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QuayStreet KiwiSaver Scheme Review

​Updated 20 August 2019
Summary of QuayStreet​ KiwiSaver
  • Funds: QuayStreet offers KiwiSaver members the choice of ten funds, with around $180 million in funds under management. The funds range from low-risk fixed-interest options, to funds specialising in New Zealand, Australian and international shares.
  • QuayStreet also offers speciality funds such as the Socially Responsible Investment Fund, an Income Fund, designed to generate a regular income, and the Altum Fund, for those seeking a higher returns.
  • A leading feature is that you don't need to pick just one fund - QuayStreet allows you to decide your own allocation, meaning you can invest in one or all of the ten funds offered.
  • 100% Active Management: All of the funds are actively managed by a fund manager, employed by QuayStreet. This means that allocations and investments in the funds are actively monitored and adjusted according to market conditions and to manage the level of risk. The costs associated with an active fund means that fund fees will be higher, relative to index-tracking schemes (like Simplicity and SuperLife).
  • Performance: The latest fund performance from our KiwiSaver comparison tool shows how the funds have performed, with the New Zealand Equity Fund and International Equity Fund being two of the strongest. 
  • Fees: There is an annual annual administration fee of $30 plus scheme expenses at approximately $15 per member per year, which is standard for most KiwiSaver schemes. The second fee is an annual fund charge, which ranges between 0.75% to 2.18%, with growth-focused funds tending to charge the most. The QuayStreet Altum Fund also charges a performance fee.
  • Ownership: The scheme is managed by QuayStreet Asset Management, which is owned by Craigs Investment Partners Limited ('Craigs'). Craigs is an investment advisory business with $18 billion in funds under management and 18 offices all over New Zealand.
Read this First: Fees, Performance and Understanding What's Best For Your Situation
  • A lot of media attention focuses on KiwiSaver fees, but this is only one thing to consider when picking the most suitable provider and fund for your retirement needs.
  • We believe that being comfortable with what you're investing in is the most important aspect of saving for your retirement, not the fee you'll pay.
  • While we don't focus on the latest returns, we encourage readers to make their own comparisons using our KiwiSaver fund comparison tool.
  • Ultimately, deciding upon whether QuayStreet is right for you will most likely come down to your interpretation of the fund performances in the medium term, their investment strategy and their fees.
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Our Review
In this guide, we outline what the QuayStreet KiwiSaver scheme is, what funds it offers to KiwiSaver members, and how they're different to other funds, as well as looking at alternatives and the level of fees involved.
 
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 QuayStreet as a KiwiSaver investment option.
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This Guide covers:

The Specs of the QuayStreet KiwiSaver Funds - fees, risks and explaining where your money is invested

  • The scheme is managed by QuayStreet Asset Management, which is owned by Craigs Investment Partners
    Limited.
  • As a background, Craigs Investment Partners is one of New Zealand's largest investment advisory firms, with branches all around New Zealand. Day to day, Craigs manages people's money (young or old, new or experienced investors alike), although historically it has appealed to individuals with sizeable funds to invest. It has been operating for over 35 years, having opened its first office in Whakatane in 1984. It competes with the likes of Forsyth Barr, and other privately owned wealth management companies.
  • Monthly KiwiSaver fund updates and quarterly fund performance reports are available on the QuayStreet website.
  • Each of the ten funds has a unique risk factor (1 = lowest, 7 = highest), which is driven by its distinct investment profile.
  • Fees, returns, risks and the suggested investment timeframe differ between funds, as we outline below.
​1: QuayStreet Fixed Interest Fund​
This fund invests 100% of its assets in income assets such as term deposits with banks, government and company bonds. Recent investments included deposits with ASB and ANZ, and bonds with companies such as Genesis Energy, Vector, Chorus, Sydney Airport and Seek, among others.
  • Average annual net return since fund launch (2009): ~3.50%
  • Annual fee: 0.78%
  • Risk factor: 2
  • Suggested minimum investment timeframe: 3 years
  • Investment Composition: NZ Fixed Interest (83%), Cash (13%) 

