For some time now, investors have been asking us to exclude fossil fuel investments. We're about to do that, and more.
Across all our funds, we'll be removing companies involved in:
This is on top of companies involved in tobacco, landmines and nuclear weapons, which we excluded last year.
This achieves two important things: It should enhance returns, and it's what investors want.
Investing in these companies (often called 'sin stocks') used to produce higher returns. That's no longer the case.
A large body of research shows these companies are no longer good investments. The numbers speak for themselves.
Had we been operating for the past five years, excluding these investments would have increased our KiwiSaver and Investment fund returns by 0.76% p.a. for Growth funds, 0.54% p.a. for Balanced funds and 0.19% p.a. for Conservative funds.
These numbers may not seem large but, like fee savings, they really add up over time.
Investors globally are sending clear signals that they don't want their savings invested in these industries. It's the same here too.
A recent survey by Consumer Magazine showed that 77% of KiwiSaver members were concerned about their funds investing in pornography; 73% were concerned about weapons; 70% about gambling and 69% about tobacco.
Our members consistently give us similar feedback.
In return for selling down these sectors, we'll be increasing investments in the Health Care, Consumer Goods, Technology and Financial services industries.
Our investment managers will remain the same, the funds will track an official index and they'll remain highly diversified, with over 20,000 investments in 23 countries.
The fees remain unchanged.
Within NZ we'll be selling all shares of Sky City, and staying invested in the remaining 49 companies in the index. Following a global trend, Sky City has underperformed the index over the past five years.
We expect to complete the changes by the end of this year, with a lot completed within a few months. We'll let you know when it happens.
Simplicity is now the fastest growing KiwiSaver scheme in NZ, driven almost entirely by word of mouth. Thanks for making this happen %)
We're now saving members over $4.7 million p.a. in fees, and donating over $200,000 p.a. to charity. The more we grow, the more we all save, and the more we can give to charity.
Here's to doing the right thing...and being richer for it %)
Sam and the team at Simplicity