Low demand and cut-price competition have scuppered the plans of start-up manager EBT Capital to launch a range of multi-fund index products in NZ.
Thom Bentley, EBT co-managing director, said firm closed shop last month after failing to raise much interest from NZ investors in its proposed trio of exchange-traded fund (ETF) products.
EBT, which also boasted Brook Asset Management co-founder Simon Botherway as a director, set up three multi-ETF portfolio investment entities (PIEs) late last year offering passive exposure to US equities, global shares and global short-term debt.
“It became apparent that the [ETF] diversification was not of interest, despite the costs set as low as we could,” Bentley said. “A couple of large providers also launched similar products soon after us at fee levels we couldn’t compete with.”
Last year both AMP Capital and Simplicity (which feeds mainly into Vanguard funds) launched respective index products in the non-KiwiSaver market priced at between 30-40 basis points.
The three EBT products – which were to invest in seven underlying ETFs offered by Vanguard, iShares and State Street – charged an all-in fee of 50 basis points.
Bentley said the costs of managing the PIE structure alone ate up about 20 basis points.
“We hoped investors wouldn’t make their decision only on fees,” he said. “It’s disappointing but I don’t regret giving it a crack.”
The EBT funds closed before accepting any investor money.
EBT was originally formed by Wanaka-based US ex-pat entrepreneur, Steven Turner. Turner, who made his fortune as part-owner of corporate information provider Capital IQ (sold to S&P in 2004 for US$200 million), moved to Wanaka in 2009.
Turner remains the sole shareholder of EBT Capital Holdings, which amalgamated with the subsidiary fund operation company at the end of March.
Meanwhile, Bentley continues to run his third-party marketing company, Remarkable Capital, that includes Auckland boutique, Constellation Capital, and Australian-based international equities manager, Insync Global, as clients.