Author Topic: Index fund recommendations in NZ  (Read 2919 times)

trickstar

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Index fund recommendations in NZ
« on: October 06, 2013, 01:11:34 PM »
Hi
Unfortunately here in New Zealand we don't have Vanguard and our stock exchange is very small.
I want to know if there are are any MMM readers who can recommend any index funds in NZ apart from those offered by smartshares

Aught3

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Re: Index fund recommendations in NZ
« Reply #1 on: October 08, 2013, 09:39:49 PM »
Hi Trickstar,

Sadly, there are no direct alternatives to Smartshares in NZ. They are the only ones who offer index funds currently at 0.6 - 0.75% their management fees are still lower than most managed funds but still high for what they offer.

Two options to consider are:
Superlife who allow you to invest in a fund of global index funds which gets you some nice international exposure at a fairly low rate.
Investing directly in Vanguard ETFs on the Australian sharemarket. It's low cost and equivalent to an index fund but you expose yourself to exchange-rate risk and fiendish taxation rules.

This thread has a fairly good discussion of the issue: https://forum.mrmoneymustache.com/investor-alley/new-zealand-investing/msg87091/#msg87091

Disclaimer: I hold Smartshares, but don't hold Vanguard ETFs

trickstar

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Re: Index fund recommendations in NZ
« Reply #2 on: October 09, 2013, 11:46:19 PM »
Thanks for pointing me to that thread very interesting

MichaelR

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Re: Index fund recommendations in NZ
« Reply #3 on: January 25, 2014, 03:04:51 AM »
Hi
Unfortunately here in New Zealand we don't have Vanguard and our stock exchange is very small.
I want to know if there are are any MMM readers who can recommend any index funds in NZ apart from those offered by smartshares

I have invested with Superlife (Super 60), not an index tracker exactly but probably as good as we are going to get and with a philosophy of relative passivity in trading and keeping fees down.  Certainly the lowest fees I have come across (0.41% pa).

The smartshares NZX index trackers are only sampling a tiny number of companies relative to the bigs ones in the US. I am unconvinced the principles of tracking market indices applies in such a small market.

Also investing in Vanguard Index trackers in Australia carries fees of 0.3%, not the 0.18% you can get in the US. They are also subject to arbitrary taxation (based on an assumed 5% annual return), and have additional volatility due to fluctuations in the exchange rate. Therefore they carry higher risk than the similar funds for US citizens investing in US stocks. While this might work for business people with good accountants I think it is too difficult for the average person investing for retirement.

Overall a (relatively) low fee mutual fund, with no set up costs or ongoing fees for adding to the investment, like Superlife seems to me to be the best way to go in NZ.