We say:
  • The QuayStreet Fixed Interest Fund​ is the most conservative QuayStreet fund, intending to provide stable returns over the medium term. It invests 100% of the fund into low-risk products such as term deposits and bonds with investment-grade companies and banks.
  • The fund's performance is somewhat restricted by the sizeable 0.78% management fee.
  • The Fund is actively managed and invests in New Zealand and International bonds. The expected returns from these asset classes is higher than less actively managed cash or fixed interest index funds.​
​2: QuayStreet Income Fund
As its name suggests, this fund invests mostly in income assets which are of short to medium-term in nature. Recent holdings included bonds with investment-grade companies such as Seek, Property for Industry, Chorus, Vector and Mirvac, and a term deposit with Kiwibank, among others. 
  • Average annual net return since fund launch (2015): ~4%
  • Annual fee: 0.79%
  • Risk factor: 2
  • Suggested minimum investment timeframe: 3 years
  • Investment Composition: NZ Fixed Interest (70%), Listed Property (10%), Cash (10%), Australasian Equity (10%)

We say:
  • The Income Fund is the second most conservative QuayStreet fund, but has performed ahead of the Fixed Interest fund because of its higher-interest investments and capital gains in sharemarket investments. 
  • Despite the performance, the fees remain relatively high. Charging 0.79% p.a. to return around 4% on average makes it one of the more expensive cash/conservative funds available to KiwiSaver members.
  • We're unsure why the fees are so high for such a fund that doesn't require an extensive amount of active investment judgement.
  • The Quaystreet Income Fund has the dual objective of providing stable, reliable income while preserving capital over the longer-term. The Fund achieves this by investing in low volatility securities.
3: QuayStreet Conservative Fund
​This fund invests predominantly in New Zealand bonds and deposits, with some international shares for fund growth. Recent holdings included NZ Government bonds, bonds with ASB, Vector, Genesis Energy and Chorus, holdings in global funds such as the Ishares Core S&P 500 and MSCI Eafe, and cash deposits with the ANZ.
  • Average annual net return since fund launch (2007): ~4%
  • Annual fee: 0.79%
  • Risk factor: 2
  • Suggested minimum investment timeframe: 3 years
  • Investment Composition: NZ Fixed Interest (60%), Cash (20%), International Equity (10%) and Australasian Equity (10%)

We say:
  • The QuayStreet Conservative Fund offers investors exposure to New Zealand bonds and term deposits, backed by the government and low-risk companies.
  • When comparing the performance to other conservative funds, QuayStreet ranks similar to KiwiSaver funds offered by the banks, and lower than specialist investment managers such as Milford and Fisher Funds. It's also worth noting that the Simplicity Conservative Fund has outperformed QuayStreet year-on-year, and charges a much lower 0.31% annual fee (vs 0.79%). 
  • We take the view that the fees remain relatively high. Charging 0.79% p.a. to return around 4% on average makes it one of the more expensive Conservative funds available to KiwiSaver members.
  • The higher-than-standard fees are due to the fund being actively managed with direct investments in New Zealand and International bond and equity markets. The expected returns from these asset classes is higher than less actively managed cash or Index funds.
​4: QuayStreet Balanced Fund
This is QuayStreet's 'middle of the road' fund, with a 60% target in growth assets (NZ and international shares) and 40% allocated to income assets (cash, bonds and term deposits). The Balanced Fund is actively managed, and recent holdings included investments in global funds such as the IShares Core S&P 500, MSCI India and EAFE (which invest in America, India and Europe respectively), term deposits with ANZ and Westpac, a bond with the New Zealand government, and shares in A2 Milk. This fund is designed to appeal to those who want to split their KiwiSaver into low-risk assets and growth assets.
  • Average annual net return since fund launch (2007): ~6%
  • Annual fee: 1.04%
  • Risk factor: 3
  • Suggested minimum investment timeframe: 5 years
  • ​Investment Composition: NZ Fixed Interest (30%), Cash (20%), International Equity (40%) and Australasian Equity (20%) and Cash (20%). 

