choosing which fund to put cash into will be no easy task.
With this in mind, Christchurch software company Trident Securities has designed a website - smartkiwisaver.co.nz - with data to help investors make an informed choice.
Trident is an unfamiliar name in the financial sector, but owner Phil Harris says the company has been providing software tools to the industry for 20 years.
"We don't get out there and provide data to the general market," he said. "It just so happens that the tools we can offer on smartkiwisaver are more in line with what people want to see."
Harris said there could ultimately be 50 KiwiSaver providers, each offering several funds. ING, for example, had six specific funds and three profile funds, "so if all 20 providers have that - that's 180 different funds. How do you get that information? A Consumer magazine pushed out every year isn't going to cut the mustard is it?"
Harris's site will include information on all the KiwiSaver funds on offer, together with guides and calculators to help investors choose the fund type most suitable for their circumstances.
"We're trying to personalise this as much as we can to empower individuals to make their own decisions."
Because all KiwiSaver funds will be new, there is no past performance data to help investors get a sense of how well an individual fund is likely to perform, so the site aims to bridge that information gap with data on similarly-styled pension funds run by the same managers. Trident has a database of 90 balanced funds for comparison.
Once KiwiSaver fund performance figures are generated over time, the site will provide charts of each fund's performance against its peers.
The downside of smartkiwisa
ver. co.nz is that using it costs $30 up front, although this covers access for a year. Although $30 isn't much, investors may be reluctant to part with the cash until they know how useful the site will be.
Some of that information will be available free, to those who know where to look. Pension fund industry website www. workplace
super. org.nz will offer KiwiSaver fund performace comparisons once data becomes available, though its site may not be as user friendly as an independent consumer site. On default fund fees, for example, the industry website offers an opaque text-heavy matrix listing the various charges for each provider.
By contrast, investment adviser and fund manager Gareth Morgan - a campaigner against the traditional fee structures in the industry - has produced a simple bar graph of KiwiSaver fees, with his own fund fees coming out the lowest.
The example shows the vested interests savers must negotiate in making their choices. If Harris's site can deliver the information people want, it's independence will be a useful asset.
- Sunday Star Times