Dean Anderson, Kernel’s CEO, says the sort of clients he is targeting have already bought their first home “and have a reasonable amount of time on their side”. These investors, he says, may not want a typical growth fund with 20-25% in fixed income assets such as bonds or cash.
Kernel’s KiwiSaver fund will invest only in equities: there will be no balanced of conservative fund options – at this point anyway.
But Anderson doesn’t think this will scare off investors. “I genuinely think there is appetite and demand out there for that high-growth option,” he says.
Set up in 2019, Kernel is relatively new to the funds management market. And while most New Zealanders are already tucked into KiwiSaver funds, Anderson believes the low interest rate environment of the past few years has prompted investors to look closely at the management and performance – and fee structures – of their current KiwiSaver provider.
And just as a long period of prolonged low interest rates has reinvigorated investors, so too will the current environment of rising interest rates, Anderson says, as investors will now be chasing higher growth. They will, however, need advice, education and support.
In his view, Kernel has two unique propositions: first, it operates its entire business digitally. Everything is cloud-based, meaning operating costs and fees can be kept low. Annual management fees are 0.25%, and 0.45% for Kernel’s thematic funds such as Moonshot, EV and Clean Energy.
Kernel’s other unique feature, Anderson says, is that it can physically replicate an index “so all the funds we run in terms of global assets, they have been investing in the underlying companies directly.
“That is unique. There are not many players in the market that are offering PIE-structured funds that physically replicate the index [and] that have really low tracking, low cash that results in better returns for investors.”