We say:
  • Currently, the Balanced Fund has reported one of the lowest 5-year average returns for all balanced funds, despite charging a high-than-average management fee. 
  • The Balanced fund remains QuayStreet's second most popular fund, with over $50 million invested.
  • The annual fee charged (1.04%) ranks it 19th out of 39th among balanced funds in terms of fees charged. 
5: QuayStreet Socially Responsible Investment Fund
This fund allocates up to 60% of money into international, Australian and New Zealand shares, bonds and other investments that have a socially-responsible nature. Recent investments include managed environmental, social and governance funds with MSCI and Vanguard, a green bond with Contact Energy, and term deposits with the Bank Of China, ANZ and Citibank, among others. The fund is designed for long-term investment, given the growth potential of such sharemarket investments.
  • Average annual net return since fund launch (2016): ~5.50%
  • Annual fee: 1.07%
  • Risk factor: 4
  • Suggested minimum investment timeframe: 5+ years
  • Investment Composition: International Equity (40%), Australasian Equity (20%), NZ Fixed Interest (30%) and Cash (10%)

We say:
  • The SRI fund is not an 'impact fund,' it is a fund that invests in a diversified portfolio of high quality Environmental, Social and Governance companies and avoids investment in unethical industries and business activities. 
  • The fund would be popular for anyone wanting to invest in a socially-focused investment portfolio. 
  • ​​The annual fee charged (1.07%) is in line with actively managed funds, but is significantly higher than the SuperLife Ethica and more than three times higher than index funds like the Simplicity Growth fund, which is itself ethically-orientated.
6: QuayStreet Growth Fund 
This fund invests up to 80% of its assets into growth assets, with QuayStreet describing the fund as a 'diversified portfolio with an emphasis on growth assets, such as shares and property'. Recent holdings included investments in index-tracking funds such as Ishares Core S&P 500 and MSCI Eafe, shares in A2 Milk and Fisher & Paykel Healthcare, and term deposits with ANZ and Westpac, among others.
  • Average annual net return since fund launch (2007): ~7%
  • Annual fee: 1.29%
  • Risk factor: 4
  • Suggested minimum investment timeframe: 5+ years
  • Investment Composition: International Equity (55%), Australasian Equity (25%), NZ Fixed Interest (15%) and Cash (5%) 

We say:
  • The Growth Fund is QuayStreet KiwiSaver's largest fund, with over 3,000 members and $70+ million invested.
  • QuayStreet's investment managers select each company based on the potential of future returns, given that shares and property are both very much a long-term investment.
  • The biggest risk is that the global markets drop in the short term and KiwiSaver balances fall as a result, but there is a 20% allocation of funds to cash assets to counteract some of this risk.
  • The annual fee charged (1.29%) is in line with actively managed funds, although still around 100% to 300% higher than index funds like the Simplicity's Growth Fund and SmartShare's Growth Fund.
  • The Growth Fund is very much a long-term fund given the investments and risks, and for these reasons, QuayStret suggests a five year minimum investment period.​
7: QuayStreet New Zealand Equity Fund
This fund invests up to 100% of its money in New Zealand shares listed in the NZX. It's a growth-focused fund, with recent investments including A2 Milk, Meridian Energy, Fisher & Paykel Healthcare, Contact Energy, Spark, Auckland Airport, Mainfreight, Ebos Group and Chorus, among others.
  • Average annual net return since fund launch (2011): ~14%
  • Annual fee: 1.29%
  • Risk factor: 4
  • Suggested minimum investment timeframe: 5+ years
  • Investment Composition: New Zealand equities (100%)

