"For my daughters' birthdays, I asked that instead of gifts, family contribute into her managed fund account, this reduces waste and contributes to her financial wellbeing" Jeanette Kassa
Jeanette Kassa is our financial adviser at Pathfinder. She has over seven years of experience in the financial sector and holds a Diploma in Financial Planning Personal Advice and is currently completing a Personal Financial Planning Graduate Diploma. This Q&A sheds light on the advantages of managed funds and how they compare with popular investment options like KiwiSaver.
Why would I choose to invest in a Managed Fund?
A: Managed funds are a popular choice due to their flexibility and the opportunity they provide for diversified investment. Unlike KiwiSaver, managed funds allow for ready access to your money, offering a degree of liquidity that can be appealing.
Investors also gain access to a wide selection of stocks, shares, and bonds, which might otherwise be inaccessible. This diversity is crucial, as it spreads risk across various companies, potentially balancing the risk and return. At Pathfinder, our managed funds are distinct because they balance financial returns and investing in a future that reflects our values. This ethical approach demonstrates that good returns can go together or say hand-hand with responsible investing.
Q. Why would I choose a managed fund over a bank term deposit?
A. Despite term-deposits short term appeal they may not be as beneficial in the long run due to inflation and shifting interest rates. Also, and more importantly, historical data shows that long-term asset classes (stocks, property, etc) outperform cash as markets react to interest rates - when interest rates come down, asset prices usually go up and vice versa. That’s also an advantage of diversification – making sure you have a little piece of lots of pies helps to spread the ups and downs.
How does ethical investing benefit me as an investor?
A. In short, we believe the process for our ethical investing allows us to pick higher quality companies that are better long-term investments.
How does this work?
As part of our ethical investing process, our investment team considers ESG metrics. These are environmental, social, and corporate governance aspects that consider environmental issues, social issues and corporate governance issues.
It’s not the only thing we consider, but it’s part of the puzzle. We do this because companies with higher ESG scores tend to perform highly. For example, take a company with better corporate governance – they create positive work environments, which appeals to top talent and employee retention. It can also positively impact the company’s productivity and product quality.
ESG metrics often include risk assessments related to environmental and social factors. Companies proactively managing these risks are likely to avoid disruptions caused by environmental issues, social unrest, or governance scandals, ensuring steadier and more reliable productivity.
Overall, it can mean that, when investing with ESG metrics in mind, your portfolio includes companies that are future proofed, innovative and socially responsible.
Q. Does it cost money to be in a managed fund?
A. Yes it does, we charge a fee for each of our managed funds, you can find the fees for each fund on our website. Fees are required for the investment team to carry out their extensive research, strategic decision making and ethical evaluations.
Q. If I want to invest money for my kids, are managed funds a good idea?
A. Yes they are a forward-thinking way to invest for their future, offering tax benefits and a chance for family members to invest in the child’s long-term future, education, or other milestones.
For example, I have a two-year-old, and for both her birthday’s my partner and I asked that instead of gifts, people contribute the money they would have spent on gifts, into her managed fund account at Pathfinder. This way everyone is collectively contributing to her financial wellbeing, helping reduce waste and give the autonomy to choose how she wants to spend that money.
Here is a great article on investing and saving for kids.
Q. Is my money safe in a managed fund? What are the risks?
A. Pathfinder rigorously adheres to Financial Markets Authority regulations, ensuring client investments are managed with the utmost responsibility and ethical consideration and overseen by independent custodians like Public Trust.
We do our best to grow client’s wealth through investing ethically. However, we cannot guarantee an outcome and it’s important to remember that most funds grow over the long term, seeing ups and downs during is part of the investment journey.
Q. Why are Pathfinder funds different to other funds on the market?
A. Pathfinder believes in investing in a better future. The world is constantly evolving, and Pathfinder funds are not only investing ahead of the trends, but they are doing it in an ethical way. We are now proving that you can make good returns while being ethical.
Our funds are actively managed (rather than being passive index funds). This means we pick and choose investments and opportunities in line with our Ethical Investment Policy. As active managers we can divest (sell stocks) if a company stops aligning with our ethical criteria. It also means we’re able to invest in specific impact companies to tilt our portfolio towards positive, future focused investments.
We actively aim to mitigate loss and maximise returns and we have a dedicated investment team who assess and select investments to ensure we’re investing with the wealth and well-being of our members in mind. See more on active vs passive investment strategies or listen to The Everyday Investor podcast with our Chief Investment Officer, Paul Brownsey.
Q. How do I know if a managed fund is right for me ?
A. There is information on our different funds and what they do on our website. However, if you would like individual financial advice, you can set up a time to talk to me with no obligation and free of charge. I help clients talk through their goals and work out an investment strategy to help them achieve those goals. Book a time to talk here. https://pathfinder.kiwi/managed-funds.
Jeanette has 6+ years of experience in financial services, working in both Auckland and Australia. With a Diploma of Financial Planning Personal Advise (RG146) and a New Zealand Certificate in Financial Services, she’s an experienced and passionate financial advisor.