InvestNow has launched hedged versions of two Vanguard exchange-traded fund (ETF) backed products that have pulled in more than $100 million in little over a year.
The direct-to-consumer platform released the Vanguard-managed funds at the back-end of 2022 under the in-house Foundation Series brand.
Tracking US S&P 500 and global equities benchmarks, the two funds feature rock-bottom Vanguard ETF management fees of 0.03 and 0.07 per cent, respectively: the new NZ dollar-hedged mirror products are priced the same.
However, the now four Foundation portfolio investment entity (PIE) tracker funds also incur transaction fees of 0.5 per cent for every buy or sell order.
Jason Choy, InvestNow senior portfolio manager, said the PIE-packaged Vanguard ETFs had tapped into strong retail investor demand for low-cost and administratively efficient broad market index funds.
Choy said the funds had found favour among a wide range of InvestNow clients with some budding interest from the wholesale and advisory markets.
“But it’s early days with advisers,” he said.
The Vanguard-based products have also super-charged growth of the Foundation suite, which held about $30 million at the end of November 2022 in the existing balanced and growth diversified strategies.
“We’re now at almost $160 million,” Choy said.
He said InvestNow was considering other funds for the Foundation range.
While the Vanguard name has been a drawcard, the Foundation funds compete against other badged versions (offered by Smartshares), direct access to US or Australian listed ETFs as well as PIE products tracking similar global share indices (Kernel and Simplicity, for example). The Australian firm, Betashares, also offers a global shares PIE – part of a batch of funds cooked up last year – in addition to its menagerie of ASX-listed ETFs that have attracted NZ money.
Choy said the new hedged funds offer another portfolio management tool for investors.
“There’s no right or wrong way [to hedge global equities],” he said. “But we want to provide investors with options.”
In total, InvestNow has more than $1.5 billion on the platform across its KiwiSaver, funds and term deposit offerings.