Foundation Series on InvestNow

The Foundation Series Funds are InvestNow’s house brand fund solutions. Currently, InvestNow offers four Foundation Series Funds, covering two global share strategies and two diversified portfolios. The two diversified funds, plus the Total World and US 500 funds are also available via the InvestNow KiwiSaver Scheme. Find out more about the InvestNow KiwiSaver Scheme here.

Introducing the Foundation Series Funds:

The mission for the Foundation Series is to help Kiwis achieve their investment goals through the most cost- and tax-efficient vehicles in the market.

We focus exclusively on creating value for investors by building competitively priced funds that offer some of the lowest fees available in New Zealand.

The Foundation Series also rests on a solid understanding of the often-neglected role of tax on investment returns. Our funds are constructed to institutional-grade tax-efficiency standards, which means more money in the pockets of Kiwi investors and less ‘donated’ to foreign governments.

We believe that robust, long-term investment outcomes are underpinned by the core principles of asset diversification and efficient portfolio construction, and incorporate these values in providing a broad set of fund offerings that are designed to form the ‘Foundation’ of any investment portfolio.    

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Foundation Series investment options

Below is the range of investment options from Foundation Series that are available through the InvestNow platform, either as Managed Fund investments or as options within the InvestNow KiwiSaver Scheme.

For fee information and links to relevant disclosure material:

  • For their Managed Funds, click here.
  • For their funds available in the InvestNow KiwiSaver Scheme, click here.

To invest in these investment options through InvestNow, create an online account.

The Fund aims to generate long-run returns by investing in an underlying Exchange-Traded Fund (‘ETF’) that invests in shares of the largest companies listed on exchanges in the United States. At present, the Fund achieves this exposure by investing in the Vanguard 500 Index Fund ETF (Ticker: VOO).

The Fund’s objective is to perform broadly in line with the return of its investment benchmark before fees and tax over the long-term.

The Fund aims to generate long-run returns by investing in an underlying Exchange-Traded Fund (‘ETF’) that invests in thousands of large, mid and small capitalisation stocks from both developed and emerging equity markets. At present, the Fund achieves this exposure by investing in the Vanguard Total World Stock ETF (Ticker: VT).

The Fund’s objective is to perform broadly in line with the return of its investment benchmark before fees and tax over the long-term.

The Fund aims to generate long-run returns by investing in a diversified portfolio with a balance of income and growth assets. The Fund’s objective is to perform broadly in line with the return of its investment benchmark before fees and tax over the long-term.

The Fund’s investment benchmark is the weighted average return (before tax, fees and other expenses) of the asset class benchmark indices, which includes both New Zealand as well as international fixed interest and equity asset classes. The long-term returns from the Foundation Series Balanced Fund are likely to be lower and more stable than those of the Foundation Series Growth Fund.

The Fund aims to generate long-run returns by investing in a diversified portfolio weighted towards growth assets but with some income asset exposure. The Fund’s objective is to perform broadly in line with the return of its investment benchmark before fees and tax over the long-term.

The Fund’s investment benchmark is the weighted average return (before tax, fees and other expenses) of the asset class benchmark indices, which includes both New Zealand as well as international fixed interest and equity asset classes. The long-term returns from the Foundation Series Growth Fund are likely to be higher and less stable than those of the Foundation Series Balanced Fund.

Foundation Series FAQs

Both the Foundation Series US 500 Fund and the Foundation Series Total World Fund are subject to a Transaction Fee charge of 0.50% for all Buy Orders and 0.50% for all Sell Orders.

At the time you raise your buy for sell order for the Foundation Series US 500 of Foundation Series Total World funds the transaction fee that applies this will be disclosed in the secure portal.

Where the order placed is in dollars you will be notified how much this transaction fee will equal to in dollar amounts, while if the transaction is undertaken in terms of units, then an estimated transaction fee will be provided in terms of dollars.

All Transaction Fees charged are clearly disclosed in your Investor Report that each InvestNow customer can download within the secure portal.

The minimum investment amounts of $250 for a one-off investment, and $50 as part of a Regular Investment Plan, are still applicable for the purchases of the Foundation Series US500 and Foundation Series Total World funds,  with these minimum’s applying prior to the deduction of the transaction fee.

