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Two colleagues went on holiday separately. One had a great time. The other had a miserable experience. Their respective stories provide valuable lessons, not just about taking a vacation, but about investment.
In a coup for Hawke's Bay, wealth and risk management specialist Stewart Group is now an asset consultant for Fidelity Life's KiwiSaver schemes that include Texas-based Dimensional Funds Advisors' (DFA) funds.
Dimensional is the eighth-largest fund adviser in the United States.
"The Asset Class Conservative Kiwi Fund and Asset Class Growth Kiwi Fund Asset with Dimensional's strategies are unique, giving everyday investors the opportunity to have to engineer from the best minds in modern finance within their own New Zealand-based investment," company director Nicholas Stewart said.
Once KiwiSaver members join the Fidelity KiwiSaver Scheme they can tailor their investment profile by blending holdings across up to four funds.
The biggest drawcard is expected to be the option of moving to the Asset Class Conservative Kiwi Fund and/or the Asset Class Growth Kiwi Fund having their KiwiSaver contributions invested mainly in DFA (Australia) funds.
"Dimensional funds are generally not accessible to mum and dad investors because the minimum investment level is too high and they are not open to the public," Stewart said.
"There are only a small number of DFA-accredited New Zealand financial advisers offering Dimensional funds - and none in the KiwiSaver market."
The Asset Class Funds will not charge performance fees.
"We believe fund performance is a result of market performance, not manager stock selection or market timing."
Stewart said KiwiSaver funds were closing because providers were seeking increased economies of scale "to make more money".
"We came about this not to make a dollar, we came about this because we wanted to do the best for our clients. And that's rather unique."
Stewart met DFA director and Ivy League professor Ken French 11 years ago while Stewart was a 25-year-old graduate, on holiday from his job at a merchant bank.
French's academic research has become the basis upon which Stewart bases investment strategies.
"I was in Canada skiing with a girlfriend and her family's wealth was managed by Dimensional," Stewart said.
"Her father said I think you need to talk to my adviser because there is a different way of thinking. The little boy from New Zealand was given an introduction - an introduction that is hard to quantify in terms of its value for me."
When KiwiSaver has launched five years ago, Stewart pitched the idea of Stewart Group tailoring its own KiwiSaver fund to his father and fellow director Donald.
"I said to him, 'we cannot give advice when we cannot put our hand on our heart and say it's perfect and aligns with our investment philosophy.' Which meant all of a sudden there was an area of the advice market that we were saying no to. You can't keep going like that - our clients need advice in certain areas.
"So we said if we can't get a product, we will make a product.
"A lot of the Dimensional guys had become friends, so when I put this into their world and said, gentlemen, I need you to help me to bring something better to New Zealand.
"We are from a small province that exports apples and lamb and we were asking for something pretty big.
"You can imagine the discussions in Austin, Texas, 'Hastings where?'."
The Americans came to the party, literally, at the Scots-themed launch on Friday in Hastings.
And why didn't Mr. Stewart mention the Canadian-girlfriend connection in his launch speech?
"Hell no, my wife was inside."
- Source: Patrick O'Sullivan, Hawke's Bay Today