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Managed Funds

Many KiwiSaver scheme funds are invested via what are called "Managed Funds".

Investment in company shares has historically proven to be a most rewarding form of investment over a medium to longer term. Despite recent volatility in world markets, which will continue for some time yet, this presents an excellent time to invest in good companies at lower prices. An individual can invest directly in shares, via share brokers. Individuals need to research each purchase very carefully and be actively monitoring each company to prevent losses. While active full service brokers can improve your chances of positive returns, small shareholders miss out when major deals occur. Larger shareholders will always control the game.

The majority of investment in the share market comes from financial institutions via Managed Funds. These investments are managed actively or passively by fund managers who design and manage a variety of funds with specific risk profiles and objectives. These fund managers are the major players that listed companies must perform for if they are to attract investment.

The local share market is very small compared to the rest of the world. Managed Funds enable an investor to invest via a fund manager in any country in the world.  Managed Funds also provide access to a wide variety of offshore investment opportunities. These have proven to perform better.

The sharemarket can be volatile and it reacts to many external political and other factors. This will affect both individual shareholders and Managed Funds returns. Despite the volatility the overall trends are positive.

KiwiSaver and Managed Funds

Most KiwiSaver funds which are a mix of shares and property, particularly offshore are invested via Managed Funds.

A managed fund which meets set criteria for investing and taxes is called a Portfolio Investment Entity, (PIE). All default KiwiSaver funds, and most other KiwiSaver funds including FirstChoice are PIE's. When you are invested in a PIE you need to nominate a tax rate the PIE uses to tax the income on your KiwiSaver investment. This is called your Prescribed Investor Rate (PIR).