Kōura review – Crypto meets KiwiSaver

kōura is a KiwiSaver provider who launched in late 2019. They’re a small provider with just over $27 million of funds under management, but they do KiwiSaver a bit differently to other providers – they provide a digital advice tool to help investors build a personalised KiwiSaver portfolio, and in May 2022 they launched the first KiwiSaver fund dedicated to investing in cryptocurrency. With their unique funds and features, could kōura be an overlooked gem in an increasingly crowded KiwiSaver market?

This article covers:
1. What’s on offer
2. Fees
3. Other considerations
4. Kōura vs competing services

1. What’s on offer

kōura offers a highly customisable KiwiSaver scheme with 9 funds. They provide two options for building your KiwiSaver portfolio:

  1. Use their digital advice tool to build a personalised portfolio for you.
  2. Build your own custom portfolio using any of their 9 funds.

More on these portfolio building approaches later. First let’s have a look at their funds:

Core Income Funds

These funds invest into conservative assets. They’re designed to be the core building blocks for short-term portfolios e.g. if you’re getting close to withdrawing your KiwiSaver for a house deposit.

  • New Zealand Cash – Invests in NZ bank deposits and cash equivalents.
  • New Zealand Fixed Interest – Invests in NZ government and corporate bonds.

Core Growth Funds

These are index funds investing entirely into shares. They’re designed to be the core building blocks for long-term portfolios e.g. if you’re investing for retirement in a few decades time.

Specialty Funds

These funds invest into specific sectors or assets. They’re typically higher risk, so are optional extras, rather than core building blocks of a portfolio. The maximum kōura allows you to allocate to these funds is 10%.

  • Carbon Neutral Cryptocurrency – Invests in Bitcoin only, through a fund managed by Fidelity Digital Assets. kōura may expand this fund to invest in other cryptocurrencies in the future.
  • Clean Energy – Invests in companies involved in the clean energy ecosystem, via the First Trust Clean Energy Fund.
  • New Zealand Property – Invests in NZ listed Real Estate Investment Trusts (REITs) and retirement village operators. May expand to invest in other property related companies in the future.

kōura’s range of funds is well rounded with their Core Growth funds covering domestic and global shares, and Core Income funds providing more conservative options for those getting closer to their investment goals. Their Specialty Funds are a little more interesting:

  • Clean Energy – This is NZ’s second fund to invest in this theme, following Kernel’s Global Clean Energy Fund.
  • NZ property – Other NZ property funds primarily invest in commercial property through REITs, but kōura’s fund also includes retirement village operators which provides exposure to the residential property sector. However, kōura’s NZ Equities Fund already has a ~22% allocation to these property related companies – so there’s no diversification benefit to investing in this fund, unless you wanted to concentrate your portfolio towards the property sector.
  • Carbon Neutral Cryptocurrency – This is the very first KiwiSaver fund dedicated to investing in crypto. Plus it’s just the second crypto fund in the world to be carbon neutral, offsetting any carbon emissions attributable to the fund’s crypto investments. Cryptocurrency is generally seen as a speculative investment, and kōura puts a lot of emphasis on the fact that this fund won’t suit everyone:

The Fund is only appropriate for investors that have a very long investment horizon and who are willing and able to withstand significant volatility. The Fund is expected to deliver a 50% loss every 1-2 years.

kōura Product Disclosure Statement

You can read more about cryptocurrency and Bitcoin in our articles below:

Further Reading:
Cryptocurrency 101 – Is it investing or gambling?
Digital Gold? 5 things to know about Bitcoin

2. Fees

Fund management fees

kōura’s funds charge the following fund management fees:

  • Core Income & Core Growth funds – 0.63%
  • Specialty funds – 1.10%

Their management fees are on the higher end for a passive fund manager. We find the following funds to be particularly expensive:

  • NZ Cash – 0.63% is incredibly high for a cash fund. Many competing cash funds have fees of between 0.20% and 0.30%.
  • NZ Equities & US Equities – Most other NZ and US equity index funds have fees of around 0.25% to 0.35%.
  • NZ Property – 1.10% is incredibly high for such a fund, especially when it’s just investing in a small subset of the NZ Equities Fund.

However kōura’s management fees are still cheaper than most actively managed funds, and the fees for the Rest of World and Emerging Markets Equities funds are roughly the same as competing options. In addition, the cryptocurrency fund appears to be reasonably priced, although there aren’t many other options in NZ to compare with – the only other NZ domiciled Bitcoin fund charges a fee of 2.50%.

