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Elevate Magazine
October 9, 2024

Sharesies Launches US500 Fund, Expanding KiwiSaver Options for Global Investment

savings

Sharesies recently announced their US500 fund for KiwiSaver members looking for an opportunity to diversify their retirement savings.

Through Sharesies, it allows investors to access the U.S. stock market by investing in the S&P 500, which includes 500 of the largest publicly traded companies in the United States. For Kiwi business leaders and employees, this new option represents a valuable chance to enhance financial strategies that align with global economic trends.

An Expanding KiwiSaver Framework

Recently, KiwiSaver has experienced considerable growth since its inception, surpassing $100 billion in funds under management. Therefore, the introduction of the US500 fund marks another milestone that enhances financial security for many Kiwis.

At the same time it allows KiwiSaver members to diversify their portfolios beyond the New Zealand market. By investing in renowned companies like Apple, Microsoft, and Amazon, members can gain exposure to sectors such as technology, healthcare, and finance, which are prominent within the S&P 500.

What the US500 Fund Offers

The US500 fund connects KiwiSaver members to the U.S. market through the Vanguard S&P 500 ETF, a low-cost index fund that tracks the performance of the S&P 500. It has an annual fund charge of just 0.09%; this fund provides an affordable pathway to a diversified portfolio of U.S. equities, making it accessible to a range of investors.

Before investing in any saving scheme, it’s important to look at the historical performance of the US500 fund. Over the past decade, the S&P 500 has delivered an average annual return of nearly 13%, illustrating its potential as a long-term investment.

The S&P 500’s diverse representation across various sectors makes it a sensible option for those looking to manage risk by spreading their investments.

For business leaders, this new fund presents an opportunity to reconsider retirement savings strategies, particularly in light of economic uncertainty and market fluctuations.

By gaining exposure to the world’s largest economy, KiwiSaver members may enhance their portfolio growth, providing reassurance as they plan for the future.

Global Diversification for Business Leaders

For Kiwi business leaders, Sharesies’ US500 fund highlights the importance of adopting a global perspective in financial planning. As the U.S. continues to lead in innovation and economic growth, investing in these markets can serve as an example of the benefits of international diversification.

Local businesses are increasingly seeking to expand their reach beyond domestic borders; the US500 investment option aligns well with that need. Leaders can learn from the global exposure provided by the US500 fund, applying similar strategies in their business operations to explore international growth opportunities.

According to the UBS Global Family Office Report (2021), 77% of family office executives think it’s important to diversify their investments to reduce risks from market fluctuations. Many entrepreneurs recognise that they need to spread their investments beyond their main business to maintain financial stability.

A report from the Forbes Business Council shows that around 70% of business leaders are working on diversifying their revenue streams to avoid depending too much on one source of income, including entering new markets, creating new products, and investing in savings plans.

What appeals about Sharesies is that the flexibility to invest in global markets is particularly appealing as remote work becomes more common. Kiwi employees managing multiple income streams or facing inflationary pressures now have a new resource to help secure their financial future.

Addressing Workforce Concerns

Younger workers are becoming more investment-savvy, creating a demand for greater control and education around retirement planning.

Vanguard Research (2022) reported that in 2021, 62% of Generation Z workers (ages 18 to 24) participated in employer-sponsored retirement plans, up from 30% in 2006. Similarly, 83% of Millennials (ages 25 to 40) were part of retirement plans in 2021, compared to 57% in 2006. This shows a significant increase in both participation and savings rates among younger workers.

The good thing is that Sharesies is a wealth development app, a platform designed with a user-friendly experience, encouraging individuals to take a more proactive approach to their KiwiSaver investments by providing financial literacy resources about investments and savings.

Business leaders can support this trend by promoting financial literacy in the workplace, ensuring employees understand their retirement planning options.

The launch of the US500 fund also brings attention to ongoing challenges within KiwiSaver, especially the gender gap in retirement savings. On average, women tend to have lower KiwiSaver balances than men, which can impact their financial security in retirement.

By introducing diverse and potentially higher-growth investment options like the US500 fund, there is an opportunity to help close this gap. Encouraging women to explore these options could empower them to create stronger financial futures.

Conclusion

The addition of Sharesies’ US500 fund to KiwiSaver signifies a meaningful shift toward global investment options that New Zealanders can utilise to enhance their retirement savings. Compared to other global options offered by KiwiSaver providers, Sharesies stands out for its flexibility and low fees.

Members can choose how much of their portfolio to allocate to U.S. investments, with no minimum investment thresholds, making it appealing for those looking to take an active role in their financial planning.

For Kiwi business leaders, this fund illustrates the advantages of looking beyond local markets to seize growth opportunities. Since Aotearoa has a current fluctuating global economy, having a diversified investment portfolio that includes major international markets like the U.S. can provide a buffer against local economic downturns.

The launch of the US500 fund offers benefits not only to individual KiwiSaver members but also to the broader business community, providing insights into the value of strategic global investments.