The NZX-owned SuperLife will seed the group’s new range of nine badged Vanguard global equity exchange-traded funds (ETFs), according to Aaron Jenkins, NZX head of managed funds.
Jenkins said SuperLife, via its $1.3 billion corporate super and KiwiSaver schemes, would back the just-released NZX Smartshares ETFs with new and existing money.
“It’s hard to get an ETF off the ground without seed investments,” he said. “The [Smartshares ETFs] are aligned with SuperLife funds and, where it’s appropriate, the majority will shift across.”
To date, SuperLife has ploughed in about $160 million into existing Smartshares products, which reported a total of about $600 million under management across its range of 10 Australasian equity ETFs.
The nine new Smartshares ETFs, due to officially hit the boards this Wednesday, feed into a range of US-listed Vanguard products covering US, European, Asia-Pacific and emerging markets.
While the new Smartshares range is priced higher than the underlying Vanguard products, Jenkins said New Zealand-based investors would benefit from the portfolio investment entity (PIE) structure and dividend management options.
The Smartshares global equity products have a base fee of 0.45 per cent (excepting the US 500 ETF, which is priced at 0.30 per cent) plus in-fund expenses (charged by Vanguard) ranging from 0.05 per cent to 0.17 per cent.
Vanguard, meanwhile, charges direct investors a base fee of 0.05 to 0.15 per cent for the similar underlying ETFs.
“If you put the [Smartshares ETFs] side-by-side with the US ETFs you’d probably say why wouldn’t you go direct to the US ones,” Jenkins said.
But he said, as well as the PIE and dividend reinvestment advantages, the Smartshares versions mean investors by-pass messy foreign exchange management, custody arrangements and brokerage fees.
“That’s hugely appealing to [NZ] investors,” Jenkins said.
While the Smartshares global ETFs are unhedged, he said the NZX would consider the option if there was enough demand.
For the time-being, the badged Vanguard release marks the end of the Smartshares equity ETF expansion. However, the NZX plans to launch both global and local fixed income ETFs as well as a cash product before year’s end, to complete the set.
With the ETF product launches out of the way, Jenkins said the NZX would decide on the fate of its $30 million Smartshares-backed KiwiSaver scheme, SmartKiwi, next month, with a wind-up the most likely option.