Pathfinder Kiwisaver Review - is this the KiwiSaver scheme for you?

Our Review
In this guide, we outline what the Pathfinder KiwiSaver plan is, how it differs from standard KiwiSaver providers, as well as looking at whether it's safe to invest in given its recent appearance in 2019 as a KiwiSaver provider. We cover:

• The Specs of Pathfinder
• The Funds
• What You Need to Know
• FAQs
• ​The Competition
• What the media says about Pathfinder
• ​3 Must-Know Facts about Pathfinder
• Conclusion

Please note: MoneyHub is not a Financial Adviser, and our guide to the Pathfinder KiwiSaver Plan has been published to explain the investment fundamentals and outline the pros and cons of the scheme. Nothing in this guide constitutes financial advice.​

How does Pathfinder compare with other options?

• Read our Favourite KiwiSaver Funds guide to find out more.
• Worried about not having enough money when you retire? Don't retire poor - read our Retirement in a Nutshell guide (warning: it's brutally honest)

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Pathfinder offers three different funds, investing in local cash deposits and bonds, as well as New Zealand, Australian and overseas shares. Pathfinder's funds' offshore assets are 50% hedged to the NZ dollar. This means that if the NZ Dollar rises against any overseas currency, the value of the overseas investment is 50% diminished due to the hedging and therefore eliminating exchange rate movement as an investment risk. Hedging is standard practice by almost all KiwiSaver schemes and Pathfinder operates in line with its competitors. 
 
The fees are as followed: 

• Annual fees:

1. Pathfinder KiwiSaver Conservative Fund: Management fee of 0.83% p.a + $27 Pathfinder KiwiSaver plan membership fee per year. 
2. Pathfinder KiwiSaver Balanced Fund: Management fee of 1.12% p.a + $27 Pathfinder KiwiSaver plan membership fee per year. 
3. Pathfinder KiwiSaver Growth Fund: Management fee of 1.26% p.a + $27 Pathfinder KiwiSaver plan membership fee per year. 

• Transfer in and exit fees: There are no exit fees, but your existing KiwiSaver scheme provider may charge an exit fee - you'll need to contact them to find out what that is. Our switching KiwiSaver guide has more details. 
• Minimum Initial Investment: $1 for all funds.

​Investment Products include:

• Cash and cash equivalents (i.e. bank deposits in New Zealand banks)
• NZ Fixed Income (i.e. investments in New Zealand or and/or local government bonds or company debt)
• International Fixed Income (i.e. investments in overseas government bonds or company debt)
• Australian Equities (i.e. shares in ethically-approved New Zealand and Australian companies listed on the sharemarket)
• International Equities (i.e. shares in ethically-approved oversras-listed companies)

Pathfinder offers three funds - Conservative, Balanced and Growth. This is a standard setup for almost all KiwiSaver schemes. When it comes to risk, generally the rule is that the higher the percentage invested in shares (rather than cash deposits and fixed income), the riskier the investment. This is because shares fluctuate in value, whereas cash deposits don't and your investment is near-guaranteed for anything classes as cash or fixed-income. It's important to note that all Pathfinder funds are actively managed, with individual shares analysed, bought and sold by the Pathfinder funds management team. 

1. Conservative Fund
This fund investments largely in fixed-income (60%) and cash (20%), leaving an exposure to the sharemarket of 20% of funds invested, with most of the risk in overseas shares. Recent holdings include bonds in forest companies, shares in a wind farm company and standard bank term deposits and cash accounts.

The fund comprises of:

• Cash and cash equivalents 20%
• NZ Fixed Income 30%
• International Fixed Income 30%
• Australian Equities 10%
• International Equities 10%

2. Balanced Fund
This fund is a bridge between the Conservative fund above and the Growth fund below, offering a midway point for someone looking for higher returns without high risk. As such, the fund is 60% shares and 40% fixed income and cash. Recent holdings include RUA Bioscience, Microsoft and ​bonds in forest companies.

The fund comprises of:

• Cash and cash equivalents 10%
• NZ Fixed Income 10%
• International Fixed Income 20%
• Australian Equities 15%
• International Equities 45%

3. Growth Fund
The most aggressive fund Pathfinder offers, with 80% tied up in shares around the world. The return and value of this fund will depend heavily on how each company performs. Recent holdings include RUA Bioscience, Sharesies, Microsoft, Vestas Wind Systems, Equinix Inc and Fisher & Paykel Healthcare, among others.
 
