kōura Kiwisaver Review - is this challenger the KiwiSaver scheme for you?

In this guide, we outline what kōura KiwiSaver is, how it differs from standard KiwiSaver providers, and why its unique approach to avoiding "growth" and "balanced" funds can help to maximise savings by the time you retire. We outline how kōura is different from other KiwiSaver schemes, as well as looking at whether it's safe to invest in given its recent appearance as a KiwiSaver option. This guide covers:

• ​The Specs of kōura Funds
• What funds does kōura offer, and what's the difference between them?
• Who is kōura Suited to?
• kōura KiwiSaver - What You Need to Know
• kōura FAQs
• The Competition - kōura vs Simplicity vs JUNO vs other challenger KiwiSaver schemes
• The Bottom Line
• 7 Things to Know About kōura's Kiwisaver Scheme
• Our Conclusion

Please note: MoneyHub is not a Financial Adviser, and this guide has been published to explain the investment fundamentals and outline the pros and cons of kōura as a KiwiSaver provider.​

Know this first: kōura argues it exists as a 'KiwiSaver 2.0' scheme by making sure people save enough for retirement

• Most KiwiSaver schemes don't focus on whether your savings will be sufficient to upkeep your lifestyle in retirement. Instead, you contribute at least 3%, your employer throws in 3% and time and market returns take care of the rest. Whether or not the balance you have at aged 65 is enough for what you need isn't a consideration.
• kōura believes that the majority of New Zealanders have not set up their KiwiSaver properly, they don’t have the right fund type and have not properly considered their contribution rates to give them what they expect in retirement. 
• kōura's response to this is their digital advice offering;  every kōura customer is told what their KiwiSaver outcomes will be before signing up, and kōura builds a personalised portfolio (the process of which we outline below).
• It's questionable whether financial advisers would be as thorough in identifying how much you should save per week for retirement; kōura's technology puts this critical question at the heart of the investment process.
• We applaud kōura for challenging the status quo by putting short-term (i.e. first home deposit withdrawal) and long-term investor needs (a comfortable retirement) at the core of the scheme. 

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kōura offers six core growth and index funds, which themselves invest in Blackrock ETFs, and three speciality funds, which cover clean energy, property and crypto. kōura states clearly that it "believes index investing will provide a better return over the very long horizon for a typical KiwiSaver investor". kōura is not alone in offering index funds for KiwiSaver - Simplicity and Superlife are two other examples. 
​
kōura's KiwiSaver funds are comprised of over 3,000 different investments in 50+ countries, and overseas investments are 70% hedged to the NZ dollar. This means that if the NZ Dollar rises against any overseas currency, 70% of the value of the overseas investment will be affected. For example, if the NZ Dollar falls in value against the USD, USD-denominated investments (i.e. international shares) will increase in NZ Dollar-terms. For this reason, exchange rate movement is an investment risk.  
 
The fees are as followed: 

• Annual fees (core funds): $30 + 0.63% of your investment balance (e.g. $6.30 for every $1,000 in your account).
• Annual fees (speciality funds): $30 + 1.10% of your investment balance (e.g. $11.10 for every $1,000 in your account).
  
• Transfer in and exit fees: There are no exit fees for withdrawing from any kōura KiwiSaver fund, but your existing KiwiSaver scheme provider may charge an exit fee to switch to kōura - you'll need to contact them to find out what that is. 
  

Core Fund Investment Products include:

• Cash (i.e. bank deposits in New Zealand banks)
  
• New Zealand Fixed Income (i.e. investments in government bonds or company debt)
  
• New Zealand Shares (i.e. shares in Spark, Fletcher Building and Air New Zealand)
  
• International Shares - including U.S, European, established Asian (Hong Kong, Singapore, Japan etc) and developing economies (Brazil, China, Mexico etc). 
  

