KEY POINTS:
The challenge of choosing which KiwiSaver fund to invest with may be about to get a little bit easier.
The NZX is launching a revamped website on May 28 including a KiwiSaver section devoted to rating the different funds.
The Consumers Institute, the Government and some KiwiSaver providers
already offer websites with comparison tools which take fees into account.
But currently there is no one place investors can go to compare the performance of their KiwiSaver fund.
The new KiwiSaver section of the NZX won't have performance figures initially but will give funds a rating, taking performance into account, staff running the fund, the investment approach and its stability.
The ratings will be provided by FundSource which the NZX acquired in September 2006.
FundSource business manager Darren Chin said the new section was designed to fill a market gap. "What we can offer is a service where people off the street can compare funds in terms of how to rate them."
Chin said the decision not to include performance statistics at this stage was because most of the funds only had very short track records.
"Typically we don't rate performance for a period less than three years. Anything less than that you get a lot of short-term volatility," he said. "We don't envisage including performance except for existing funds that were rolled into KiwiSaver funds." The site will also be limited to covering only those providers who pay FundSource for their service.
Some in the industry have criticised this as being advantageous to the big providers who can easily afford to spare the cash.
But Chin said it was charging $7000 for between one and three funds for the first year and did not see it as a hurdle for fund management firms.
He said the site would include ratings on funds for 10 to 15 providers initially and the firm hoped to grow it to 15 to 20 within the first year. There are around 40 different providers.
The highest rating will be triple A, followed by double A, single A and switch. It will also provide basic information on the providers as well as the funds and a breakdown of what the ratings actually mean.
The rating system will also be new to the FundSource business.
Where previously the business used a one to five star rating system it was solely based on performance statistics although qualitative factors were included in the comments.
The qualitative factor takes into account the fees for managing the fund and entering and exiting it, the people managing it and their strategy while the quantitative factor takes into account the performance of the fund relative to its peers.
Only funds in the top 15 per cent of performers will receive the top rating although the qualitative factors will have equal ranking with the quantitative factors.
