Inside Money: NZX digs up smarter data; pushes out new passive fund

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New data from the NZX-owned research house, FundSource, suggests KiwiSaver default members may be starting to make more risk-appropriate investment choices.

According to the latest FundSource KiwiSaver survey, over the three months to June 30 this year, a net $66.9 million flowed into default funds compared to almost $142 million in the previous quarter.

Over the same time frame, flows into conservative, balanced and growth KiwiSaver funds were $116.5 million, $313.4 million and $287 million respectively - all up on the previous quarter, according to Sam Stanley, head of NZX exchange products.

"We're watching out to see if this is a trend," Stanley says.

And it is way too early to conclude that default members are making educated choices to opt into KiwiSaver funds that match their theoretically perfect investment profiles.

But Stanley says if overseas experience is any guide, rising member balances combined with an increase in financial literacy should see KiwiSaver members move away from the more conservative default options.

Or they could be chasing last year's returns. It is possible default members have noted the higher returns from growth assets over the previous year or so and are looking for a piece of the action.

Meanwhile, as flagged here last December, the NZX has launched its first unlisted fund under the Smartshares banner.

The 'NZ Core Equity Trust', which hit the market early in July, has been seeded by several financial advisory groups, Stanley says.

While Smartshares is the designated legal manager of the fund, the US-based passive-style firm Dimensional Fund Managers carries out the actual investment management.

According to the 'NZ Core Equity Trust' prospectus, the fund will hold a minimum of 20 NZ stocks from a possible target of 50-70 firms. As per the Dimensional strategy, the fund will vary allocations between "small companies and/or value companies" and larger listed firms.

Stanley says while some money may flow away from SmartFONZ - the Smartshares exchange-traded fund (ETF) that tracks the NZX top 50 share index - to the new product, advisers are also selling down directly-held equities to buy into the fund.

He says Smartshares is also pushing on with plans to release two more ETFs.