Start-up passive fund provider Kernel Wealth has doubled its product offering with a suite of three new global funds scheduled for launch on July 15.
The three new Kernel global equity funds – covering infrastructure, consistent dividend-paying companies and an assortment of 100 well-known brands – join the firm’s three NZ share products released last August.
Dean Anderson, Kernel founder, said the digital-only index investment firm had accumulated more than $10 million across the batch of NZ products to date with a surge of further commitments from financial advisers and wholesale investors over the last six weeks.
“We’ve seen strong demand for the NZ funds but our investors have been asking us for access to global markets as well,” Anderson said.
Like the local products, the new Kernel offshore range – the Global 100, Global Dividend Aristocrats, and Global Infrastructure funds – have a sticker price of just 0.39 per cent. The all-in management fee for the existing suite falls to 0.29 per cent for investors with more than $25,000 held in Kernel funds.
However, Kernel charges most members a $3 monthly ‘member fee’ (with a teaser fee-free portfolio threshold of $1,000 for novice investors).
Anderson said two of the three new global funds are based on modified S&P indices while the infrastructure product will hold just over 100 stocks deemed to fit the asset class description.
“It’s a ‘pure-play’ infrastructure fund that invests in 104 entities with exposure to up to 20 markets,” he said. “For example, one of the companies is the French firm Vinci, which is helping build the Auckland city rail project.”
The group’s Global 100 fund targets a basket of the world’s best-known brands – such as Amazon and Nike – based on the S&P index formula (but filtered for NZ mandatory exclusions like cluster munitions manufacturers). Similarly, the Global Dividend Aristocrats Fund follows a S&P benchmark (again adapted to NZ rules) that have grown dividends consistently for at least the last 10 years.
The new global funds will be unhedged. As per the NZ funds, the Kernel global products will pay distributions quarterly.
Kernel invests directly into the underlying global stocks rather than using an interposed index manager such as Vanguard.
Anderson said going direct helps Kernel keep fees low. He said the group had established relationships with offshore brokers and other service providers.
“We’ve done a lot of work putting the right infrastructure in place,” he said. “Now that our systems are set up it will be easier to launch other products.”
Kernel will also rename its ‘Level 9’ fund, which has a tilt to smaller NZ companies, as the NZ Small to Medium Cap Opportunities Fund. Anderson said the new name better reflects the underlying investments of the fund, which is billed as the “first index fund to invest beyond the Top 50” NZ listed companies.
The manager uses Adminis for custody and fund administration while it appointed Trustees Executors (TE) as supervisor in March to replace the embattled Australian firm, Sargon. Last week TE also confirmed it would retain Bravura for registry software services as reported here in May.