Digital-first investment firm, Kernel, has set a May go-live date for its just-established KiwiSaver scheme, joining an increasingly crowded space of niche start-ups in the sector.
Founded only three years ago, Kernel’s move into KiwiSaver coincides with substantial across-the-board fee cuts and the launch of two new funds to bring its product suite up to 13.
The Kernel KiwiSaver scheme mirrors the manager’s range of passive, low-cost equity funds including latest additions – a US S&P500 product and the ‘high growth’ option that combines some of the other underlying strategies into a diversified mix.
However, the shares-only approach is unique in the market where KiwiSaver providers generally offer diversified funds including fixed income and/or a broad range of sector strategies.
“While most providers have twenty to twenty-five per cent of their growth KiwiSaver funds in bonds and/or cash, the Kernel funds are pure equities, which can be more susceptible to short-term fluctuations yet have greater long-term growth potential,” the group says in a statement.
Dean Anderson, Kernel founder, said the group’s generally younger target market could tolerate a higher exposure to shares.
“But we will have a look at a fixed income option at some point,” Anderson said, with more standard conservative diversified funds in the production pipeline.
Meanwhile, Kernel has slashed 35 per cent off the headline fee for most of its global and local share funds, dropping the price to 0.25 per cent across the range, effective last week. The three Kernel ‘thematic’ funds – covering clean energy, electric vehicles and eclectic ‘moonshot’ stocks – are now priced at 0.45 per cent compared to the previous 0.55 per cent.
“We see these new initiatives as an important development for the sector, supporting a range of client bases, from our existing wholesale clients through to adviser groups looking for efficient tools to support smaller clients,” Anderson said in the release.
Kernel reported about $250 million under management as at the end of last year. Adminis provides custody and administration to the Kernel funds while Trustees Executors is supervisor.
Since September 2020 five locally owned KiwiSaver providers have entered the market – InvestNow, Select, KiwiWRAP and Aurora: four of them, including Kernel, focus on offering a wide range of investment choice.
And over the last four years, nine new KiwiSaver providers have launched, all bar one (Nikko) NZ-owned start-ups.
From a low of 29 KiwiSaver schemes three years ago the market has grown to 38, offered by 32 providers. Last November Fisher Funds purchased the Aon KiwiSaver (and superannuation master trust) but has yet to integrate the acquisition into its home brands.
The ANZ Default scheme also closed to new members from November 30. ANZ was one of the five incumbent providers axed as default fund operators.