KEY POINTS:
Kiwis can expect to see more offerings from Australian fund managers following the signing of a mutual recognition agreement between the two countries.
The agreement allows for the same offer documents to be issued in both countries, dropping the extra compliance barrier that has previously put some Australian fund managers off because of additional costs.
The New Zealand Government says it will smooth the way for the public to invest with greater ease across both countries and allow New Zealand companies to raise money in Australia.
But Murray Weatherston, chairman of the Society of Independent Financial Advisers, says it's more likely to open the door for Australian fund managers to offer products here rather than vice versa.
"Intuitively Australian products will be much more attractive to New Zealanders than New Zealand products to Australians.
"I would expect a lot of Australian managers to be a least jumping on a plane to dip their toes in and test the waters."
That move is unlikely to prove popular with local fund managers who will face tougher competition for New Zealand investors' dollars.
Weatherston suggests some Australian managers may also be able to undercut management fees because of their size.
But it also begs the question as to whether Kiwis will be left exposed to more complicated investment products that they do not understand and may get tripped up on.
Perhaps it would have been better for the Government to finish its bid to tighten up adviser regulation and investor protection before opening the floodgates?
SUPER REPORT CARD
The New Zealand Superannuation Fund, which was set up in 2001 to help provide for the future costs of superannuation for New Zealand's ageing population, has recently been given a check-up by the Office of the Auditor General.
The 2007 performance audit found the fund's guardians generally met or exceeded accepted international practices when it comes to managing the fund but could do better in some areas.
Those at the top of a list of 24 recommendations included adopting a formal board charter to guide external reporting, updating the fund's risk management framework, making sure there are regular independent assessments of the board's current and future capabilities, preparing a long-term operational strategy covering how the fund will be administered in the future and putting in place a transparent process for setting the level of remuneration it may need to pay to attract specialist skills. Sounds like the guardians will have their work cut out for them this year. The report did not assess the actual performance of the fund relative to its peers.
THE $5 TRILLION VIEW
UBS recently surveyed the largest gathering of central banks reserve managers and sovereign wealth funds about the global economy. More than 70 institutions who manage $5 trillion between them were questioned, with interesting results.
Of those surveyed 84 per cent believed the US Federal Reserve rate will be at or lower than its current rate bucking recent market expectations.
At the same time a majority of 62 per cent also believed the European Central bank rate will be at or above its current level.
Perhaps less surprising given soaring dairy prices was that the majority believed commodities were the most miss-priced asset in the world.
Energy prices were perceived to be the biggest risk to the world economy outweighing concerns about a severe US recession or the failure of a large financial institution.
And over the longer term a scarcity of resources was thought to be the biggest risk to the global economy over the next quarter century.
However one perception that has not appeared to change, despite the growth strength of the Euro, is the belief that the US dollar will remain the world's most important reserve currency beyond 2020.
KIWISAVER AS TEACHER
Recent events have shown some people don't seem to properly understand the relationship between risk and reward when it comes to investing.
But there is hope that KiwiSaver will mean future generations do understand more about investing in shares and financial products.
Fiona Oliver, chief operating officer for BT Funds Management - Westpac's investment arm - says a growing number of young people will start their working lives as members of KiwiSaver, improving New Zealand's future financial literacy levels, investment sophistication and retirement savings record.
"You only need to look at Australia, which has had compulsory superannuation for 20 years and has over one trillion dollars in superannuation funds under management."
She believes better understanding will mean more people will invest in growth assets such as global and domestic shares and property.
Latest KiwiSaver statistics show around 180,000 of the 670,000 people who have so far joined KiwiSaver are under 25.
Finance minister Michael Cullen recently told a group of Auckland accountants he believed KiwiSaver numbers could reach one million by the time of the general election in November.
But sceptics question whether tougher times will see many decide to opt for a contribution holiday as soon as their one-year anniversaries roll around.
STAYING POSITIVE
Sentiment towards KiwiSaver also does not appear to have been affected much by the poor performance that has dogged the sharemarket in the last six months.
A quarterly survey conducted by KiwiSaver provider Mercer shows people are feeling more positive about the retirement savings scheme.
While those who are actively against KiwiSaver increased from 22 per cent to 24 per cent those who are sceptical have dropped considerably from 31 per cent to 26 per cent.
The survey found those who feel positive but reserved about KiwiSaver increased from 33 per cent to 36 per cent although those who felt positive and embracing remained the same at 14 per cent.
Since Mercer began conducting the survey in October the percentage of people signed up to KiwiSaver has grown from 14 per cent to 29 per cent and it has boosted the number of people in workplace savings schemes to 39 per cent.
The survey was conducted in April on a random sample of 300 New Zealanders between 18 and 64 years of age.
