The Generate KiwiSaver Focused Growth Fund has been issued a “3 IP” rating by Research IP, with a score of 3.13/5.
The Generate KiwiSaver Scheme Focused Growth Fund (“the Fund”) invests into underlying funds. The portfolio is actively managed and includes cash, fixed interest, property and infrastructure assets, Australasian equities and international equities.
Volatility is likely to be the highest of the funds. Long-term returns are likely to be highest of the funds due to the highest weighting of growth assets.
What is the Fund’s competitive advantage?
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Research IP says
“The stated 30% target allocation to property and infrastructure is higher than relevant peer group comparisons, but Research IP believes the Manager’s wider definition of property and infrastructure, which effectively includes Australasian equities, provides enough diversification opportunities for this segment of the portfolio. This is aligned with the asset class benchmark for both the property/infrastructure and Australasian equity allocation, which is S&P/NZX50 Index Gross.“
“Within the equity allocation to Australasian equities (including property and infrastructure) the bias will consist of earnings quality and yield factors. The Manager takes an active approach, so stock selection will drive a significant portion of the Fund’s performance over the long-term.“
“The international equity allocation has a quality bias. For example, through investments in the Magellan Global Fund and Berkshire Hathaway Class B shares. However, there is also an element of growth through the Manager’s allocation to the T. Rowe Price Global Equity Growth Fund, and stocks like Tencent, Facebook, Alphabet, and Alibaba. Since early 2020 the allocation to direct stocks has increased from around 30% of the Fund to approximately 36% in early 2021. The performance contribution of the increased allocation to international companies versus the managed fund exposures is not clear. Therefore, the contribution of the Manager skill is difficult to evaluate.“
“Research IP commends specific actions taken by the Manager in implementing the responsible investment policy to date. The following examples demonstrate the active approach applied by the Manager:
– Signatory to a collaborative engagement to encourage Facebook, Alphabet and Twitter to strengthen controls to prevent the livestreaming and dissemination of objectionable content.
– Significant investment in a community bond where proceeds will be used for specific public housing projects.”
Research IP, 30 August 2021
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Disclaimer, Disclosures and Warnings
Research IP strongly recommends this document and report be read in conjunction with the relevant Product Disclosure Statement. Research IP gives no warranty of accuracy or completeness of information in this document. Any information, opinions, views or recommendations are general information only and do not take into consideration any person’s particular financial situation or goals and therefore does not constitute financial advice. This document should not be relied upon as a substitute for financial advice from your financial adviser.