Passive investment specialist, Kernel Wealth, has added a dash of active management to the mix with the launch of new balanced and cash funds as the firm taps into fixed income assets for the first time.
Kernel founder, Dean Anderson, said newly recruited portfolio manager, Matthew Winton, would run the cash and local bond portfolios in-house according to a range of parameters such as duration, yield and credit risk – but broadly in line with standard benchmarks.
Anderson said the move away from a pure-equities play comes amid growing investor demand for fixed income exposures as well as improving cash yields.
“You can get a decent yield from cash now and that is probably appealing to many investors who may have discovered that conservative funds weren’t what they thought they were,” he said.
The Kernel Cash Plus fund is “actively managed and invests in short-term New Zealand fixed interest-bearing assets and other cash and cash equivalent investments”, according to the product disclosure statement.
Meanwhile, the new balanced fund – the second diversified strategy in the Kernel suite following the launch of the all-shares High Growth option this April – invests in a range of the manager’s other 14 equity products as well as targeting 5 per cent in cash, 17 per cent in NZ bonds and 18 per cent in global fixed income.
“We’ll be getting the global bonds through an offshore exchange-traded fund,” Anderson said, with Kernel providing a hedging overlay.
The new Kernel products, which also include a hedged version of the S&P Global 100 fund, will be available in the group’s KiwiSaver scheme and to the wider market.
Recent volatility in the NZ dollar has triggered rising interest among Kernel clients for currency management strategies who have committed $10 million at launch to the hedged S&P Global 100 fund, Anderson said.
Kernel has priced the new funds at an all-in fee of 0.25 per cent – at par with most of its now 17-product range excluding a trio of exotic thematic strategies offered at 0.45 per cent.
Since launch in 2019 the Auckland-based boutique has accrued about $350 million in funds under management including $20 million in the nascent KiwiSaver scheme, which was established this April: the Kernel Global Infrastructure fund remains the most popular option, boasting more than $150 million as at the end of June.
Adminis provides custody and admin for the Kernel funds while Trustees Executors is supervisor.