Account fee

kōura charges a $30 per year for members over the age of 18. We’re not fans of fixed account fees as they can be incredibly expensive for investors with smaller balances. For example, $30 would equate to a huge 3% fee on a $1,000 portfolio, and 0.30% for a $10,000 portfolio. 0.30% may not seem like much, but it would bring your overall fees (including fund management fees) up to 0.93% – around the same price as many actively managed funds.

3. Other considerations

Digital advice

kōura offers a digital advice tool to help you build your KiwiSaver portfolio. It works by asking you questions about your investment goals and attitude towards risk, then recommends a portfolio to you that’s built from a selection of kōura’s 9 funds. Their tool can spit out hundreds of different fund combinations, resulting in a highly personalised portfolio, compared to other providers who tend to take a 3 sizes fits all approach offering “Growth”, “Balanced”, and “Conservative” funds.

You can then revisit the tool at anytime to adjust your portfolio in the case your personal or financial circumstances change. kōura recommends that you review your portfolio at least every year, especially to ensure your portfolio gets adjusted into more income assets as you get closer to your investment goal.

While the digital advice tool is relatively simple, we think it’s kōura’s best feature. kōura’s research found that over half of New Zealanders are in the wrong type of KiwiSaver fund, a problem made worse by the fact that financial advice is often hard to access. Their tool provides a huge step towards ensuring investors get the right fund allocation for their personal circumstances, without the expense and inconvenience of meeting an adviser.

Maximum allocations

kōura also offers the ability to manually build your own portfolio using their 9 funds. If you’re building a custom portfolio, there is a maximum percentage you can allocate your money towards certain funds:

  • Most core funds – 100%
  • Emerging Markets Equities Fund – 50%
  • Specialty Funds -10%

As an example if you had a KiwiSaver balance of $10,000, you couldn’t invest that entire balance into the cryptocurrency fund – the maximum allocation to that fund is 10% or $1,000. This reflects the higher risk of the specialty funds.

Rebalancing

Over time different funds will grow at different rates, resulting in them shifting away from their target allocations. kōura automatically rebalances your portfolio semi-annually, to bring your funds back to their target allocations.

For example, if your portfolio has a target allocation of 90% towards share funds and 10% towards crypto, and the crypto grows faster than your shares, your actual asset allocation could become overweight in crypto and underweight in shares. Your portfolio would be rebalanced by selling off some crypto and reinvesting that money into shares, to bring your actual fund allocation back to 90% shares and 10% crypto.

Ethical considerations

kōura places great importance on ethical investing. Their funds aim to exclude investment into contentious industries such as tobacco, whaling, weapons, and recreational cannabis.

In addition, despite being a largely passive fund manager, kōura aims to actively engage with the companies they directly invest in. For example, they’re advocates for gender diversity on company boards and will vote against any Director appointments for a company if there’s no females on the board.

Cryptocurrency carbon offsets

A common criticism of cryptocurrency is the high energy usage and resulting carbon footprint of many coins. kōura makes their cryptocurrency fund carbon neutral by estimating the carbon emissions relating to their cryptocurrency holdings, and offsetting that carbon through a carbon offset programme or by planting trees. This offsetting process occurs annually.

4. Kōura vs competing services

Here’s a brief overview of how kōura compares to competing KiwiSaver providers.

SuperLife

Similar to kōura, SuperLife’s KiwiSaver scheme allows you to build a KiwiSaver portfolio out of a wide range of single-sector funds. These include NZ, US, Europe, and Emerging Markets share funds, a few sector specific funds like NZ property and Australian financials, and cash and bond funds. Altogether there’s over 40 funds to choose from, but there’s no thematic or crypto funds on offer.

For those unsure what to invest in, SuperLife provides an Age Steps option which automatically places you into a portfolio depending on your age. However, this has some flaws compared with kōura’s digital advice tool. SuperLife Age Steps assumes you’re using KiwiSaver for retirement at age 65 so will invest accordingly – it doesn’t consider the fact you may be using KiwiSaver for your first home, nor does it consider your risk tolerance. Therefore kōura’s tool is a lot more personalised in setting up an investor’s asset allocation.

In terms of fees, kōura and SuperLife are roughly the same. With a few exceptions SuperLife’s funds charge a management fee of between 0.49% and 0.63%. Both providers charge a $30 annual account fee.

Further Reading:
Smartshares & SuperLife review – The smart way to invest in shares?

Kernel

Kernel’s KiwiSaver Plan allows you to build a KiwiSaver portfolio out of their range of 13 index funds. Their unique range (including interesting options investing in electric vehicles and infrastructure) provides plenty of choice in customising your KiwiSaver. A few of Kernel’s funds could be good substitutes for kōura’s funds:

  • The NZ 50 ESG Tilted or NZ 20 fund are suitable for making up the NZ equities portion of a portfolio.
  • The Global 100 could make up the international equities portion of a portfolio. Their S&P 500 Fund is another option for US centric investment.
  • The NZ Commercial Property Fund is essentially the same as kōura’s NZ Property Fund, minus the retirement villages.
  • Kernel also offers a Clean Energy thematic fund.

