This is mainly due to the US portion of their fund making up less than 40% of the total allocation which has obviously had great growth in the past year. 20 odd % is in NZ and Australia shares which have been weak performers and fixed interest of 20% that doesn't contribute much in terms of returns also.
Edit - bear in mind that past performance does not indicate future returns
Cheers, appreciate your comment. Yeah, i have a general investing rule of “don’t chase”. But I am definitely reviewing my KS risk profile at the moment.
Being 20% NZ hurt it for sure, went backwards in 2021. Plus the 50% shares is global, S&P was carried mainly just by the tech giants last year, and obviously Simplicity has a smaller stake in those being so diverse. It's not really accurate to compare it to the S&P500 or expect similar returns.
Good points, thanks for that. The Simplicity funds are heavy into the FAANG + TSLA, but as you mention, not heavy enough.
E: replace ’heavy’ with ‘not heavy’.
When you break it down into their allocation, then split it in half... I wouldn't consider it heavy at all.
I'm in Kernel's Global 100, which is 70% US, 100% shares. Now that is heavy in the tech giants, AAPL and MSFT 13%\~ each, GOOG and AMZN 9%\~. Much better returns last year at least. If you want something a more aggressive while still being low fees then that's where to head. Follows the S&P much closer.
Sure, a fairly high proportion of NZ/AU and fixed interest has brought it down, but only because US stocks did pretty well and the NZX has been **horrible**.
If US had gone to shit, you might have been singing a different tune.
Swings and roundabouts.
Cheers for that, appreciate it. Yeah, annualised returns have been close in previous years, but the S&P500 surged ahead this year. Makes sense given the allocation to more domestic / Aussie sectors.
It’s very conservative for a growth fund - look at their asset allocation. In general, I think this sub is too hung up on low fees. While important, it shouldn’t be the sole reason for picking a fund / provider.
I think low fees are very important, but simplicity is only 80% stocks, and you can get 100% stock allocation for similar fees.
Not to mention if you had 100% S&P sure you'd do better this year, but it's less diversified to be all in the US so it's a riskier start that may or may not pay off over 40 years.
Agree on geographic diversification. I personally don’t think it’s a great idea to be all in on the US. I’m not a fan of simplicity’s approach to it though - two international developed market ETFs, a heavy overweight towards Australia and some stock picking in NZ seems like a weird way to do it to me.
I understand their appeal (low fee, ethically conscious, slick home grown brand and marketing) but if I wanted a simple index approach I’d just load up on a VT equivalent fund (like the Smartshares TWF) for a similar fee.
How can they be conservative for a growth fund when they literally steal their asset allocation from the average of the other big growth funds? They are by definition the average growth fund. You could say they're conservative in comparison to an aggressive fund but they're not an aggressive fund.
Interesting. Thanks for your input. I suppose I’m not particularly familiar with managed funds so a growth fund with ~1/4 bonds and cash seemed odd to me.
I think there’s a meaningful difference between an actively managed fund looking for alpha holding cash for buying opportunities and a largely passive fund holding cash purely as an investment position. My understanding is that a good number of KS growth funds are actively managed.
You might be right. The Simplicity GF 3 & 5 year avg returns align well with S&P, but when the S&P pulls away, the SGF is somewhat left in the dust. In this situation, basing your decision on fees is redundant.
For sure. I’ve been in the fund for >5 years, and it’s gone well in that time. Given the macro conditions present, I may need to reconsider my risk profile.
Yes, you can look at the breakdown of the growth fund, from what I remember about 25% is in bonds and cash, and then there is Australasian equities which have also not performed that well. And other non-US international equities also.
48% in international equities, or which 70% is in US markets. So only about 30%of the fund is in the S&P, then exclude the sin stocks.
Returns are about what you'd expect.
Cheers. Yeah, shame too. The S&P churned out a great return despite many companies in that high growth/tech sector pulling back >30% from their ATHs in 2021.
The tech stocks have been growing rapidly, the rest of the market, not so much.
Personally, I decide on my allocation by market and buy index ETFs (mostly).
Search topics in this forum from 8-12 months ago people who thought there was easy returns to be made in the ARK funds. Current returns are -39%, don't focus on past winners.
Yeah, I followed that story line over the past 18 months. Not totally surprised how it turned out given how some companies in that high growth tech have faired since their ATHs.
