Source: Radio New Zealand
RNZ’s money correspondent Susan Edmunds is questioning her paltry returns from Sharesies. RNZ / Marika Khabazi
Share markets have had a pretty good run over the past decade – albeit with some notable blips.
Why then, has my share portfolio via Sharesies had a relatively dismal return?
Sharesies displays a “simple return” on its investment dashboard, which represents the lifetime performance of the investment.
Mine, running since 2017, was sitting at just over 26 percent on Tuesday. At first glance that doesn’t look bad – but that’s less than 3 percent a year. I could have done better in a conservative managed fund (about 4 percent a year over a decade, according to Morningstar).
There are some caveats here – I had some share and fund investments held outside Sharesies that I moved in at various points, so their performance is only captured from the time I moved them over.
Still though, I would have hoped to have done better. My KiwiSaver, for example, which is currently in Milford’s active growth fund, has returned 8.33 percent a year since inception.
So what went wrong? I asked some experts to have a look.
Individual stocks
I own shares in a range of companies, predominantly in New Zealand.
Their performance is a mixed bag but this is where some of the major weakness in my portfolio is.
A2 is up just under 9 percent since I invested (there was a brief heyday in 2020). Air NZ is down more than 40 percent.
ANZ is up more than 134 percent but Fisher and Paykel Healthcare is only up 7 percent (though this was transferred from another platform in early 2025). Fletcher Building is down 10 percent, Ryman is down 57.66 percent.
Overall, my stocks have an average return of 17 percent and only six of 13 are in profit.
Kernel founder Dean Anderson said the mixed results showed the risk of putting too much money into a few names.
He said, while new investors were often told to “buy what you know”, it wasn’t always the best advice.
“The idea is that if you like a brand or use a product, you’ve got an edge. We don’t think that holds up, and your portfolio is a great case study of why,” he said.
“Familiarity can make you feel more confident, but it doesn’t tell you whether a company is well priced or likely to grow. Markets already reflect what is publicly known, so what investors are often bringing is familiarity, not necessarily insight.”
He said owning individual stocks was not inherently a bad idea. The problem was that the range of outcomes was huge.
“One stock can double while another loses nearly everything, and there’s no way to know in advance which is which. That’s the reality your portfolio shows: Intel up 197 percent, Me Today down 94 percent, both picked by the same person with the same good intentions.”
(A note from me – fortunately not with the same amount invested in each!)
Anderson said people needed to move beyond buying the stocks that felt familiar.
“When you love Air NZ as a brand, or you’ve been a Ryman resident’s family member, or you use My Food Bag every week – that feeling of ‘I know this company’ is real, but it doesn’t tell you anything the market doesn’t already know. Share prices reflect everything that’s publicly known. What you’re actually bringing is familiarity, not insight – and familiarity tends to make people more confident, not more accurate.”
Koura founder Rupert Carlyon said I shouldn’t feel too bad about the poor performance of many of my shares because few people “if any” could consistently beat the market over the long term.
Rupert Carlyon, founder of Koura KiwiSaver. Supplied
“For small or mid cap stocks, a fund manager will meet management two or three times before investing which shows the importance of the quality of management. They will also talk [to] three or four research analysts to get their view before investing.
“Investing in individual stocks is really hard because it requires a lot of work. You need to create a solid investment thesis and keep on testing that investment thesis each and every week.
“I’m guessing you bought Fletcher Building because it had been through one of their multiple profit downgrades and it all of a sudden got cheap … Air New Zealand, you probably did the same. Me Today, because they sold a really glitzy glam story.
“This is kind of why you invested, was kind of similar to what most retail investors do. They look at stuff that’s cheap. They look at stuff that’s fallen. They look at stuff that kind of has a bit of glitz and glam about it.”
He said My Food Bag was a good example. At the IPO, in which I invested, there was a lot of support from retail investors like me but not so much from institutional investors.
“They didn’t believe the story and they couldn’t get their heads around the strategy and therefore the retail guys got massively over allocated.”