Speciality Fund Investment Products include:

• Cryptocurrency (KiwiSaver members can invest a maximum of 10% of their balance into the crypto fund)
  
• Clean energy (with a focus on technology companies innovating in the industry rather than energy generation companies)
  
• Property (with a focus on New Zealand Real Estate Trusts and Retirement Villages).
  

kōura is unique in that it doesn't offer standard fund buckets like 'conservative', 'balanced', or 'growth'. Instead, it offers six core growth and index funds; three of which invest only in New Zealand ('domestic exposure' funds), and three investing overseas ('international exposure' funds). These are:

• International exposure funds: US Equities Fund, Rest of World Equities Fund and Emerging Markets Equities Fund, all of which are managed by Blackrock, the world's largest asset manager. All of these are growth assets because they invest in the sharemarket.
• Domestic exposure funds: NZ Equities Fund, Fixed Interest Fund and Cash Fund, all of which kōura directly managers or invests in an existing investment fund. Only NZ Equities is a growth asset; Fixed Interest and Cash are income assets because they invest in low-risk, fixed-interest securities. kōura managers its domestic funds directly with the assistance of their strategic partner Hobson Wealth, who is a cornerstone shareholder of kōura KiwiSaver. Hobson Wealth Partners is one of New Zealand’s largest wealth managers and trusted by thousands of clients.
• kōura also offers three speciality funds, which focus on New Zealand property, crypto and clean energy. We expand on these in the section below.

Be aware: Unlike many other KiwiSaver funds with retain 5% or 10% in cash, even if they are growth assets, kōura's five non-cash funds are 99%+ invested in their underlying fund or shares and bonds. This anticipates that the majority of kōura's members are invested in a number of funds, including the Cash fund, so there's less need for a cash holding in each fund.

Fees: The six core growth and index funds charge a flat 0.63% p.a. management fee, while the three speciality funds have a 1.10% pa. management fee. It's arguable that 0.63% p.a. is high for cash and fixed interest funds, but kōura doesn't expect you to invest in a single fund. Instead, kōura encourages its KiwiSaver members to invest in a portfolio of these funds according to their risk profile. The result will be a mixture of growth and income assets, invested locally and/or overseas.

​For its overseas funds (1. to 3. below), kōura invests KiwiSaver money primarily in iShares, which are exchange-traded funds managed by BlackRock. For the New Zealand funds, investments include NZX50 companies, local government and commercial bonds, as well as a BNZ cash account. The speciality funds each have a unique investment strategy which we explain below.

The funds are as follows: 

Core Growth and Index Funds

1. kōura US Equities Fund focuses on investing in dominant companies listed on the US share market.
The fund invests over 99% of its money into the iShares ESG MSCI USA Leaders ETF, which invests in hundreds of American-listed companies. Recent holdings include Microsoft, Alphabet (Google), Johnson & Johnson, Visa Inc and Procter & Gamble, among others. 

2. kōura Emerging Markets Fund focuses on investing in emerging markets like developing Asia, South America and Eastern Europe. 
The fund invests over 99% of its money into the iShares MSCI EM IMI ESG SCRN, which invests in Alibaba, Samsung, Tencent and the China Construction Bank, among others. 

3. kōura Rest Of World Equities Fund focuses on investing in non-US and Canada shares.
The fund invests over 93% of its money into the iShares Trust iShares ESG MSCI EAFE and ETF and Xtrackers MSCI EAFE ESG Leaders Equity ETF. Both of these funds invest in companies like Roche, SAP, GlaxoSmithKline, SONY, BP and Allianz. 

4. kōura NZ Equities Fund focuses on investing in the New Zealand share market. 
The fund invests in NZX50 companies, with major holdings being Fisher & Paykel Healthcare, A2 Milk, Spark and Meridian Energy, among others.

5. kōura New Zealand Fixed Interest Fund focuses on fixed-interest investments in bonds and term deposits with New Zealand-based companies and organisations. 
The fund invests in bonds from organisations like the Auckland Council, Christchurch International Airport, China Construction Bank (NZ) and Fonterra.

