New climate-focused KiwiSaver scheme allows Kiwis to invest money where it makes a difference

Original article was written by Priscilla Dickinson, and can be found here on NewsHub

A new KiwiSaver scheme aims to give Kiwis the option to avoid environmentally risky investments and instead put their money into areas where it can make a difference.

Launched by investment manager Aurora Capital on Monday, the Aurora KiwiSaver Scheme consists of three funds: a conservative fund, growth fund and a 'future-focused' (growth) fund.

The funds invest in underlying funds managed by external fund managers, Mint Asset Management and BlackRock.

Describing its KiwiSaver scheme as suited to 'middle New Zealand', founder and CEO of Aurora Capital and Aurora Financial Simon Rolland said the funds apply 'Environmental, Social & Governance' (ESG) principles

Using factors to evaluate companies and reduce their risks, ESG funds (also referred to as socially responsible funds), support investing in line with the broader interests of society.

Confirming its conservative and balanced funds have a higher ESG rating, Rolland said the aim of the new KiwiSaver scheme is to provide a good return for retirement - and make money work for people today.

"We don't get any tangible value from our KiwiSaver until we turn 65, but what we'd like to see is that money being put to good use," Rolland said.

He said its future-focused KiwiSaver fund is a growth fund designed for people investing long-term, over 10 to 30 years. Rather than avoid investing in certain areas, the fund aims to allocate capital "where change needs to happen".

Examples are clean energy, clean technology - and creating a better future.

"Our future-focused fund is about actively getting into industries to help get them on their journey, whether it be carbon net-zero, a cleaner future [or] sustainab[ility]," Rolland added.

For KiwiSaver members wanting to buy a first home within three to five years, the company's future-focused fund includes a 'first-home buyer strategy'.

"It gives some exposure to our future-focused fund but also predominantly our conservative fund," Rolland explained.

Aurora Capital is the funds management arm of financial advice provider Aurora Financial, which provides advice on insurance, mortgages and KiwiSaver.

Its KiwiSaver scheme is issued and managed by Wellington-based company Implemented Investment Solutions Limited.

The Aurora KiwiSaver scheme provides advice for members, and includes a flat management fee and a monthly account fee.

Clive Fernandes, director of KiwiSaver advice provider National Capital, told Newshub PathFinder is an example of a KiwiSaver provider proven to have used ethical investment principles over time.

"Our research into them shows that they have put their money where their mouth is, and that has been validated recently when they were awarded the Best Ethical KiwiSaver Provider and Best New Ethical Fund at the Mindful Money Ethical and Impact Investment awards," Fernandes said.

Those considering joining a new KiwiSaver scheme could look at the past returns of the underlying fund managers. They could also check the KiwiSaver Product Disclosure Statement to see who the custodian is - the company holding the assets on behalf of investors.

Mindful Money CEO Barry Coates said results from a responsible investment survey conducted in October 2020 showed over three-quarters (78 percent) of those with investments such as KiwiSaver believe ethical investments perform better long term.

Results showed a high level of consensus in the areas of investment people wanted to avoid.

"Issues like human rights violations are top of the list (around 90 percent), animal welfare, weapons, gambling [and] fossil fuels (around 75 percent)," Coates said.

Conversely, renewable energy, social housing and clean water were among the areas people wanted to invest in.

People wanting to invest ethically could use Mindful Money's online KiwiSaver tool to check what percentage of a particular KiwiSaver fund invests in each area of concern for Kiwis, e.g. alcohol, animal testing, fossil fuels, gambling and/or weapons.