The fund comprises of:

• Cash and cash equivalents 5%
• NZ Fixed Income 5%
• International Fixed Income 10%
• Australian Equities 20%
• International Equities 60%

​The Claim
"Pathfinder is a KiwiSaver plan that goes further than simply avoiding companies that harm our society – we seek out companies actively making a positive difference".
 
Is it True?
Yes - Pathfinder investment managers (and specialist third-party ratings agents), consider all companies on environmental, social and governance (ESG) metrics. As a result, Pathfinder doesn't invest in any business trading in tobacco, factory farming, whaling, controversial weapons, fossil fuels, civilian weapons, inequality, animal testing, gambling, adult entertainment. 

Pathfinder manages the assets and are responsible for getting the best returns across all funds. Pathfinder looks after $150m+ in assets, held on behalf of New Zealanders. The costs of active management is the main reason fees are the staff. 

Understanding the process of ethical investment selection: Pathfinder KiwiSaver safely boasts one of the most rigorous standards in ethical investing. It’s ethical policy and approach are spelled out in detailed here. It is one of the few fund managers who are signatories to the UN Principles of Responsible Investment and is accredited by the Responsible Investment Association Australasia. Pathfinder's extensive ethical investing policy can be downloaded here.

For all funds, the answer to this is yes. However, the percentage of your money invested in the sharemarket depends on the fund and its risk profile - the Conservative Fund has the least money in sharemarket, whereas the Growth Fund invests the most money in the sharemarket. However, all of the investments are diversified so you are protected if and when one or two investments don’t work out.

Risk - the three funds each offer a unique investment strategy. Some are low-risk, some are medium risk and some are high risk. The returns/profit you make don’t necessarily depend on the risk you take.

Pathfinder is a young, small but growing KiwiSaver plan. Because it's a young scheme, it is smaller than other established providers like Westpac and BNZ, and other non-banks schemes such as Simplicity and JUNO. As of January 2021, about $60 million was invested across the three funds, with the Growth Fund having the most invested.

On the issue of trust, the answer is 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). Pathfinder has appointed 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.

What happens if Pathfinder closes?

• ​Should Pathfinder close down, your funds would transfer to another provider under the rules of 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 Pathfinder. The fund updates section is updated every three months and outlines how the funds have performed, as well as what the top ten holdings (i.e assets) are of each fund.

Pathfinder and Simplicity are arguably the most charitable and ethical KiwiSaver funds. However it's difficult to compare given Pathfinder is actively managed and Simplicity is a passive scheme. Pathfinder applies a high standard to the companies it chooses to invest it because it is not a index fund investment, and its ethical investing policy is at the heart of every investment. 

Results: Pathfinder produced the second-highest Growth Fund returns for the year ended 30 September 2020 per Morningstar data, outperforming other ESG funds such as Simplicity Growth and Booster Growth. Additionally, the top performing fund for conservative category for the three months to 30 September 2020 was Pathfinder Conservative, up 2.5 per cent (and featured in the NZ Herald).

What Others Are Saying:

The NZHerald reported in July 2019 that Pathfinder (known then as CareSaver) was aligned with ethical investing and would only invest in New Zealand listed companies that have at least one female director on their boards. Furthermore, Pathfinder committed to share 20 per cent of its investment management fees from its funds with 17 leading charities including the Mental Health Foundation, Forest & Bird and Plunket. Individual KiwiSaver members will be able to select the beneficiary charity.

Stuff.co.nz reported in October 2019 that Pathfinder (known then as CareSaver) used Sustainalytics to help it avoid companies in industries its investors wish to avoid: tobacco, factory farming, controversial as well as civilian weapons, fossil fuels, gambling, and animal-testing.

BusinessDesk reported in June 2020 that Pathfinder (known then as CareSaver) had taken stakes in medicinal cannabis company Rua BioScience and online investment platform Sharesies, investing $420,000 and $460,000 respectively. 

John Berry, Pathfinder's CEO, writes occasionally as a columnist in Stuff.co.nz - an example of a recent publication (covering COVID-19 and KiwiSaver balances) can be found here.