6. kōura Cash Fund is a bank account with the BNZ and exists to offer investors exposure to cash. 

Speciality Funds

1. Clean Energy Fund – This fund invests in the First Trust NASDAQ Clean Edge Green Energy Index Fund. It focuses on innovation and technology companies rather than power generators. Recent holdings include Tesla, SolarEdge Technologies and Plug Power.

2. New Zealand Property Fund – kōura's focus is on REITs and retirement villages listed on the NZX. 

3. Carbon Neutral Crypto Currency Fund - This fund is a New Zealand first with a 100% exposure to Bitcoin. It's also only the second carbon neutral cryptocurrency fund to launch globally.

Where to get more information about the funds and their performance?
kōura publishes its latest fund performance data here; fund updates are released every 3 months for the periods ending 31 March, 30 June, 30 September and 31 December. You can also download the latest Statement of Investment Policy and Objectives (SIPO), which outlines the scheme's philosophy and strategy.

​The Claim
"kōura offers a proven investment strategy to give you more".

Is it True?
The claim is based on the fact that that kōura is an index investor, and avoids picking individual shares in the belief that, in the long-run, indexes always out-perform individual funds. This is no different to the investing strategy of Simplicity or Superlife and many funds run by the banks.

​The Claim
"Kōura offers a best in class sustainable portfolio".

Is it True?
The claim is based on kōura's refusal to invest in anything unsustainable. This includes gambling, civilian weapons, controversial weapons, adult entertainment, whaling and tobacco. Avoiding 'nasty' industries is increasingly popular among KiwiSaver schemes and isn't a unique approach by kōura. Whether or not it is "best in class" is a matter of opinion. 

The Claim
"Kōura fees are almost half the industry average".

Is it True?
Yes - but the 'industry average' they claim also includes actively managed funds which, in almost all cases, are more expensive to manage by nature. For example, a Milford Asset Management or Generate fund charges over 1% p.a. Comparing Kōura's 0.63% p.a. annual management fee among its peers, Simplicity charges 0.31% and Superlife's funds generally range from 0.50% to 0.70%.

The Claim
"We have over 200 different portfolios, so we can always match a portfolio to your goals and risk profile.  This gives you the best chance to make the most out of your KiwiSaver".

We haven't substantiated the 200 different options as we don't specialise in calculus. However, the broad range of questions you're asked in the portfolio generator tool suggests the results you're given will differ significantly based on how you answer. The idea of this tool is to build an investment portfolio that moves away from generic, stock-standard growth, balanced and conservative funds. 

For the core growth and index funds, there are two fund managers involved. Firstly, Hobson Wealth Partners is responsible for the three New Zealand funds' investments. As outlined above, they are an experienced fund manager with branches around New Zealand. Secondly, Blackrock Partners managers the investments of the three overseas funds. By using specialist companies who track indexes, the costs are kept low as there are no fund managers and investment analysts to pay. This allows the savings to be passed on to investors, hence the mid-range 0.63% annual fee.

For the speciality funds, all three have different managers or investing strategies. For example, the clean energy fund invests into this US-listed ETF, the crypto fund invests 100% into bitcoin and the property fund invests into New Zealand-listed property-related companies.

Yes - most of kōura's funds invest in shares, and it's likely your portfolio will include at least one of these. With the exception of the crypto fund, all of the funds are diversified, so you are protected if and when one or two companies get into trouble.

We define 'big' as the total funds under management. Because kōura is a young scheme, it is one of the smallest KiwiSaver schemes right now, with around $35 million under management with 1,000+ members from all over New Zealand.

Yes - all KiwiSaver providers must comply with a number of strict rules to ensure the funds of their clients (i.e. what KiwiSaver investors put in) are kept completely separate from the funds used to run the scheme (i.e. money to pay the staff and run the business). kōura appoints Public Trust as their independent supervisor and custodian. Public Trust has been around for almost 150 years and is ‘guaranteed independent’ under the Public Trust Act 2001. kōura is also registered with the Financial Markets Authority. 

