‘I have the guts of my portfolio in shares and I dabble with the fun stuff’
After working for a hedge fund, Frank Aarts returned to New Zealand to live off his investments.
25 May 2022
Frank Aarts is proof that smart share market investing pays off. He’s living in sunny Northland, working from home, and enjoying a swim between phone calls.
He returned to New Zealand after living in the Caribbean working for a hedge fund.
Since becoming a professional share trader, he now has the flexibility to trade from anywhere in the world.
After shortlisting several countries, he and his family ultimately gravitated right back to the community where he grew up, One Tree Point.
After 20 years in the financial services industry, Aarts wants to help other Kiwis succeed with their own investing. He has recently set up his own financial advice business, My Frank Advice.
He’s in the enviable position of not needing to rely on commissions to pay his bills, so he’s excited about offering advice to people just starting out on their investment journey.
“I’d like to try to work with people when they’re starting out and put things in place so they can achieve in this game,” says Aarts.
“People tend to leave it a bit late. They wait until they’re in their fifties, then say, ‘Oh no, I can see retirement coming on the horizon’.
“I’d like to help younger people set themselves up, without upselling anyone into products they don’t need.”
The share market ‘just makes sense’
Aarts admits he made a few risky investments when he was younger, but he says he’s learned the value of a slow-and-steady approach.
He says the share market is an obvious choice for strong, reliable returns over the long term.
“The share market has historically been the place to go, and to me it just makes sense. Some people are threatened by the idea of it, but all you’re doing is taking partial ownership in big businesses.”
Index funds are his main investment vehicle, because they tend to outperform active share funds over time, and because they offer unparalleled diversification.
“It’s impossible to replicate that diversity yourself. You’d be chewed up and spat out with trading fees so, mathematically, index funds make sense.”
He invests directly through Kernel and SmartShares, using passive funds to give him a wide exposure to industries and economies. He picked Kernel after doing a lot of research, he says.
“I really gravitated towards them because they’re Kiwi-based and very clear on what they’re doing, and I like the suite of funds they have available,” he says.
“My core investment portfolio is made up of Kernel index funds, which I really like, and three or four SmartShares ETFs [exchange-traded funds] which complement what I hold with Kernel.
“With the guts of my portfolio in passive index funds, I can then dabble around the side with the fun, speculative stuff like crypto and NFTs [non-fungible tokens]. That keeps it a bit exciting.”
Little tweaks can add up to big success
He talks of a Warren Buffett analogy to show how selective focus is vital.
If you had a ticket with only 20 slots in it so that you had 20 punches representing all the investments of a lifetime, you’d really think carefully about what you did.
Aarts says one or more punches should be in a big passive share market fund filled with blue-chip stocks.
Aarts believes you shouldn’t invest too heavily in KiwiSaver because your money is locked in.
“People don’t realise you can expose yourself to the same investment vehicle in other ways and add diversification to your portfolio.”
Aarts believes anyone can start small and slowly build up an excellent portfolio.
“Your financial health is a long-term project and it takes long-term effort,” he says.
“It’s the same as your physical health – making small incremental lifestyle changes early on sets you up for life.”
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