A second KiwiSaver provider is to offer access to cryptocurrencies like Bitcoin. Photo / File
A second KiwiSaver provider is to offer access to cryptocurrencies like Bitcoin. Photo / File
A second KiwiSaver provider is to offer exposure to cyptocurrency in a bid to attract new members.
Koura, founded by Rupert Carlyon just over two years ago, is adding three new speciality funds to its KiwiSaver offering; a carbon neutral cryptocurrency fund, clean energy fund and a New Zealand propertyfund.
Koura's move follows NZ Funds Management which added the ability to invest in cryptocurrency to its KiwiSaver funds in October 2020.
But Carlyon says the difference with his KiwiSaver scheme is that investors will have to specifically opt in to have the new investment funds be part of their KiwiSaver portfolios.
"We don't think this is an appropriate investment for everyone. We don't think everyone needs cryptocurrency or clean energy because it's high risk and it is highly volatile."
He said using its online advice tool people would be able to select whether they would like to invest in the funds.
A small percentage of their KiwiSaver account would then be allocated to the new funds and members could then go and tailor that and increase it if they wanted to.
But there will be a cap of 10 per cent for each of the funds.
Carlyon said ensuring people knew what they were getting into was all about disclosure.
"We have got a very robust process around disclosure. It is going to be pretty hard to say you accidentally ended up here or you didn't understand the risks. We will be giving people warnings on the way in and making sure we give people warnings after they have selected those funds."
"We are not out to try and convince everyone to invest in cryptocurrency. We are really just saying it is here if you want it and if you want it make sure you understand all of the risks. That has been one of the biggest focuses of the regulatory regime is making sure we have got all the appropriate disclosures in place."
The cryptocurrency fund will be invested in a fund run by Fidelity - the fourth largest asset manager globally - through an investment structure that is insured against cyber security incidents.
While the clean energy fund will be invested via a First Trust ETF [Exchange Traded Fund] run out of the US which invests in 60 US-based companies that are involved in that space.
"Historically it has invested in Tesla, and other things all the way from transportation to battery technology to wind technology but it is really focused on the technology side and the enablers rather than other clean energy funds which focus more on the utility company side of it."
The property fund will invest in NZX-listed real estate investment trusts and the listed retirement village stocks.
Carlyon said a driver for the new offerings was about giving people something exciting to invest in for their KiwiSaver.
"We know over the last two to three years Kiwis have become so much more engaged with their finances and we are seeing a lot of involvement in Sharesies, Hatch and these other platforms - and KiwiSaver is the largest investment account these people will ever have so why aren't we giving them a range of exciting investment opportunities, letting them take control, letting them do some interesting stuff?
"We want to get people engaged with KiwiSaver so therefore we have got to get them the products to do that."
But access to funds doesn't come cheap. They will have an annual management fee of 1.1 per cent - higher than Koura's standard fund fees of 0.63 per cent.
Carlyon said the fee was still lower than the average growth fund which charged 1.25 per cent.
Koura founder and managing director Rupert Carlyon. Photo / Supplied
He is hoping the new funds will help boost its membership numbers. Koura only has around 1000 members with $35 million.
Asked if the company was viable with such low membership Carlyon said it was happy with how things were tracking.
"We are bringing on lots of new customers every month. We have got a solid set of shareholders behind us who are aware of the journey."
Based on its research it typically took three to five years for a KiwiSaver business to get to break even, Carlyon said that was what it was planning for.
"Does the business make sense at 1000 members? No. But fundamentally we don't expect to be at 1000 members for long and that's what we - when we started this business - that's what we expected all along.
"It is a hard journey to start off with to get a combination of trust and understanding from clients but once we build the trust, have got the results and proven that we can be trusted for people's retirements that is historically when you have seen these businesses pick up."
