The almost $40 million Anglican Church-run Koinonia KiwiSaver scheme has switched to an ‘all in’ fee based on funds under management (FUM) from its previous method of directly charging costs to members.
According to Koinonia disclosure documents, the new fee regime will cover all “regular administration and management costs and expenses for trusteeship, administration and investment management”.
Following the changes Koinonia annual fees will range from 1.4 per cent of FUM for its Income Fund to 1.6 per cent for the Growth Fund.
Previously, the restricted scheme – which targets the potentially large NZ Christian market – apportioned costs and expenses directly across its membership, which currently sits at about 1,650.
Hugh Stevens, trustee and investment committee member of the NZ Anglican Church Pension Board, which oversees Koinonia among its other funds, said the fee change would “not have a significant impact” on bottom line cost to members.
Investment News NZ KiwiSaver data shows Koinonia total costs have averaged 1.7 per cent of FUM over the last few years.
Stevens said the charging policy reflected requests from members and prospective clients seeking greater “clarity” on Koinonia fees.
“We had some feedback from people who wanted greater certainty about what they were getting into [fee-wise],” he said. “The [FUM-based] fee provides that clarity and brings us into line with the rest of the industry.”
Furthermore, Stevens said Koinonia had joined an “emerging group of managers” willing to charge an “all-in fee” rather than layering multiple ‘expenses’ on top of a basic management fee.
He said the recent Financial Conduct Authority review of the UK funds management industry recommended all-in fees as the preferred charging method.
“It will be interesting to see how the FCA report influences market behaviour around the world,” Stevens said.
While the Koinonia fund takes the all-in approach it does reserve the right to charge “other costs and expenses, such as those that are irregular or extraordinary or cannot be reasonably known or estimated”.
Stevens said the new regime kept Koinonia fees at a reasonable level, particularly considering the scheme has implemented a comprehensive responsible investment approach.
“It shows that even with responsible investing a small scheme like us can meet the market in fees,” he said. “And over time, as we grow, we should have the ability to make more efficiencies.”