Newly launched cash fund, Wedge, has blown through its six-month target just five weeks after going live, according to founder, David McLeish.
“It’s been an encouraging start,” McLeish said.
The former Fisher Funds fixed income head founded Wedge last year in a bid to offer an alternative to bank savings and term deposits with a competitive interest rate and daily liquidity inside a portfolio investment entity (PIE) structure.
He said the product has attracted interest from a diverse client base ranging from ‘mum and dads’ through to financial advisory groups, brokers and asset managers.
“Potential users are looking at Wedge for different purposes,” McLeish said.
For example, retail clients might see the product like an on-call savings account while brokers are seeking better rates on large cash management pools that currently sit on bank balance sheets.
“Financial advisers are telling us, too, that Wedge might help them broaden their service to clients where bank accounts have traditionally been outside their remit,” he said.
The product is also competing with several new cash front-ends offered by the likes of Sharesies, Kernel and Booster.
But McLeish said those products are proxy bank accounts tied to respective institutions with returns typically determined by the official cash rate (OCR) less a margin.
Wedge has a broader investment mandate covering both local fixed interest instruments and offshore bonds, targeting returns above the OCR.
Currently, the savings product has a sticker rate of 3.75 per cent compared to the OCR of 3.25 per cent, although the figure has fallen from 4 per cent at launch post the recent Reserve Bank of NZ cut.
Despite the prospect of further OCR cuts ahead, McLeish said Wedge was continuing to field a growing number of enquiries from potential investors across the board.
“I’ve never had so many coffees in my life,” he said.
Wedge uses Adminis for custody and administration with Guardian Trust as supervisor.