We say:
  • The NZX has rallied in recent years, driving growth in the QuayStreet New Zealand Equity Fund. Day-to-day returns will be volatile, but over the long-term, the aim is to beat market indexes.
  • The biggest risk is that New Zealand shares drop in the short term and KiwiSaver balances fall as a result, but the investment managers can switch investments to cash or fixed-interest investments to counteract this risk.
  • The annual fee charged (1.29%) is in line with actively managed funds focused on New Zealand equities.
  • The QuayStreet NZ Equity Fund ranks 5th for all funds in the Kiwisaver comparison for funds with a minimum 5 year track record, making it historically one of the best performing KiwiSaver funds. 
8: QuayStreet Australian Equity Fund​
As the name suggests, this fund invests in Australian shares. Recent holdings included ANZ Bank, Commonwealth Bank Of Australia, Westpac, Macquarie Group, BHP Billiton, Resmed Inc, Cleanaway Waste Management and Santos, among others. Because of market movements and the long-term nature of shares, it's a growth-focused fund that has a suggested 5+ year investment period.
  • Average annual net return since fund launch (2011): ~3%
  • Annual fee: 1.29%
  • Risk factor: 5
  • Suggested minimum investment timeframe: 5+ years
  • Investment Composition: Australasian equities (100%)

We say:
  • Based on the investment class targets above, the fund offers relatively high-risk investment opportunity with a 100% exposure to Australian shares.
  • The 1.29% fee is standard for actively managed equity funds, but the recent annual returns of 2% to 3% challenge the costs, risks and returns of this fund overall.
9: QuayStreet International Equity Fund
This fund invests in international shares. Recently holdings include global funds like Ishares Core S&P 500, MSCI Eafe, and direct investments in Paypal Holdings Inc, and deposits with Westpac and ANZ, among others. The fund aims to beat global markets by looking for opportunities unknown to other investors. QuayStreet's investment managers will research specific companies and buy/sell shares as needed.
  • Average annual net return since fund launch (2009): ~7%
  • Annual fee: 1.29%
  • Risk factor: 5
  • Suggested minimum investment timeframe: 5+ years
  • Investment Composition: International Equity (100%)

We say:
  • The QuayStreet International Equity Fund offers exposure to international companies, with the investment managers selecting shares directly and also investing in global funds and index-tracking funds. 
  • Since 2009 it has made an average 7% return per year, although the fee of 1.29% is at the higher end for a share-investing fund.
  • Those wanting higher returns from sharemarket investments can consider the QuayStreet Altum Fund (see below), QuayStreet New Zealand Equity Fund and QuayStreet Australian Equity Fund (see above). 
10: QuayStreet Altum Fund
This fund invests up to 100% of its money in Australian and New Zealand shares. It is one of QuayStreet's most aggressive funds, although less risk than the QuayStreet International Equity Fund (above) due to its focus on local companies. Recent investments included Fisher & Paykel Healthcare, A2 Milk, Macquarie Group, Mainfreight, CSL, Santos and Fletcher Building, among others.
  • Average annual net return since fund launch (2014): ~7.50%
  • Annual fee: 2.18% (including a performance fee estimated at 0.9% per annum). 
  • Risk factor: 4
  • Suggested minimum investment timeframe: 5+ years
  • Investment Composition: Australasian Equity (100%)

We say:
  • The Altum Fund will appeal to KiwiSaver members who want to invest in growth assets locally based. Since the fund launched, equity markets in New Zealand and Australia have performed well, but how the fund performs when there is market turbulence remains to be seen. 
  • The fund was launched in 2014 and has one of the highest management fees in KiwiSaver, although the 2.18% fee includes a performance fee estimated at 0.9% per annum. 
  • Those wanting a growth fund that focuses on only Australia and New Zealand markets can consider the Altum fund, but alternatives such as the QuayStreet Australian Equity Fund or the QuayStreet New Zealand Equity Fund offer similar investments without the high management and performance fees.

Who is the QuayStreet KiwiSaver Scheme Suited To?

In our view, we believe the core Conservative, Balanced and Growth funds offered by QuayStreet are not as attractive as alternative funds managed by active managers like Milford, Fisher Funds, Booster and Generate, and index-tracking options such as SuperLife and Simplicity. This is based on historical performance and fees.
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Standout Features:
  1. Unlike KiwiSaver schemes run by many banks, QuayStreet is New Zealand owned and operated.

Pros
  • Ten funds that offer a sliding scale of risk and return, clearly defined in investor statements.
  • Investments are diversified and include cash deposits, NZ government bonds and NZ corporate bonds, New Zealand shares and global equities.
  • Up to date fund performance and balances are available 24/7 via QuayStreet's website.

