Boss says low-cost management is becoming the ‘dominant trend’
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Non-profit fund manager and KiwiSaver scheme Simplicity has hit $1 billion in total assets under management – a feat achieved in less than three years of operation, and almost two years ahead of schedule.
Each of Simplicity’s funds has also ranked either first or second among approximately 20 competitors in Morningstar’s latest KiwiSaver quarterly survey, with its non-KiwiSaver investment funds also placing high in the league tables. Simplicity managing director Sam Stubbs said the results demonstrated the benefits of low-cost fund management, and that these figures would be relevant to the Government’s review of default KiwiSaver providers.
“These are very satisfying returns,” he commented. “It’s like sending a team to the Olympics, and every athlete winning a gold or silver medal.
“As these numbers show, to make the most money for members’ low fees really matter. It also highlights that the high fee managers, including the banks, are underperforming. That has cost their members millions of dollars in poor returns over the last 12 months.”
Simplicity also did well in the charts back in January, with Stubbs commenting on its rapid expansion and hopes of holding approximately 20% of the market within five years. He says low-cost management and high returns is becoming the ‘dominant trend’ across the globe, despite resistance from traditional lenders and fund managers.
“[Low fee management] doesn’t grow bank profits or fund manager bonuses, so they have resisted change,” Stubbs said.
“When every single default fund underperforms a low-cost provider like Simplicity, you really have to ask whether the current system is working for KiwiSaver members. The Government review underway is very timely.”
Despite a change in regulation in 2018 requiring transparency on KiwiSaver statements, an estimated 20% of KiwiSaver members are still in default funds.
