Kernel has launched three actively managed wholesale NZ bond funds including two set maturity end-date vehicles.
The two short-dated funds – designed to emulate respective maturities in March of 2027 and 2029 – feature annual management fees of 0.5 per cent while the open-ended bond fund costs 0.4 per cent.
According to a Kernel spokesperson, the end-date funds would typically hold between 10 to 15 securities: by contrast, the broad NZ fixed income strategy targets 30 plus underlying NZX-listed bonds.
Currently, the NZX houses 155 listed bonds from about 50 issuers with a total face value of almost $56 billion.
In a statement, Matthew Winton, Kernel fixed income portfolio manager, said: “These funds are designed to offer significant advantages for individual investors over direct bond purchases due to their diversification, superior liquidity, tax benefits from their PIE structure, active management to optimise returns, and zero transaction costs.”
Winton joined Kernel in June 2022 ahead of the manager’s KiwiSaver scheme launch.
The move marks a departure for Kernel, which has to date specialised in mostly equity index-tracking funds, albeit some that follow niche benchmarks such as electric vehicle stocks.
But the addition of local fixed income fills a gap in the manager’s product suite following on from the recent launch of the Kernel US bond index fund.
Kernel has, however, held fixed income assets – managed by Winton – inside some diversified and KiwiSaver funds.
The new bond funds have gone live for wholesale investors, the Kernel spokesperson said.
“They are already loaded into FNZ, Adminis and NZXWT [NZX Wealth Technologies]. For retail, these will be live on the Kernel platform in a few weeks’ time.”
Winton said in the release that new fixed income products had sparked “significant initial interest” from financial advisers and some individual wholesale investors.
Kernel has about $800 million under management with a pipeline through to $1 billion, according to founder, Dean Anderson.
Elsewhere last week, NZXWT finalised the transfer of a new adviser client to its full-custody platform service.
In a release, the NZX-owned investment administration service noted the Christchurch advisory firm, Total Wealth, had “successfully completed its onboarding project”.
Total Wealth, headed by Katrina Studholme, previously used the FNZ-based Consilium platform, according to disclosure documents.
Studholme said in the statement that the Total Wealth “service model relies on us having access to accurate data, sophisticated reporting capabilities and local support with fast response times. NZXWT offers smart technology that is easy to configure, giving us the ability to do things ourselves.”
The NZX had flagged a queue of advisory firms set to shift to the platform this year after signing on several in 2023 including Northland-based, Yovich & Co, along with Ethical Investing and Multiply.
NXZWT also had several larger clients lined up en route to “deliver on its longer term target of FUA between $35 and $50 billion”, the NZX 2023 annual report says.
As at the end of last year, the platform counted 23 clients, all aboard the new technology system.
The NZX platform reported almost $11.8 billion in funds under administration at the end of February, up from $11.5 billion two months prior.