Passive Investing with KiwiSaver / Ep 146 / Rupert Carlyon

Episode #146

In today’ show, Rupert Carlyon is going to walk us through how KiwiSaver works behind the scenes. Rupert is with Koura Wealth ,a KiwiSaver fund manager - a fund manager makes investment decisions on behalf of members (that’s you and me).

Average balances have been increasing gradually over time, and so we’re all trying to figure out how to optimize our returns – this is where the style of the fund manager can make a big difference. So what do we mean when we talk about management style.

Well broadly speaking, there’s two camps here – one is passive management and the other active. 

Passive has a systematic and strategic approach that relies heavily on the assumption that markets are efficient, so you wont have access to information that will give you an edge, especially in the long run -the best strategy therefore is to continually invest across a diversified selection of assets such as cash, fixed interest, property and shares. 

Active is a bit different – the assumption with active here are that markets are not indeed efficient, and therefore you can make tactical investing decisions in an attempt to beat the returns the market would give you on it’s own. Is one right and the other wrong? Will one style work well in a rising market compared to another in a flat market? Is the market still inefficient in some areas, but they’re just different areas than they were in the past?

So many questions – and we’re going to answer some of them today. 

As mentioned, active and passive have their place, but to a large degree this depends on how you’ve constructed your investment portfolio elsewhere. The fund that you invest in via KiwiSaver, can be managed in a passive style, but that doesn’t mean that you as an investor need to have a 100% passive strategy. Perhaps you tactically respond to changing market conditions by changing the mix of your passive funds. On the other side, perhaps you passively invest through some active fund managers – you’re being strategic in how you contract out the active management you want. 

The main point here, is that from an investors perspective- from your perspective, you may be the active fund manager. Perhaps you work with a financial adviser to actively manage your overall portfolio or you do it on your own – if that’s the case, do you really need to have an active KiwiSaver fund manager as well? It really does depend.

Remember that this Wednesday at 530pm I’ll be in Clubhouse, so if you follow NZ Everyday Investor this week, you’ll hear Rupert and I chatting around some current events – that’s 530pm on Clubhouse, where all podcasters go to say what we really think– if you need an invite, hit my up on messenger or on twitter @Ungarodarcy

Thanks for listening in – I hope you have an awesome week

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