In A Major Expansion, Simplicity Is Investing More In New Zealand Housing, Lowering Fund Charges And Launching New Funds

Simplicity, the nonprofit KiwiSaver and investment fund manager, has announced a major expansion, by increasing investment in New Zealand unlisted assets, reducing annual fund charges and launching seven new funds.

Increased investment in unlisted New Zealand assets

Simplicity has increased its asset allocations to unlisted New Zealand investments across all its existing diversified KiwiSaver and Investment Funds.

Build-to-rent housing, first home lending and private equity all have increased asset allocations, bringing the total target asset allocation to unlisted assets from 7.5% to approximately 10% of funds under management.

‘We are big believers in New Zealand,’ said Sam Stubbs, Managing Director of Simplicity.

“So we’re increasing investment in areas intended to enhance returns for our investors over the long term, support local innovation and help get more families into warm, dry and affordable homes,” Mr Stubbs said.

“This is what many pension funds do overseas, so we’re doing it here,” he said.

Lower costs

The recent switch for the management of international investments from Vanguard to DWS International GmbH (DWS) has reduced Simplicity’s management and administration costs for existing diversified funds, and these savings will be passed directly on to investors.

The total annual fund charge for all existing diversified KiwiSaver and Investment funds will drop by approximately 3.3%, from 0.30% to 0.29% p.a. from 28 April 2023.

This is the sixth time in five years that fees and charges have been reduced.

“As a nonprofit, we pass on the benefits of scale to members, not to shareholders or management bonuses,” said Mr Stubbs.

Simplicity remained highly critical of KiwiSaver industry management fees, which can be up to three times what Simplicity charges.

“The industry is on target to make $700 million from KiwiSaver fees this year. We estimate that over half of that is excess profits, taken from the savings of ordinary Kiwis,” he said.

Seven new funds

At the same time Simplicity is expanding its range of KiwiSaver and Investment Funds.

The new funds include KiwiSaver High Growth and Defensive Funds and matching Investment Funds. All of these funds have a low 0.29% p.a. total fee.

Simplicity is also launching three new global share and bond investment funds:

• Hedged Global Share Fund
• Unhedged Global Share Fund
• Hedged Global Bond Fund

All three funds charge a very low 0.15% total annual fee, with no entry or exit fees.

As international investments will be held in New Zealand-based PIE funds set up by Simplicity, the funds can now access New Zealand withholding tax treaty rates for overseas investment income.

The new funds are designed to increase diversified and offshore single sector investment options for members, all with low fees.

All new funds are available from today.

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