For example, a customer can still raise a one-off buy order for $250, which will meet the minimum requirement, which will generate a, $1.25 transaction fee (0.50% buy transaction fee), with the balance of $248.75 invested into the fund.  The same applies in the case of a $50 Regular Investment Plan buy order, which would generate a transaction fee of $0.25, with the balance of $49.75 being invested into the fund.

No, the only the Foundation Series Core Equity Funds, being the Foundation Series US 500 Fund and the Foundation Series Total World Fund are subject to transaction fees.

The Foundation Series Diversified Funds, being the Foundation Series Balanced Fund and the Foundation Series Growth Fund are not subject to transaction fees, and are only subject to the 0.37% Management Fee as well as each fund’s applicable buy / sell spreads.

The Foundation Series US 500 Fund and the Foundation Series Total World Fund each solely invest into the Vanguard S&P 500 ETF (Ticker: VOO) and the Vanguard Total World Stock ETF (Ticker: VT) respectively, with both Foundation Series Funds charging the same annual management fee as the underlying Vanguard ETFs of 0.03% and 0.07% respectively.

However, if a New Zealand retail investor wanted to get direct exposure to the same Vanguard ETFs, they would typically need to sign up to a Share Broker platform (which may have platform fees), convert their NZD to USD (where the platform typically charges FX fees) and then purchase the ETF on the platform (where the platform typically charges brokerage). Unlike other platforms which charge these individual distinct fees which may have their own independent fee structure, these Foundation Series Funds only charge a simple 0.50% buy and sell transaction fee, which is a competitive fee when compared against other NZ share brokerages.

Furthermore, the Foundation Series Funds are all managed funds that are structured as Multi-Rate Portfolio Investment Entities (PIEs), meaning that certain investors can benefit from tax-efficiencies compared to investing directly in the Vanguard ETF itself, which are considered Foreign Investments and would fall within the Foreign Investment Funds (FIF) tax rules.

Moreover, the Vanguard ETFs trade on publicly listed stock exchanges, while the Foundation Series Funds are not traded on stock exchanges as they are managed funds, with any application or redemption process undertaken directly with the fund itself on a daily basis at the determined unit price of the fund.

Finally, the daily unit price change of the Foundation Series Funds should approximate the daily market price change of the publicly traded Vanguard ETFs, however this may deviate slightly based on the nature and timing of cash flows into and out of the fund.

Both the Foundation Series Funds as well as the Vanguard International Exclusions Index Funds are international equity funds that utilise Vanguard as the underlying investment manager.

However the key differences are that the Foundation Series US 500 Fund invests into the Vanguard S&P 500 ETF, which represents 500 of the largest companies within the United States only, while the Foundation Series Total World Fund and the Vanguard International Select Exclusions fund invest into shares in both the United States as well as the rest of the world.

In particular, the Foundation Series Total World Fund invests into the Vanguard Total World Stock ETF, which broadly to track the MSCI All Country World Index (which includes both Developed and Emerging Market countries), while the Vanguard International Select Exclusions broadly aims to track the MSCI World ex Australia Index (which includes only Developed Market countries) while also excluding Tobacco, Controversial Weapons and Nuclear Weapons.

Furthermore, the Foundation Series Funds are all Multi-Rate Portfolio Investment Entities (PIEs), which can provide significant benefits for NZ investors in terms of tax-efficiencies (see below FAQ on tax efficiencies) over the Vanguard International Select Exclusions Index Funds which are all Australian Unit Trusts (AUTs) and are subject to additional tax leakage as well as being subject to the Foreign Investment Funds (FIF) tax rules.

The main benefit of investing in global share solutions that are structured as a Portfolio Investment Entity (PIE) such as the Foundation Series US 500 and Total World Funds are the fact that PIEs are subject to a maximum tax rate of 28%, versus global share solutions that are subject to the Foreign Investment Funds (FIF) tax rules such as investing in Australian Unit Trusts (AUTs) or directly in foreign ETFs, which are taxed at an investor’s marginal tax rate of up to 39%.

In addition, certain tax leakages can be mitigated with funds that are structured within PIEs compared to their AUT counterparts, as Kiwi investors in AUTs are not able to claim back the usual tax offset credits that Australian investors are typically able to with AUTs.

While tax is a complicated topic within investments and investors are recommended to seek independent tax advice in order to assess their individual tax circumstances, generally speaking the an efficiently structure solution such as via a PIE structure can mean investors incur less overall costs (in the form of fees and tax) and can thereby take advantage of higher after fees and tax returns.

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