Kernel’s funds also come with significantly cheaper fees than kōura’s equivalents. Their core funds charge just 0.25% (versus 0.63% for kōura’s core funds), and their thematic funds charge 0.45% (versus 1.10% for kōura’s specialty funds). In addition, Kernel doesn’t charge an account fee for their KiwiSaver scheme.

Kernel’s main limitation is that they don’t have any cash or fixed interest funds for shorter-term or less risk tolerant investors. Their current offering is only suitable for investors with a long time horizon and high appetite for risk.

Further Reading:
Kernel review – High quality index funds

InvestNow

InvestNow’s KiwiSaver scheme is another heavily customisable one, offering 36 funds from 14 fund managers. That makes InvestNow’s scheme unique, as you have the ability to spread your KiwiSaver portfolio across multiple fund managers including Macquarie, Milford, and Fisher Funds.

Despite the large fund offering, InvestNow isn’t as flexible as kōura, SuperLife, and Kernel in terms of asset classes. A lot the funds on offer are pre-built diversified funds (e.g. growth, balanced, conservative funds), and there aren’t many unique single sector funds – you couldn’t invest in a fund specific to European shares, emerging markets, or clean energy for example.

Further Reading:
Build your own KiwiSaver – InvestNow vs SuperLife vs Craigs

Simplicity

Simplicity are famous for their low-cost KiwiSaver scheme, with their funds charging 0.31% with no account fee – much cheaper than kōura. Simplicity offers 3 pre-built fund options – Growth, Balanced, and Conservative, with Growth having a higher allocation to shares, and Conservative having a higher allocation to bonds.

A problem with Simplicity’s offering is that their “3 sizes fits all” approach won’t suit everyone. For example, they don’t have an equity only option for long-term investors looking for a more aggressive KiwiSaver investment. Nor do they have a cash fund for those getting very close to their investment goal and looking to protect their capital. kōura is a lot more flexible in their ability to build a portfolio that’s suited to your circumstances.

Further Reading:
InvestNow Foundation Series vs Simplicity funds – Tax leakage an issue?

NZ Funds

NZ Funds (through their Growth Fund) was the first KiwiSaver provider to invest in cryptocurrency. However, their Growth Fund isn’t a dedicated crypto fund, but rather an ordinary KiwiSaver fund which happens to have a small allocation to crypto (the fund currently has a ~5% allocation to Ethereum). Its investment into crypto is at the fund manager’s discretion – as an investor you can’t control the fund’s crypto allocation, nor can you opt-out of it. kōura’s fund is the first KiwiSaver scheme to put control of the level of crypto exposure into the hands of the investor (up to the 10% maximum).

Conclusion

We think kōura is an underrated KiwiSaver scheme thanks to two very unique and compelling features:

  • Digital advice – This allows you to get advice on your KiwiSaver portfolio without the expense and inconvenience of using an adviser. This is a massive feature because so many people get their KiwiSaver allocations wrong, and no other providers offer such a comprehensive and personalised tool.
  • Cryptocurrency fund – Currently kōura provides the only dedicated way to allocate your KiwiSaver to crypto, but keep in mind you’re limited to a 10% allocation to their cryptocurrency fund.

However kōura’s key features won’t entice everyone:

  • Some people are comfortable investing without the digital advice tool, and others would prefer a human adviser.
  • Plenty of people aren’t interested in crypto, or are happy with investing in it outside of KiwiSaver.
  • kōura’s other specialty funds are nothing special – the NZ Property Fund overlaps with the NZ Equities Fund and is just an expensive way to get exposure to REITs and retirement villages, while the Clean Energy Fund is quite a niche thematic.

So for those who don’t need these features, there’s plenty of other KiwiSaver options who will offer similar levels of customisability with cheaper fees like Kernel, and InvestNow. Though keep in mind that getting your asset allocation wrong could end up costing you more than the fee savings these platforms offer.

Lastly, while we really like kōura’s unique features, they aren’t particularly difficult to replicate. We feel that other KiwiSaver providers will soon catch up and offer digital advice tools and crypto funds of their own. So we’re looking forward to seeing what innovations kōura comes out with next to stay ahead of other providers.


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Disclaimer

The content of this article is based on Money King NZ’s opinion and should not be considered financial advice. The information should never be used without first assessing your own personal and financial situation, and conducting your own research. You may wish to consult with an authorised financial adviser before making any investment decisions.

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