Cons
  • QuayStreet's low-risk funds still incur high management fees relative to similar funds offered by many other providers.
  • Recent data from our KiwiSaver comparison tool, which uses Financial Markets Authority data, reported QuayStreet's Conservative, Balanced and Growth funds as having some of the lowest returns in their respective fund classes.
  • There is no life/age program option, which moves your money into more conservative (i.e. less risky) funds as you get older as a way to protect your KiwiSaver balance. However, QuayStreet does allow investors to select more than one fund, so as you age, you could put more of your KiwiSaver balance into lower-risk funds.

Be aware:
  1. As with any investment, markets go up and down. The Dotcom bubble in the early 2000s sank global sharemarkets, as did the 2008 Global Financial Crisis. While many global sharemarkets are now at record highs, this is no guarantee of future earnings.
  2. When it comes to Socially Responsible Investing, QuayStreet makes it clear - "If you want to invest with social responsibility in mind the options in the market can be limited". It offers the Socially Responsible Investment Fund as an alternative option. 

8 things to know about the QuayStreet KiwiSaver scheme

QuayStreet is one of the smallest KiwiSaver schemes around

The first KiwiSaver funds launched in 2007, and right now total around $180 million in funds under management. This represents a fraction of one percent of the total KiwiSaver investments.
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No matter what your employer's default KiwiSaver provider or fund is, you are entitled to select QuayStreet as your KiwiSaver scheme

Your employer may offer another KiwiSaver provider as their preferred provider, but you are free to choose QuayStreet KiwiSaver as your provider if you feel it's right for you. ​You don't have to be a client of Craigs Investment Partners - QuayStreet is available to everyone.

QuayStreet has easy-to-understand fees, and there is no minimum investment

No matter what your fund is, as a QuayStreet KiwiSaver member, you'll pay two fees:
  • Between 0.78% and 2.18% p.a. of your KiwiSaver balance per year, depending on the fund(s) you select, which represents the management and administration fees.
  • $45 per year, made up of a $30 administration fee, and a scheme expenses fee of $15, which are fixed fees for being a member of the QuayStreet KiwiSaver scheme.

If you want to contribute to your fund at a level above your fixed salary contribution, you can do this via the online banking or manually by contacting the client services team. If you stop contributing, you will still pay both fees. 

Dividends your fund receives are reinvested, meaning more cash is invested on your behalf

Many of the QuayStreet KiwiSaver funds invest in shares, and many will pay dividends. These cash payments represent the profits from companies returning it to the shareholders, i.e. you. When a company declares a dividend, your fund will receive money, and it is re-invested into more shares, growing the value of your fund. Despite being a cash payment, and as is the case with ALL KiwiSaver funds, there is no option to take this money as cash until you turn 65. 

All of QuayStreet's KiwiSaver funds are actively managed

While some KiwiSaver funds have objectives stating that they will make decisions with the aim of beating the markets, QuayStreet is much more conservative. The following is stated in its Product Disclosure Statement:

  • The underlying QuayStreet Funds are managed with the investment philosophy that an actively managed and concentrated selection of investments can provide better returns than market benchmarks.
  • We target investments which have good and sustainable underlying business models which are trading at an attractive valuation in relation to their “intrinsic value”.
  • The “intrinsic value” is the valuation we derive after analysis that values the future cash flows of the investment at today’s prices. This basic philosophy applies to all security types and assets that we invest in.
  • We have a high level of conviction in our investment ideas which is reflected by larger investments in a smaller number of securities.
  • We believe in the benefit of being proactive, but not hyperactive in terms of managing the portfolios. We do not transact frequently and generally buy securities with the intention of holding them for the long term.

In summary, QuayStreet ensures investments are actively managed - each fund has its own key personnel, tasked with the responsibility of portfolio management and analysis. QuayStreet will then select specific investments it sees as undervalued, anticipating that in time, the value of the investment will grow and ultimately make a profit for the fund. It does this with a long-term view, and doesn't 'day trade' or buy and sell investments in the short-term.

