Stuff | 22 July 2015
When your money goes into KiwiSaver it goes on a journey into the global financial system and some of the places it ends up will surprise you.
Some KiwiSaver schemes invest a lot in New Zealand deposits, bonds and shares, but most have big chunks invested in overseas companies and with overseas governments.
That means KiwiSavers fund a dizzying array of activity from building drones to owning Disney princesses.
And often, global headlines from deep sea oil exploration protests here, to Russian pressure on Ukraine have a direct KiwiSaver link too.
Princesses and bluebirds
There’s a whole battalion of Disney princesses on the side of KiwiSavers. Photo: 123rf.com
Cinderella and her bluebirds are owned by Walt Disney, and Walt Disney is partly-owned by many KiwiSaver funds.
KiwiSaver funds invest a lot of their money in shares, many of them giant US companies. Walt Disney is among them, so many KiwiSavers in effect own an entire battalion of princesses from the soapy, pre-feminist Cinderella and Sleeping Beauty to feistier (though still frock and prince-obsessed) modern-day ones.
ANZ’s KiwiSaver Growth fund was 0.65 per cent invested in Walt Disney at the end of March, its public annual disclosure datafile shows. Westpac’s Balanced fund had 0.44 per cent.
Deep sea oil exploration in New Zealand
Some KiwiSaver funds have an interest in deep sea oil prospecting in New Zealand. Photo: 123rf.com
If you have seen those Stop Deep Sea Oil posters and car stickers around, or been stopped in the street by an activist with a Greenpeace clipboard, you’ll know some New Zealanders are nervous about ongoing deepwater oil prospecting in our seas.
They fear the impact a spill would have on our coasts and marine environments.
What you may not realise is that two of those prospectors, Chevron and Anadarko, are listed companies which are both partially-owned by some KiwiSaver growth funds.
BNZ’s Growth fund, for example, had 0.05 per cent of its assets in Chevronat the end of March. Westpac’s Growth fund had 0.01 per cent of its money in Anadarko.
Hammer of the Ukrainian economy
Russia’s Gazprom is part-owned by some KiwiSaver funds. Photo: 123rf.com
KiwiSavers unwittingly take part in global political affairs through their ownership or shares and bonds.
Russian company Gazprom stopped selling gas to Ukraine on July 1 and the Ukraine economy is hurting.
Ukraine lost Crimea to Russia last year. Tensions are high.
Gazprom issues bonds to investors to fund its operations.
Some KiwiSaver funds buy them. Westpac’s balanced fund had a small stake in Gazprom.
Assassin’s Creed
Violent video games may not be your thing, but some KiwiSaver funds invest in their makers. Photo: 123rf.com
London, 1868. The Industrial Revolution has brought in an age of invention, but the poor are little more than legalised slaves, until assassin Jacob Frye decides to fight on their side.
KiwiSavers in BNZ’s growth fund are among those who should be hoping that Frye will make Ubisoft, the games publisher a heap of money.
It’s another example of the stories buried away in the heart of KiwiSaver.
Funds within funds
KiwiSaver can feel like a Russian doll, with funds investing in funds investing in funds. Photo: 123rf.com
KiwiSaver schemes invest your money in stocks and shares. They often do that through other funds, which in turn may invest in yet further funds.
KiwiSaver can feel a little like a set of Russian dolls that way.
Take the Westpac KiwiSaver Growth fund as an example.
At the end of March, its single biggest holding was with Ramius Alternative Solutions. It is a US hedge fund specialist which was looking after 9.01 per cent of the Westpac Growth fund at that date. And its speciality is investing the money entrusted to it with other fund managers.
The vampire squid
Goldman Sachs tower in New York from which global financial domination is plotted. Photo: 123rf.com
KiwiSavers are, by default, passive players in the highest levels of global capitalism because KiwiSaver funds are shareholders in some of the biggest names in financial services, including some that have been pinged with some enormous fines and have agreed to pay enormous sums to end lawsuits.
Goldman Sachs is among them. It was described by Rolling Stone magazine in 2009 as “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
It’s coughed up some staggering fines and settlements for its past actions.
It is also a staple of KiwiSaver portfolios.
AMP’s growth fund owns a little, for example, and its not alone. Most big growth KiwiSaver funds also own other big banks whose records are far from spotless like HSBC, Citibank, and JP Morgan Chase.
Droning on
KiwiSavers can find their some of their money invested with arms manufacturers. Photo: 123rf.com
Many KiwiSaver schemes are invested in companies that supply war machines.
One example is giant US engineering firm Honeywell. The BNZ KiwiSaver Growth fund owns a piece of it, and it is not alone.
Honeywell makes reaper drones which have made plenty of headlines for their use in the Middle East.
Ethical KiwiSaver funds do their best to exclude things like tobacco, pornography and arms manufacture, but it’s hard.
Take Koinonia, the KiwiSaver scheme for Christians. It aims to do that, but its Growth fund’s joint fifth largest holding at the end of March was Warren Buffet’s Berkshire Hathaway, and it owns TTI, an electronics company, which in June was awarded the title of “Military/Aerospace Distributor of the Year” by manufacturer Souriau. TTI is a small part of the Buffet empire, but its still there.
Support their veterans
The Kroger Company, a supermarket chain in which the Kiwibank KiwiSaver scheme invests is doing its bit for US veterans. Photo: Mike Blake/Reuters
KiwiSaver funds invest in hundreds of companies. Each has its own story, and some of them are fascinating. Take The Kroger Company, which was a top 10 holding in Kiwibank’s KiwiWealth KiwiSaver growth fund.
It’s a US supermarket operator, which in 2014 did over US$108billion of sales, and its got a big drive on to support returning US war veterans.
There’s a parallel there to retailers here like The Warehouse and Z Energy raise funds for good causes.
Foreign country bonds
Slovenian government debt is a lesser known KiwiSaver asset. Photo: 123rf.com
Many of the world’s countries are big debtors, and KiwiSavers are profiting from this.
Conservative and balanced funds buy government bonds. Income is earned off the interest they pay, but there can be capital gains.
Take the example of the BNZ Conservative fund.
It’s got US Treasury bills, British bonds alon with German, Kiwi, Irish, Mexican, Norwegian, Japanese, Danish, Malaysian, Canadian, South African, Australian, Swedish, Polish, French, Slovenian, Finnish, Italian and Belgium bonds.
It’s not just countries. Local councils are increasingly indebted.
BNZ’s Conservative fund has Dunedin City Council bonds and Auckland Council bonds.
Merivale Mall
For some KiwiSavers, every day is like Christmas because they own Merivale Mall in Christchurch. Photo: Carys Monteath/Fairfax NZ
KiwiSaver schemes tend to hold “liquid” assets that are easy to sell.
But, because they are huge, KiwiSaver funds are able to hold illiquid assets.
An example is Growth Fund of the Fisher Funds Two scheme, which owns Christchurch’s Merivale Mall.