Greg Smith, investment specialist at Generate said a couple of large losses had dragged down my overall returns. “So it’s not that there weren’t any good picks, it’s that a handful of bad ones had an outsized impact.”
Carlyon said if I had skipped investing in those companies and had instead put my money into two global funds, ACWI and JGLO (more on those in a moment), I could have got up to 130 percent over the past decade.
He said it was also worth looking at why I have such a heavy New Zealand exposure.
“You own a house in NZ, you will get your pension here in NZ, you already have a massive exposure to NZ, so it can be better to remove your exposure to NZ as you are already overly exposed to the NZ economy. When thinking about this stuff, it is important to think about everything together rather than looking at your investment portfolio separately.”
Funds
I’ve done better with most of my funds.
I have a range that I automatically invest in every month. The Smart Total World ETF is up 90 percent. The Smart Australia Financials ETF is up more than 100 percent.
Others are more like 50 percent. Overall my funds had an average of 56 percent return but all were positive.
Greg Smith, investment specialist at Generate. Supplied / Generate
Smith said I had been running two strategies at once. “Your ETFs have delivered solid, market-like returns over time, while your individual stock picks have been much more mixed, with a few quite large losses pulling things down.”
Carlyon said I could think about why I have so many ETFs – just under 10.
“There are a few different things in there and it might be easier to combine them all into the Total World ETF to reduce transaction costs. I am a massive fan of ACWI – the ishares global product with an expense ration of 0.32 percent. And the other one I like is JGLO – you can buy this in Australia, it has a good fee and gives you an active management approach taking the thinking away from you. I like to tell people go 50/50 on those two funds and you get a really good global exposure and you get both active and passive management for a low fee.”
Anderson agreed I should be keeping an eye on the fees I’m paying.
“Looking at your portfolio, notably your Smart investments, while the annual management fee difference between something like a US 500 ETF at 0.34 percent and our 0.25 percent is relatively small in isolation – about $9 a year for every $10,000 invested – the more meaningful drag is often the transaction fees on regular auto-invests. If you’re investing $100 regularly and paying a 1.9 percent fee each time, that $1.90 cost is effectively equivalent to 21 years of that management fee gap. Over time, that upfront friction can eat into your compounding significantly.”
So what next?
Carlyon said other people probably have similar portfolios and outcomes to me.
“You’ve got to remember back in the day, Sharesies had the smart platform and they didn’t have any international options.
“It’s really interesting right now, you watch it and a lot of the capital raises, Sharesies is now a really important part of the capital raising process for a lot of New Zealand businesses. They’re pumping individuals like Air New Zealand, they took a huge amount during the Covid rights issues, all of that kind of stuff.”
Anderson said Sharesies has done something genuinely valuable by getting more people to start investing. But a few years in, many investors were now taking stock – moving from their early experiences toward a more considered stage of building long-term wealth.
Carlyon said I should be thinking hard about all of the individual stocks that I own and asking whether I would be willing to buy more.
“And if you’re not willing to buy more, then you should be thinking yourself, does that mean I should be selling it? The only reason you might say, I don’t want to buy more is because I’m actually pretty happy with my kind of exposure. I might have 3 percent of my portfolio in Fletcher Building and I think that’s enough.
“But if you’re sitting there going ‘I don’t really know, I don’t really like it. I’m kind of sick of the downgrades and I’m sick of, and I’m just holding it because I don’t want to crystallise my loss’, you should be getting out.
“I suspect there are a lot of people with Sharesies portfolios that look extremely similar to yours. In fact, I looked at one on Thursday, which was, they all have the same stuff, right? They’ve all got Air New Zealand, Fletcher Building, Kathmandu.
“A whole lot of them have got The Warehouse too, actually, because they all kind of Covid downturned and then people bought in during that period. And then they haven’t really delivered anything. If anything, they’ve gone backwards since then. And so the big question I’d be posing to all of those people is, now, should you be just crystallising those losses and moving it into a fund versus doing something else? I think you probably should, unless you’ve got a strong belief otherwise.”
Sharesies has not yet responded to my request for comment.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand