Reaction to the Securities Commission new KiwiSaver guidelines has been mixed.
Well Gareth didn't like them, everyone else thought, as far as guidelines go, they were OK.
I thought they were interesting enough, particularly, where the Securities Commission hints it may demand - at some
point in the future - greater disclosure of the actual underlying investments KiwiSaver funds hold.
In one of its guidelines, the Commission reiterates that KiwiSaver providers must stick very closely to the investment mandates and practices as published in their trust deeds. Any variance from those set mandates must be countered with the publication of a new prospectus:
"This can apply where a fund invests outside its stated policies and practices and where a fund limits its investment to a narrower selection of investments than disclosed in its stated policies and practices," the guidelines say. "In both cases this can be misleading as to the true nature of the investment offered."
Providers who prefer a more flexible, opportunistic approach to investing money may try to get around these confines by setting vague mandates in the first place. But the Commission has thought of that too:
"Where scheme mandates or statements of investment policies and objectives are widely drawn so as to effectively allow unlimited investment discretion, the disclosures made should include the issuer's actual investment intentions during the currency of the prospectus...
"The disclosures made should be sufficient to enable potential members to identify the nature of the fund concerned and the risks and likely returns of investment."
In other words, if KiwiSaver funds are going to take your money to exotic places, at the very least they will have to send back regular postcards that say more than 'Having a great time, wish you were here'.
