Booster has upped its KiwiSaver investment options to 16 with the addition of a new ‘Asset Class’ balanced fund.
The balanced fund joins its Asset Class growth and conservative siblings, which are ultimately managed by US factor-based investment house Dimensional Fund Advisors.
As well as introducing the new fund, the Wellington-based Booster (formerly Grosvenor) has trimmed the fees for the conservative and growth options by 0.01 per cent to 1.15 per cent and 1.29 per cent, respectively. Meanwhile, the Asset Class growth fund has dialed up the risk exposure a little, increasing the allocation to growth assets to 90 per cent from its previous 85 per cent.
Booster inherited the Asset Class funds, which are advised on by the Hastings-headquartered Stewart Group, following its 2013 purchase of the Fidelity KiwiSaver scheme.
Nick Stewart, Stewart Group head, said the latest Asset Class changes reflected increased demand from a growing band of advisers committed to the Dimensional investment philosophy.
“We’ve got some scale now with $67 million under management in the Asset Class funds,” Stewart said, “which means we’ve been able to reduce the fees.”
Dimensional funds are typically only available via fee-only advisers or to wholesale investors.
Founded 35 years ago, Dimensional follows the famous Fama-French factor model that incorporates up to five market measures (including size and value) to construct passive-style portfolios. Now one of the largest global fund managers, Dimensional boasts some US$675 billion in assets under management with offices in eight countries including Australia.
Booster has also introduced a range of tweaks to its KiwiSaver and other investment funds including adjusting the risk-o-meter for the Default Saver up from two to three while turning down the Options Fund setting a notch from five to four.
Introduced under Financial Markets Conduct Act regulations, the seven-step ‘risk indicator’ is a standardised scale fund managers must include as a descriptor in product disclosure statements (PDS).
In a note to advisers, Booster also says its new fund documents include an estimate of the group’s private equity-style Tahi fund, which the manager’s KiwiSaver scheme has invested into.
The Tahi fund, which recently made its first investment in a NZ wine-maker, has an estimated annual fund charge of 1.89 per cent based on a 12 per cent return. While the Tahi fund charges no annual management fee it has a dual factor (growth and income) performance-based fee structure. According to the Tahi PDS, total annual fees would range from 0.24 per cent (the annual administration charge) to almost 6.2 per cent based on respective returns of -5 per cent and 25 per cent.
“We have also introduced a rebate of 0.50% of our management fee on the amount invested by the relevant fund in Booster Tahi LP,” the Booster PDS says.