Our Choice in Ethical KiwiSaver Fund Options
Ethical investing is the practice of using an ethical framework as a primary filter for how to select investments and it is certainly taking centre stage around the globe, with KiwiSaver being no exception. With over 3 million people taking part in the scheme, and almost $100 billion in funds invested, KiwiSaver is a fantastic opportunity to invest in companies that have a positive impact socially and on the environment.
Ethical Investment Approach: Positive and negative screening
How do KiwiSaver providers make their funds ethical? Ethical KiwiSaver schemes often refer to their investment approach as subject to either ‘Negative’ or both ‘Negative and Positive’ screening.
Positive Screening is the investment strategy of looking at companies and industries and deciding whether they have a positive impact on society and the environment. Companies now report on ‘ESG’ (Environment, Social and Governance) factors therefore it is now possible for fund managers to complete detailed analysis and perform this screening. This approach is often paired with negative screening, and is less common in the KiwiSaver space.
Negative Screening is the investment strategy of excluding certain companies or industries that are considered harmful to the environment or society. This is the typical approach taken by ethical KiwiSaver funds. For example, KiwiSaver funds that employ a negative screening strategy will say no to the following:
Fossil fuels
Nuclear power production
Military weapons manufacturing
Civilian firearms production
Tobacco production
Alcohol production
Gambling operations
Adult entertainment
Genetically modified organisms
Ethical KiwiSaver options
In this blog, we’ll discuss our two favourite ethical KiwiSaver providers and consider their level of social and environmental responsibility, as well as returns and fees.
PathfindeR
An ethical and research based KiwiSaver Scheme managed by Pathfinder Asset Management Limited, launched in July 2019. Pathfinder rate all investments on environmental, social and governance (ESG) metrics, and use both a ‘negative’ and ‘positive’ screening approach.
Pathfinder is the first fund manager in New Zealand to achieve B Corp™ certification. Their B Corp certification sits alongside the A+ rating awarded to Pathfinder by the United Nations Principles of Responsible Investing (UNPRI) for governance and strategy.
Pathfinder donated 20% of their management fees to charity for the last four years totaling $1.35 million dollars donated over those four years. This year they are shifting their approach and from the 1st of April Pathfinder will instead be dedicating 1% of its revenue from across their whole business (this covers all retail managed funds as well as KiwiSaver funds) to support their vision for a better future. They will continue to support charities whose work actively improves the planet and they are also broadening their horizons to include social enterprise grants; education and awareness and scholarships. More information can be found on this page of their website here.
Returns as at 30 April 2024, after fees before tax:
1 year average return:7.2%/year
3 year average return: 3%/year
Fees as at 30 April 2024
Total fees: 0.94%/year
Fixed fee: $27/year
Returns as at 30 April 2024, after fees before tax:
1 year average return: 12.7%/year
3 year average return: 5.3%/year
Fees as at 30 April 2024
Total fees: 1.17%/year
Fixed fee: $27/year
Returns as at 30 April 2024, after fees before tax:
1 year average return: 15.3%/year
3 year average return: 6.2%/year
Fees as at 30 April 2024
Total fees: 1.30%/year
Fixed fee: $27/year
Booster Socially Responsible Investments (Booster SRI)
Booster Socially Responsible Investment (SRI) funds were introduced in 2010, and use a ‘negative’ screening strategy. The Booster SRI funds are certified by the Responsible Investments Association Australasia. Booster apply 15 screening filters across their SRI funds. They were the first KiwiSaver scheme to offer certified Responsible Investment Association Australisia Socially Responsible Funds.
Returns as at April 2024, after fees before tax:
5 year average return: 6.5%/year
3 year average return: 3.7%
1 year average return: 13% / year
Fees as at April 2024
Total fees: 1.22%/year
Fixed fee: $36/year
Returns as at April 2024, after fees before tax:
5 year average return: 10.9%/year
1 year average return: 20.9% / year
3 year average return: 7.4% / year
Fees as at June 2024
Total fees: 1.24%/year
Fixed fee: $36/year
If you want to know if your KiwiSaver fund is invested in ethical investments, being maximised for returns, and suitable for your personal situation, follow the link below to our KiwiSaver Discovery Quiz. Our quiz only takes 5 minutes to complete, and once you have finished we will provide you with a free no-obligation KiwiSaver recommendation.
Compound Wealth are based in Mount Maunganui, Tauranga and offer KiwiSaver, Investment & Retirement Financial Advice to clients all over New Zealand.