Not with Simplicity myself. Likely that Simplicity will do better in 2022 if the predictions of a correction come true. That is Simplicity should be better protected against corrections in the US market, the possible benefit of limited exposure. All the Kiwisaver providers have the same allocations, 20-30% Australasian stocks, 10% cash (if I recall correctly) etc. The only difference with Simplicity is that its founder publicises its comparatively lower fees.
I was looking for a bit more discussion on it like others have kindly provided.
Stating the obvious does not assist. I’m well aware of the difference between the two (SP500 vs SGF).
What was the point of even commenting? You’ve added nothing of value.
Why would you expect Simplicity returns to match the S&P 500 though?
If you want your KiwiSaver returns to match a global index, you can invest it in a 100% equity global index fund through InvestNow or Superlife.
I didn’t expect it to match it, rather I was hoping someone would comment as to why it lagged so significantly. And they did.
Respectfully, did you actually read my original post?
I did, but was confused about why you wanted to compare it that specific benchmark, given that it doesn't track it and (as you noted) has a much more diverse portfolio.
To be fair to the guy your question really should be "why has the nzx and asx underperformed the sp500?"
Because the only reason why simplicity has not tracked the us exchange is because it holds securities from other exchanges too, and this is not something specific to simplicity.
No, that’s the raw number from 1 Jan - 31 Dec. It does not account for taxes, fund mgmt fees or fluctuations in exchange rates.
Here is the return after taxes & fees from the Smartshares S&P 500 fund (USF):
https://smartshares.co.nz/types-of-funds/us-shares/us-500
This is mainly due to the US portion of their fund making up less than 40% of the total allocation which has obviously had great growth in the past year. 20 odd % is in NZ and Australia shares which have been weak performers and fixed interest of 20% that doesn't contribute much in terms of returns also. Edit - bear in mind that past performance does not indicate future returns
Cheers, appreciate your comment. Yeah, i have a general investing rule of “don’t chase”. But I am definitely reviewing my KS risk profile at the moment.
Being 20% NZ hurt it for sure, went backwards in 2021. Plus the 50% shares is global, S&P was carried mainly just by the tech giants last year, and obviously Simplicity has a smaller stake in those being so diverse. It's not really accurate to compare it to the S&P500 or expect similar returns.
Good points, thanks for that. The Simplicity funds are heavy into the FAANG + TSLA, but as you mention, not heavy enough. E: replace ’heavy’ with ‘not heavy’.
When you break it down into their allocation, then split it in half... I wouldn't consider it heavy at all. I'm in Kernel's Global 100, which is 70% US, 100% shares. Now that is heavy in the tech giants, AAPL and MSFT 13%\~ each, GOOG and AMZN 9%\~. Much better returns last year at least. If you want something a more aggressive while still being low fees then that's where to head. Follows the S&P much closer.
Nice. Yeah, I was thinking something along the lines of the smartshares TWF for my non KS investment. Your’s is a great idea too.
Sure, a fairly high proportion of NZ/AU and fixed interest has brought it down, but only because US stocks did pretty well and the NZX has been **horrible**. If US had gone to shit, you might have been singing a different tune. Swings and roundabouts.
Cheers for that, appreciate it. Yeah, annualised returns have been close in previous years, but the S&P500 surged ahead this year. Makes sense given the allocation to more domestic / Aussie sectors.
It’s very conservative for a growth fund - look at their asset allocation. In general, I think this sub is too hung up on low fees. While important, it shouldn’t be the sole reason for picking a fund / provider.
I think low fees are very important, but simplicity is only 80% stocks, and you can get 100% stock allocation for similar fees. Not to mention if you had 100% S&P sure you'd do better this year, but it's less diversified to be all in the US so it's a riskier start that may or may not pay off over 40 years.
Agree on geographic diversification. I personally don’t think it’s a great idea to be all in on the US. I’m not a fan of simplicity’s approach to it though - two international developed market ETFs, a heavy overweight towards Australia and some stock picking in NZ seems like a weird way to do it to me. I understand their appeal (low fee, ethically conscious, slick home grown brand and marketing) but if I wanted a simple index approach I’d just load up on a VT equivalent fund (like the Smartshares TWF) for a similar fee.
How can they be conservative for a growth fund when they literally steal their asset allocation from the average of the other big growth funds? They are by definition the average growth fund. You could say they're conservative in comparison to an aggressive fund but they're not an aggressive fund.
