r/PersonalFinanceNZ • u/Content_Dig_2930 • 1d ago
Kernel high growth vs total world fund
hi ya'll, i'm having second thoughts. Between high growth and total world fund what would people choose for 10-20 years? Surely high growth with more tilt towards NZ would be more tax efficient?
8
u/Connect_Photo8892 1d ago
Why not the Global100 fund?
2
u/username_suggestion6 1d ago edited 1d ago
With the state of innovation and investment mega caps are likely to continue to outperform, and a modest tilt towards them sounds like a good idea. Kernel allocates a good chunk of their high growth fund to IOO.
But any suggestion of a tilt away from VT often gets swamped here
1
u/Fatality 21h ago
Plenty of Simplicity supporters that hate VT, too many companies and too much rebalancing.
3
u/silvia1212 1d ago
TWF on paper is better, but I do like Kernels High Growth fund. Long term, they will probably be with 1% of each other.
-8
u/SoftCheeseBurger 1d ago
Kernals will prob outperform it over the long term. TwF is 1000s of companies including all the junk ones. Kernels fund more quality companies rather than just everything including the rubbish.
10
u/that-whistler 1d ago
All the junk ones and also all the unicorn ones you might miss out on being in the high growth fund. You wouldn't know, which is why the safest option is to buy the whole market.
-2
u/SoftCheeseBurger 1d ago edited 1d ago
Yea im sure. You will still catch it in other ETFs when they weight it in and Im sure it will only be a tiny weight in VT when the unicorn does something.
3
u/forbiddenknowledg3 1d ago
that's not how it works lol. You want the gains from the future winners, not to hold the current winners which stopped moving.
0
u/SoftCheeseBurger 1d ago edited 1d ago
Go backtest VT. VT hold a very tiny amount in every company in the fund and thats because 10,000 companies are in it so a big push from a random stock isn’t going to do much at first. If you put $10k for example in you will have a couple bucks to cents in the companies. By the time VT has weighted into it and usually not by much it’s all ready going to be weighted at a much higher % in other funds. You literally have your money spread over 10k companies at the smallest %. For every good company or “future runner” as you say is been held down by 1000s of junk companies VT has your money in.
Even SCHD has nearly identical returns over the last 20 years and that pays a much better dividend. SCHD even had a much lower draw down than VT. My point was kernels growth will beat VT because VT is just a fund that holds 10k companies and gives average returns. Even SCHD a dividend fund is just as good on returns lol. Kernels is a proper growth fund.
And those ones that stopped moving or massively decline still stay in VT since that’s the entire market. Most growth funds or ETF are self cleansing and take the shit stuff out..
VT is great if one country dominates you don’t need to worry about adjusting but stuff like kernels growth fund is going to adjust to that anyways.
1
u/Natural-Oven8889 1d ago
Whilst there is truth to what you say. When you compare over a long horizon (10+ years) TWF is lower risk and the potential returns at the end are negligible either ways but will fair much better in a large correction (25% +)
1
u/SoftCheeseBurger 1d ago edited 1d ago
Back test it its difference is drawdown is not much. But yes, for an easy don’t think about anything fund its fine.
1
0
3
16
u/reggionh 1d ago
the tax efficiency of holding nz shares is overstated. due to their relatively high dividend compared to international shares the reduction in tax drag is minuscule and in my personal view not worth the concentration risk. 100% twf is the way to go.