Smartshares is to roll-out four new low-cost exchange-traded funds (ETFs) next month while reorganising its entire product suite.
Thom Bentley, head of institutional sales for the NZX-owned fund business, said the four new ETFs – due for launch on July 15 – would join four existing products in a group of ‘core’ funds.
The remaining 30 or so Smartshares ETFs fall under the ‘specialist’ category, Bentley said, in an exercise that will also see the current fund sub-sector groups renamed along more intuitive lines.
“Our core funds will offer investors access to a low-cost set of basic portfolio building blocks,” he said.
Designed to institutional specifications, the core Smartshares line-up includes five equity-based ETFs (covering NZ, Australia, US as well as hedged and unhedged global equities), local and offshore fixed income, and NZ cash.
Bentley said the batch of new releases includes the cheapest “true NZ shares index-tracker” in the country, which will follow the S&P/NZX50 gross benchmark.
The gross index apportions holdings according to exact underlying market capitalisation as opposed to the S&P/NZX50 portfolio benchmark that caps exposure of any one stock at 5 per cent.
Smartshares’ existing NZX50 ETF, which tracks the Portfolio index, has almost $680 million in funds under management with an annual sticker price of 0.5 per cent. Bentley said the new NZX50 ETF tracking the gross benchmark has been priced at just 0.2 per cent.
“The feedback we got from institutions is that they want an NZX50 product that follows the gross index,” he said.
Smartshares will also introduce two other ETFs based on indices new to the suite, Bentley said, covering the ASX200 and NZ government bond benchmarks.
The ASX 200 and NZ government bond ETFs come in a 0.3 per cent and 0.2 per cent, respectively.
“We’ve never had an ASX 200 product before – it was a gap in the range,” Bentley said. “There also hasn’t been any fund previously that offers access to a pure NZ government bond index.”
Lastly, the fresh ETF core quartet includes a 100 per cent hedged version of the Vanguard-backed Smartshares Total World fund, which carries a price-tag of 0.46 per cent.
The unhedged Total World ETF (to be discounted from the current 0.56 per cent to a new price of 0.4 per cent), launched under Smartshares colours a few years ago, will also sit in the core category, Bentley said, allowing investors to mix-and-match their currency exposures.
Other existing ETFs that will fall into the core bucket include the Global Aggregate Bond fund (that feeds into a BlackRock iShares product), the US S&P 500 tracker and the NZ Cash fund.
Bentley said Smartshares had lowered the NZ Cash ETF price from 0.3 per cent to 0.2 per cent after bringing management in-house last year (Nikko Asset Management previously ran the portfolio).
“The core ETFs allow investors to build a solid diversified portfolio efficiently and at very low costs,” he said.
According to Bentley, baseline costs for setting up any portfolio investment entity (PIE) fund – which the Smartshares range of products are – amount to at least 10 basis points.
The remaining 29 ‘specialist’ ETFs cover a broad spread of other asset classes and sub-sectors including the relatively new robotics and healthcare funds.
Following the revamp, the Smartshares funds would also be grouped in a more logical fashion, Bentley said,
Rather than the current categories such as ‘SmartLarge’, the revised ETF groups would carry labels like ‘NZ shares’ that more accurately reflect the underlying investment exposure.
The NZX will be accepting expressions of interest in the new ETFs from this week ahead of the July 15 listing date. Investors would also likely be able to access the funds from retail platforms InvestNow and Sharesies as well as through brokers and direct from the NZX.
At the latest count, Smartshares has about $3.9 billion under management, about on par with its pre-COVID FUM.