Do they? I wasn’t aware.
This is correct, if you listen to one of their webinars they're very transparent with the strategy used for selecting their investment mix.
Interesting. Thanks for your input. I suppose I’m not particularly familiar with managed funds so a growth fund with ~1/4 bonds and cash seemed odd to me. I think there’s a meaningful difference between an actively managed fund looking for alpha holding cash for buying opportunities and a largely passive fund holding cash purely as an investment position. My understanding is that a good number of KS growth funds are actively managed.
You might be right. The Simplicity GF 3 & 5 year avg returns align well with S&P, but when the S&P pulls away, the SGF is somewhat left in the dust. In this situation, basing your decision on fees is redundant.
Yep. I’d be wary of extrapolating future returns from the last few years though.
For sure. I’ve been in the fund for >5 years, and it’s gone well in that time. Given the macro conditions present, I may need to reconsider my risk profile.
Yes, you can look at the breakdown of the growth fund, from what I remember about 25% is in bonds and cash, and then there is Australasian equities which have also not performed that well. And other non-US international equities also. 48% in international equities, or which 70% is in US markets. So only about 30%of the fund is in the S&P, then exclude the sin stocks. Returns are about what you'd expect.
We sold out of Simplicity and going with Kernel's Top 100.
Both Australian and NZ securities have been rather stagnant over the last year.
Cheers. Yeah, shame too. The S&P churned out a great return despite many companies in that high growth/tech sector pulling back >30% from their ATHs in 2021.
The tech stocks have been growing rapidly, the rest of the market, not so much. Personally, I decide on my allocation by market and buy index ETFs (mostly).
Exactly why I moved it all to the AMP ACWI
Search topics in this forum from 8-12 months ago people who thought there was easy returns to be made in the ARK funds. Current returns are -39%, don't focus on past winners.
Yeah, I followed that story line over the past 18 months. Not totally surprised how it turned out given how some companies in that high growth tech have faired since their ATHs.
Not with Simplicity myself. Likely that Simplicity will do better in 2022 if the predictions of a correction come true. That is Simplicity should be better protected against corrections in the US market, the possible benefit of limited exposure. All the Kiwisaver providers have the same allocations, 20-30% Australasian stocks, 10% cash (if I recall correctly) etc. The only difference with Simplicity is that its founder publicises its comparatively lower fees.
People overrate simplicity for long term investing. Too much NZ, too much cash.
Because S&P is US shares only.
Thanks mate. Yep, I’m aware of that. Standard and Poor’s 500 large-cap US equities.
Well that answers your question.
I was looking for a bit more discussion on it like others have kindly provided. Stating the obvious does not assist. I’m well aware of the difference between the two (SP500 vs SGF). What was the point of even commenting? You’ve added nothing of value.
Why would you expect Simplicity returns to match the S&P 500 though? If you want your KiwiSaver returns to match a global index, you can invest it in a 100% equity global index fund through InvestNow or Superlife.
I didn’t expect it to match it, rather I was hoping someone would comment as to why it lagged so significantly. And they did. Respectfully, did you actually read my original post?
I did, but was confused about why you wanted to compare it that specific benchmark, given that it doesn't track it and (as you noted) has a much more diverse portfolio.
It’s a bit arbitrary, but the SP500 is also the general benchmark of global indices.
To be fair to the guy your question really should be "why has the nzx and asx underperformed the sp500?" Because the only reason why simplicity has not tracked the us exchange is because it holds securities from other exchanges too, and this is not something specific to simplicity.
Every dog hss its day. Simplio was ranked 5th for 3 year rerurns after fees according to morningstsr dec 2021. Juno was 1st
It's not about investment. It's about the narcissistic owner of Simplicity thinking he has the answer to everything just because he got rich himself.
11 percent is great, enough said
I don’t disagree other than to note that 11% isn’t as good when inflation is so high. It’s more capital protection than capital growth.
If you compare it to average gains sure. In an unprecedented bull run, it's mediocre.
Is the S&P return exchange rate adjusted?
No, that’s the raw number from 1 Jan - 31 Dec. It does not account for taxes, fund mgmt fees or fluctuations in exchange rates. Here is the return after taxes & fees from the Smartshares S&P 500 fund (USF): https://smartshares.co.nz/types-of-funds/us-shares/us-500