​Should kōura close down, your funds would transfer to another provider under the rules of the KiwiSaver. With regards to whether it’s safe to invest, no fund is guaranteed, but the risk profile indicates where your money will be invested. This is the case with any KiwiSaver scheme, and not unique to kōura. If a kōura fund went ‘bad’, then the performance of the other funds in your portfolio would factor into your overall KiwiSaver balance. However, most of the funds invest in the world's largest companies, so the risk of a troubled fund is minimal, even in a post-COVID-19 world.

kōura is rivalled by Simplicity and SuperLife who also offer KiwiSaver growth-focused index funds and compete on fees. The specifics are as followed:

1. Simplicity: Four funds with a 0.31% p.a. annual management fee
2. SuperLife: Many funds with a ~0.5% p.a. annual management fee, and $30/year member fee.

Let's calculate the annual fees on a $10,000 KiwiSaver balance:

• kōura = $10,000 X 0.63% + $30 = $93
• Simplicity = $10,000 X 0.31% = $31
• SuperLife = $10,000 X 0.50% + $30 = $80

And calculating the annual fees on a $30,000 KiwiSaver balance:

• kōura = $30,000 X 0.63% + $30 = $219
• Simplicity = $30,000 X 0.31% = $93
• SuperLife = $30,000 X 0.50% + $30 = $180

The NZHerald reported in October 2019 that "the six funds kōura will invest in US Equities Fund, Rest of World Equities Fund, Emerging Markets Equities Fund, NZ Equities Fund, Fixed Interest Fund and NZ Cash Fund. In terms of fees, kōura has a simple price - an annual fee of $30 for over 18-year-olds and a funds under management charge of 0.63 per cent which is at the lower end for charges because it uses index-tracking funds".

GoodReturns published in August 2019 that "Hobson Wealth owns about half the shares in Kōura....and Kōura would not invest into Hobson's funds, however. It will have a passive strategy, investing into international passive funds and building its own domestic passive funds. Kōura will only offer robo-advice. Carlyon said while people needed help, they were generally not willing to pay for it".

kōura offers something that most KiwiSaver schemes do not - it asks the investor (i.e. you) what their investing goals are, and how much they're willing to risk. kōura avoids the "conservative", "balanced" or "growth" fund approach, and instead auto-populates a portfolio approach based on the investor's risk profile using its robo-advice questionnaire. This approach is very different from almost every scheme offered, and something that MoneyHub believes to be valuable to the average investor. For those who want specialist exposure, it offers crypto, green energy and property funds.

The objective of kōura is to avoid KiwiSaver members from missing out on savings by the time they reach retirement. A recent article (sponsored content in The Spinoff) reported that Kōura had done research which shows that more than half of KiwiSavers are in a fund that is not the right type them. This includes the 20% of people who are languishing in low-return default funds. While we can't comment on those figures, we do believe there is a systemic issue with people choosing (or defaulting into) the wrong funds. kōura is right to challenge this with a robo-advice approach. 

Know This: Once you're a member, kōura will remind you once a year to update the robo-advice questionnaire proposition.  If you have moved to a different stage in your life, and your portfolio needs to be changed, kōura will suggest the fund mix you are most suited to. For example, if you're close to buying your first home or wanting to retire soon, then kōura will suggest that you make a tweak to your portfolio. 

kōura delivers a friendly user experience; your investor dashboard breaks down your total fund invested into components including returns since you joined. There is also a feel-good graph showing projected totals until you reach 65 years of age based on your previous contributions.

Despite the innovation, kōura won't be for everyone. Some people like 'simplicity' and will prefer to be in one fund - you can do this with kōura, but ultimately that is not its purpose. If you are an active or aggressive KiwiSaver investor and want a fund manager to continuously pick shares or other securities for short/medium-term investment, kōura is not for you.