KiwiSaver Schemes That Invest In Cryptocurrency

Date Oct 20, 2021
Blog category Kiwisaver
By Sieg C
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Cryptocurrencies can become the next investment option for KiwiSaver. Digital currencies are getting more and more popular to investors, thanks to their aggressive growth in just a short time.

Several KiwiSaver providers are now looking to offer crypto investment in the future. Of course, it goes without saying that amid the popularity of digital currencies, it’s not without risks, volatility, and unpredictability. In fact, they’re often considered the most volatile asset.

So, should you choose to invest in cryptocurrencies for your KiwiSaver?

Read: Guide To Cryptocurrency In NZ: Invest, Buy and Trade

What are cryptocurrencies?

Cryptocurrencies are a new form of digital money that act as a currency, similarly with cash, debit, and credit, while acting as an alternative asset like gold and silver at the same time. The biggest cryptocurrencies as of writing, are:

  1. Bitcoin (BTC) - $1,177,101,945,510
  2. Ethereum (ETH) - $451,913,142,081
  3. Binance Coin (BNB) - $82,416,414,996
  4. Cardano (ADA) - $70,222,084,567
  5. Tether (USDT) - $69,009,368,732
  6. XRP (XRP) - $51,400,310,781
  7. Solana (SOL) - $47,720,440,148
  8. Polkadot (DOT) - $40,808,679,033
  9. Dogecoin (DOGE) - $33,104,621,373
  10. USD Coin - $32,650,256,461
Source: CoinMarketCap

It’s slowly gaining traction for KiwiSaver, but it still has a long way to go before most providers invest in cryptocurrencies. Some providers are seeing it as speculative, acting more like a gamble rather than an investment. JUNO also cited that cryptos are open to fraud.

Even with these reservations, some KiwiSaver providers are being more positive, as cryptos — particularly Bitcoin — are performing very well.

Read: How To Cash Out Bitcoin And Other Cryptocurrency In NZ

Which KiwiSaver providers invest in crypto?

Most KiwiSaver comprises of traditional assets classes, bonds, and shares, among others. This way, your investment grows steadily but surely, which is ideal for retirement plans — the main purpose of KiwiSaver.

However, there are people who would want to invest aggressively. They aim to use their KiwiSaver for their first home purchase, funds for immigration, and more.

As of writing, there are currently only two KiwiSaver providers that invest in cryptocurrencies: NZ Funds and Pathfinder.

NZ Funds

NZ Fund’s KiwiSaver Growth Strategy funds have invested around 5% in Bitcoin of its $350 million investment at the end of December 2020. They continue to invest in Bitcoin as the price continues to steadily rise. However, they should move on to the next asset class if the momentum is on a downward trend. 

Chief Investment Officer James Grigor said that Bitcoin has become a commodity just like gold, which investors stock up during a crisis. “If you are happy to invest in gold, you can’t really discount bitcoin,” he said. “We bought in October at US$10,000 (NZ$14,360). It was US$62,000 at the weekend, and it’s back at US$55,000 today,” he added.

Read: How Do Taxes Work With Your Crypto Assets In New Zealand?

Pathfinder

Pathfinder has also recently invested in cryptocurrency infrastructure. While they don’t directly invest in cryptocurrencies like Bitcoin, it has invested in Easy Crypto, an NZ-based crypto platform offering over a hundred cryptos. They’re one of the big names in the industry that raised $17 million in Series A Funding. 

One of the biggest goals of Pathfinder in investing in the crypto platform is to solve the world’s large ‘unbanked’ problem. Almost 1.7 billion people all over the world are still not serviced by conventional banks. Easy Crypto’s aim is to expand in Brazil, the Philippines, and other parts of Asia can just solve this problem.

This is an expected move from Pathfinder as they’re known for their ethical KiwiSaver investment. Cryptocurrencies aren’t exactly the most sustainable, as mining and trading them use a lot of energy. 

Chief Executive and Co-founder John Berry said that there’s so much more to cryptocurrency. “We are not ignoring issues around the energy needs of Bitcoin nor the anonymity that crypto provides, but these need to be balanced against potential positives for an ethical investor from decentralised finance,” he added.

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Is investing cryptocurrency in retirement funds smart?

It’s hard to tell as early now. However, investing pension funds in cryptocurrencies isn’t unique in New Zealand. 

Galaxy Digital, a US-based pension fund, also invested in Bitcoin funds. This is where NZ Funds have invested the KiwiSaver money too. Early this year, Morgan Stanley, one of the major banks in the US, became one of the pioneers to offer Bitcoin funds to its clients, through Galaxy Digital.

Different countries have also some type of cryptocurrency funds, directly or indirectly. Examples of these are Evolve ETFs from Canada, Queensland Investment Corporation from Australia, and more.

As cryptocurrencies become more accepted in the global economy, more countries may soon consider investing in them, too.

Note that this is not financial advice. Some people are still wary of crypto, and understandably so.

Experts in the financial industry also don’t see that the risks are worth the investment. Booster’s David Beattie said, “At this stage we would say, ‘no’ because it’s an investment that doesn’t demonstrate risk-return properties that are acceptable from our point of view.”

“I think bitcoin within KiwiSaver is tantamount to gambling, not investing. I’m surprised any KiwiSaver manager would consider it a legitimate asset class,” Simplicity’s Sam Stubbs added.

Nonetheless, you now have more options for your chosen KiwiSaver scheme. 

To make the best of your investments, make sure you choose the right KiwiSaver plan for you. Compare the best offers right here at glimp!

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