Low-fee KiwiSaver manager launches more funds

Simplicity chief executive Sam Stubbs says New Zealanders should be able to pay the same for index funds as investors in bigger markets. Photo / Janna Dixon.

Low-cost KiwiSaver provider Simplicity has launched two new index funds aimed at undercutting rivals.

It will charge a $30 administration fee and a 0.1 per cent management fee for investment in its New Zealand Share Index Fund and New Zealand Bond Index Fund.

The share fund will invest in the top 50 listed companies in the NZX50 index and the bond fund will invest in 30 New Zealand investmen grade bonds.

But investors will have to come up with a minimum of $10,000 to buy into the funds.

The non-KiwiSaver funds are set to rival those offered by NZX-owned Smartshares.

Smartshares charges around 0.5 per cent for its index funds but has a much lower entry point with investors needing $500 to start or $50 a month.

Its funds are also listed on the stock exchange.

Sam Stubs, chief executive of Simplicity, said the fees on its index funds were in line with developed markets overseas.

"Kiwis should have access to products at the same price as investors in big developed markets. Now they do," Stubbs said.

Index funds - those that track a particular group of shares or bonds- have been growing in popularity in recent years with big international players like Vanguard and Black Rock gaining in popularity.

Simpicity launched 18 months ago and has around $400 million invested with it.

Stubbs said that growth meant it now had economies of scale enabling it to expand its range of investment products.

"As a non-profit, we only charge what it costs, and that means management fees
much lower than our profit-making competitors," he said.

"Now we're managing over $400 million. Economies of scale are kicking in, and
we can pass those on to our members."