How does this work in practice?
  • Each QuayStreet fund and its investment team follows the agreed-upon target investment mix. For example, the target of Australasian Equity investments in the QuayStreet Growth Fund is 20%.
  • This allows the fund manager to invest up to 20% of the fund in assets that fall within the category of 'Australasian Equity'.
  • The manager can use all of the allocation on one company, or diversify into many investments (which is what happens in practice). As Australasian equities are not without its risks, investment managers will diversify and purchase many different shares.
  • A recent report into the holdings of the QuayStreet Growth Fund shows Australasian Equity-classified investments in A2 Milk and Fisher & Paykel Healthcare.
  • As market conditions change, the investment manager buys and sells individual investments as they see fit.
  • Remember, past fund performance is no guarantee of future results; what you ultimately invest in will be determined by your level of comfort with a fund.
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​Signing up to QuayStreet isn't complicated, and you are not limited to only one fund

Signing up to the QuayStreet KiwiSaver scheme is easy, and you can create your own portfolio of investments by choosing any combination of the funds. This means you can allocate 20% of your money to one fund, 40% to another, and 10% to another two, giving you diversity.

But if mixing funds doesn't interest you, QuayStreet makes it easy to pick one fund. Helpfully, the names of the funds are free of buzzwords or spin with the use of plain English titles. 

Generally, if you're looking for a safe investment with the lowest risk of seeing your original investment fall, a conservative fund could be a suitable option. But many investment professionals would suggest against being in a conservative fund for the long term. If you're looking for a higher return and are prepared to have your money in higher-risk investments which could fall in value, balanced and growth funds operate in this manner.

Generally, if you want to grow your KiwiSaver fund for the long-term, and unless you're risk-averse, the Conservative Fund isn't likely to make you high returns. Share investments in the QuayStreet Conservative Fund are limited to a 20% target, meaning 80% of the money sits in low-interest bonds and other fixed-interest.

If you are in this fund and would prefer a more aggressive fund, you have the option to switch free of charge. You can switch to another QuayStreet KiwiSaver fund, or any other KiwiSaver fund operated by another scheme. You can also opt-out of KiwiSaver altogether if you do not wish to participate.

If you're not sure of what to invest in and want to have a range of options to pick from, look at MoneyHub's KiwiSaver fund comparison tool which includes all QuayStreet funds.

The performance data is easy to follow, and updated regularly

​Fund performance details are published on the QuayStreet website monthly (via fund updates) and every three months. You can see the asset allocation, performance and regional investments (i.e. what percentage of your KiwiSaver fund is in USA shares and Australasia, for example). 

You can also check your KiwiSaver balance 24/7 by logging in to the QuayStreet website.
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QuayStreet offers a fund dedicated to investing in New Zealand shares

Relatively rare within KiwiSaver, QuayStreet is one of the few schemes which offer investors to pick a fund that only invests in New Zealand listed companies. The Quaystreet New Zealand Equity Fund is actively managed, and recent holdings included heavyweights A2 Milk, Meridian Energy, Fisher & Paykel Healthcare, Contact Energy, Spark, Auckland Airport, Mainfreight, Ebos Group and Chorus, among others.

Our Conclusion​

  • QuayStreet offers a diverse range in funds despite its small size and total funds under management. 
  • Whatever the underlying reasons are that affect the recent returns, we take the view that investors may find better value for money and (potentially) higher returns by looking beyond the QuayStreet offering.
  • Most funds offer investors exposure to the New Zealand sharemarket, Australian sharemarket, local and global bonds, as well as New Zealand bonds and cash deposits.
  • The active management means particular shares will be bought, at the discretion of the fund manager, so there is a risk of negative returns if the investment doesn't perform.
  • Active management can also add to the upside while avoiding risks by adjusting investments according to market conditions.
  • With every fund offered, the higher the weighting of growth assets vs income assets, generally, the higher the annual management fee. This is expected to be offset by the long-term performance of the fund.
Do you have experience with QuayStreet's KiwiSaver scheme that you would like to share with our readers? Email our research team who would be delighted to hear from you.