Simplicity is set to launch a new retail fund tapping into a NZ residential property strategy already embedded in its KiwiSaver scheme.
In a release, the mostly passive investment firm said the Homes and Income Investment Fund would go live on October 30 offering exposure to the related Simplicity Living build-to-rent scheme, mortgages and social housing bonds.
According to the latest Simplicity retail funds disclosure documents, the “Homes and Income Investment Fund target asset allocations are 25% in growth assets (25% shares in an unlisted property company [Simplicity Living]) and 75% in income assets (40% in cash and cash equivalents, 25% in residential mortgages and 10% in community housing bonds)”.
The fund is benchmarked against a blend of 40 per cent cash, 35 per cent NZ fixed income and 25 per cent unlisted NZ property.
“… The returns from the Fund are expected to be a combination of stable returns in the short term from income assets such as residential mortgages and steady growth over the long term from investments in growth assets, primarily shares in an unlisted build-to-rent property company.”
Launched in 2016 as a pure index play KiwiSaver scheme, Simplicity gradually added off-benchmark assets over the intervening years including venture capital (via Icehouse) and private equity as well as NZ direct mortgages and residential property development.
About 10 per cent of the Simplicity diversified growth fund, and 17.5 per cent of the high growth option, is invested into the collective illiquid alternatives.
In 2017 the manager also launched retail versions of its NZ bond and equity index funds, later adding a suite of diversified and standalone global sector products earlier this year after replacing underling manager, Vanguard, with the German-headquartered DWS.
According to the release, the group invests about 5 per cent of KiwiSaver assets in the NZ housing-related assets, equating to about $170 million based on the $3.1 billion total scheme figure reported by Morningstar June 2023 report on the sector.
Excluding the alternative assets, Simplicity reported about $4.8 billion under management across the KiwiSaver and retail funds as at the end of June.
Sam Stubbs, Simplicity founder, said in a release that after three years of investing into NZ residential housing via the KiwiSaver scheme the group was “now ready to scale up and make a big difference”.
The Homes and Income Investment Fund will sport a minimum investment of $1,000 with annual fees in line with most other Simplicity products at 0.29 per cent.
Also last week, the $4 billion Generate KiwiSaver scheme flagged a $55 million private equity allocation – its third alternative asset investment in the space of just 12 months.
According to a Generate release, the scheme has committed a total of US$32.5 million to Los Angeles based specialist real estate and infrastructure manager, CIM Group.
CIM will give Generate exposure to a range of US renewable energy and other assets as well as specific US$7.5 million allocation to Novva Data Centers, a recently launched data centre developer.
Sam Goldwater, Generate chief investment officer, said in a statement that the CIM assets have “clear structural tailwinds” including a fiscal boost from the US Inflation Reduction Act that will throw hundreds of billions of dollars at renewable energy projects, among other spending.
Goldwater said Generate has previously seen “strong returns” from other renewable energy and data centre investments through NZX-listed firm, Infratil.
Over the last 12 months the Auckland investment boutique also invested $20 million apiece in local technology private equity funds managed by Movac and Icehouse Ventures.