New Simplicity Investment Funds could save Kiwis $1/2 billion annually in fees

Non-profit investment manager Simplicity continues its assault on high fees in the managed funds sector

Tuesday, April 4th 2017, 6:00AM

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This week, Simplicity Investment Funds opened three passively managed funds Conservative, Balanced and Growth to investors. It will charge a $30 a year plus a 0.31% investment management fee, exactly the same fee it charges for its KiwiSaver funds. These fees are 50-75% lower than the market, depending on the amount invested. For someone investing $50,000 a year in a growth type fund, the savings could be more than $7,000 over 10 years, says managing director Sam Stubbs.

“It’s about time Kiwi investors had access to diversified funds that charged only what it costs, no more,” he said.

“Fees for KiwiSaver funds are way too high, and managed funds are even worse. Some are just outrageous, reflecting old ways of managing money and sales tactics which belong in the last century,” said Stubbs.

Simplicity Investment Funds exactly mirror the investments of its KiwiSaver funds. Each will have over 5,000 investments in 23 countries, and be fully hedged to the New Zealand dollar. Overseas investments will be managed by Vanguard, the world’s second largest asset manager. Investors will be able to withdraw their money at any time.

`The managed fund sector in New Zealand is estimated to be worth $40 billion a year. If Simplicity’s savings were applied, investors could save close to half a billion a year in fees, says Stubbs.

As with it’s KiwiSaver, all funds exclude investments in nuclear weapons, cluster bombs, mines and tobacco.

“As a non-profit, 100% online manager, we are here to provide easily understood, diversified funds to ordinary Kiwis, so they can increase their wealth’. It’s as simple as that,” said Stubbs.

The launch of these funds has been brought forward by 12 months due to demand.

Simplicity Investment Funds Quick Facts

Simplicity fees are 50-75% cheaper than the average diversified investment fund currently in the market.
Multi-sector Conservative Fund fees range from 0.97% to 2.38% p.a. (Simplicity Fees: 0.31% + $30 p.a.)
Multi-sector Balanced Fund fees range from 1.16% to 2.75% (Simplicity Fees: 0.31% + $30 p.a.)
Multi-sector Growth Fund fees range from 1.25% to 2.93% (Simplicity Fees: 0.31% + $30 p.a.)
The average fee saving for a $10,000 investment in the growth fund is $117 p.a. After 5 years this saving grows to $585, and after 10 years is $1,170
The savings for a $50,000 investment in the growth fund are $705, $3,525 and $7,050 respectively.
There are no performance fees.
15% of the management fee earned goes to Charity
All funds have more than 5,000 investments in 23 countries and are 100% hedged to the NZ dollar.
Offshore investments managed by Vanguard, the world’s second largest asset manager.
Government owned Public Trust is the custodian and supervisor.