Simplicity has seeded its new pair of NZ asset portfolio investment entities (PIEs) with about $40 million a piece as it seeks to package up the index-tracking funds for wider consumption.
Sam Stubbs, Simplicity chief, said the new NZ Share and NZ Bond PIE index funds would be seeded out of the $400 million assets under management held in the group’s KiwiSaver and unit trust range.
Currently, Simplicity manages the NZ equities and fixed income assets in-house by apportioning the securities across its current batch of seven funds.
However, Stubbs said it was more efficient to bundle up the asset classes into PIEs now Simplicity had grown.
“We thought we should also offer the benefits of that scale to the wider market,” he said.
Under the offer both the Simplicity NZ fixed income and equities funds have been priced at an annual management fee of 10 basis points (0.10 per cent) plus a $30 yearly ‘member fee’: at the minimum investment amount of $10,000 that equates to 40 basis points – still 10 points cheaper than the comparative NZX-owned Smartshares local asset class products.
Simplicity offers three risk-weighted KiwiSaver funds and mirror versions for the non locked-in market. The provider also includes the Guaranteed Income Fund (backed by the ‘variable annuity’ Lifetime Income product) via the KiwiSaver scheme.
All told, as at February the Simplicity KiwiSaver scheme managed about $260 million with a further $70 million invested through the unit trust versions.
Simplicity invests offshore – where the bulk of its assets currently reside – through passive fund giant Vanguard.
“As no suitable Vanguard index fund is available for New Zealand bonds and shares the Diversified Funds invest in the Index Funds that track the relevant market indices,” the Simplicity fund disclosure document says.
The Simplicity NZ share and fixed income portfolios will be managed in-house by chief operating officer, Andrew Lance, to track the S&P/ NZX 50 and the Bloomberg NZ Bond Govt 0+ Yr indices, respectively.
Simplicity’s new PIE range coincides with a raft of other fund launches in the NZ market including offers from: the Consilium and SBS Bank-owned Funds Administration New Zealand Limited (FANZ) joint venture, Synergy; and, Milford Asset Management.
Last week Synergy, a discretionary investment management service (DIMS), added four new PIE fund portfolios to its range of nine traditional and four socially responsible investment portfolios.
Graham Duston, FANZ executive director, said in a statement: “Some clients have very simple tax affairs and want the tax deducted at source. For them, a PIE solution works best. We frequently come across clients in this situation, so it was important for us to offer them a solution that best fits their needs.”
Last month Milford Asset Management also rolled out two new funds targeting Australasian and global fixed income assets and a PIE version of the recently-launched Australian Absolute Growth Fund. Both the Milford Trans-Tasman Bond Fund and Global Bond Fund are managed by Paul Morris and David Lewis.
The Trans-Tasman Bond Fund, which launched in PIE form last month after operating as a wholesale fund for the last three years, has a 50/50 NZ and Australian corporate debt benchmark. After a year incubating as an internal fund, Milford also minted its Global Bond Fund as a PIE last month.
Milford released the Australian Absolute Growth Fund last year across the Tasman hoping to replicate the success of its flagship NZ Active Growth Fund.
Murray Harris, Milford head of wealth, said there had been strong interest from clients this side of the ditch following the release of the NZ currency PIE take on the Australian Absolute Growth product.
“We are also very excited that this is the first fund to come out of our Sydney office and Australian team of six portfolio managers and analysts,” Harris said.