Simplicity ‘declares war’ on NZX

Not-for-profit KiwiSaver provider Simplicity has launched two low-cost index funds in direct competition with NZX, the operator of the New Zealand sharemarket.

Simplicity, which now has more than $400 million in funds under management, says the two non-KiwiSaver funds have ‘‘record low’’ management fees.

Its new NZ Share Index Fund invests in the NZX50 index of the largest companies on the New Zealand sharemarket, while the NZ Bond Index Fund tracks an index of more than 30 NZ ‘‘investment grade’’ bonds.

Simplicity founder Sam Stubbs said both funds were significantly cheaper than the Smartshares funds provided by NZX which invested in the same areas.

The Simplicity funds have an annual administration fee of $30, annual management fees of 0.1 per cent, and a minimum investment of $10,000.

By contrast the NZX’s Smartshares Top 50 fund charges 0.5 per cent, and its NZ Bond Fund charges 0.54 per cent. Both of the Smartshares funds have an initial establishment fee of $30, and a minimum investment of $500.

Stubbs joked that he was ‘‘declaring war’’ on the NZX, saying it should focus on growing the market, not its fund management business.

As well as winning business from ordinary mum and dad investors, Simplicity hoped to attract large ‘‘wholesale’’ investors such as charities and super funds.

NZX chief executive Mark Peterson said Simplicity was a welcome new entrant to the New Zealand market.

Smartshares chief executive, Hugh Stevens said: ‘‘It’s fantastic to see another passive fund manager offering access to the New Zealand market.’’