Newly-established digital-only NZ passive funds provider Kernel Wealth has already secured support from several financial advisory groups, according to founder, Dean Anderson.
Anderson said both advisers and direct investors would seed the three NZ share funds Kernel launched last week.
As well as friends and family, he said early direct investors would likely include interests associated with minority Kernel shareholder, the Zino Angel Fund – an NZ Chinese venture investment vehicle.
The Zino Angel Fund Nominee company owns about 22 per cent of Kernel.
But Anderson said Kernel’s digital-only play, and keen pricing, would tap into a growing demand for index-style products across a wide range of NZ investors.
Intriguingly, Kernel is set up as both a direct platform of sorts – backed by Wellington-based custody and administrator, Adminis – and a conduit for advised money flowing through other platforms.
Anderson said Kernel would link in with Aegis and FNZ, for example.
In a release, he said the digital-only Kernel system “empowers users with the tools to take control of their investments with ease”.
“This makes investing accessible for the newcomer while delivering a highly satisfying experience for the seasoned professional,” Anderson said. “From there, our platform equips the investor to buy and sell investments at the literal click of a button, with no transaction fees.”
As well as Adminis, the start-up provider has appointed Heritage Trustees as supervisor, handing the Australian-owned operation its first contract in the licensed supervisory space. (Although, as reported here, Heritage almost simultaneously locked in a second client, Kōura Wealth.)
The Kernel products, priced at an all-in fee of 0.39 per cent, track S&P Dow Jones Indices (S&P DJI) targeting the NZX top 20, listed real estate stocks, and ‘emerging opportunities’.
While other products track NZX real estate benchmarks, the Kernel top 20 and emerging opportunities (branded as the ‘Level 9 Fund’) funds represent new, complementary, indices.
The Level 9 Fund, based on the new S&P DJI NZX emerging opportunities index, “invests in listed financial products whose free-float market capitalisation is between $75 million and $1.25 billion New Zealand dollars and who are outside of the S&P/NZX 20 Index”, the Kernel disclosure document says.
Anderson, previously Smartshares head of product, formed Kernel late in 2018, bringing on another ex NZX colleague, Stephen Upton, in June this year.
Smartshares, the biggest NZ-domiciled index fund provider, has more than $3.1 billion under management across its range of 31 exchange-traded funds, according to the latest NZX data.
But Kernel will also be competing against other low-cost providers of NZX-based unlisted index funds, notably Simplicity and AMP Capital.
Anderson said Kernel would likely expand into other asset classes over time.
