Trawling through the latest prospectus published by my KiwiSaver provider I stumbled across this clause: "Details of the current underlying funds and fund managers for any Portfolio can be obtained by contacting the Manager."

Which to me was an invitation too good to resist. And as it happened, I was pretty sure the KiwiSaver scheme had made some recent changes to its underlying fund managers.

Most, but certainly not all, KiwiSaver providers to varying degrees outsource the actual investment management duties to third-parties, who from time to time will change.

And some providers are also more upfront than others about disclosing who those external fund managers are even to members. (A rare good example is Mercer, which includes a full list of underlying fund managers as well as identifying who was hired and fired during the year in its annual report.)


Now not everybody may take an interest in who their KiwiSaver provider delegates fund management duties to, or even who their KiwiSaver provider is. However, for discerning KiwiSaver members (and in the interests of encouraging broader financial literacy) the information about underlying fund managers can be a useful tool in assessing each scheme.

As the Cabinet paper detailing new KiwiSaver provider quarterly disclosure regulations argues:

"Disclosure is important because it:

a. Increases transparency and informs investors of the fund's investment strategy, the potential risks and the actual returns and costs of investment. Investors can assess whether the fund's investment strategy is consistent with their investment philosophy and risk threshold;

b. Enables the comparison of information across funds. Comparability is important because it enables investors to become more informed and make efficient investment decisions; and

c. Increases the ability of investors to monitor the investment practices of the fund manager and ensure that the fund is adhering to its investment objective. Investors can also determine whether the fund manager's interests are aligned with their interests."

However, the quarterly disclosure requirements, due to take effect next April, may not necessarily include all details about underlying fund managers. The rules require KiwiSaver providers to disclose details of "underlying securities" they invest in, including those invested in by the fund managers they use.

"Where the other managed investment fund comprises of under 5 per cent of the KiwiSaver fund's assets, or the assets of the other managed investment fund are available to the public, the KiwiSaver fund should only be required to disclose the name of that managed investment fund," the Cabinet paper says.

It's possible, then, that you may still have to, as I did, harangue your KiwiSaver provider if you want to find out which fund managers they use.

Almost a month after my first query, and several emails and phone calls later, my provider finally coughed up the list of fund managers. I don't know if the first two cut-and-paste replies the provider supplied to me were part of a deliberate policy of obfuscation or genuine ignorance of the customer service staff (who were, by the way, very courteous and helpful).

Ignorance is possible. I heard a funny story about a National (or maybe it was ANZ) Bank teller trying to lure a customer to its KiwiSaver scheme away from his current provider arguing on the basis of better quality investment management.

The punchline was the customer's existing KiwiSaver provider was OnePath, responsible, as is widely known, for the investment management of the ANZ and National Bank schemes.