NZX’s Smartshares unit eyes new ETFs targeting global equity, bonds, possibly energy

Monday 15th July 2013

Smartshares, the NZX unit that offers exchange-traded funds and a low-cost KiwiSaver product that invests in them, is planning to launch three new ETFs targeting global equities, bonds and possibly the New Zealand energy sector.

Smartshares currently has five ETFs on issue invested in baskets of large and medium-sized stocks on the NZX and ASX. They have a combined $330 million of funds under management, with the largest being the smartFONZ fund which tracks the performance of the NZX 50 Portfolio Index.

The company charges a management fee of 0.6 percent on its smartTENZ fund, which targets New Zealand’s 10 largest companies, and its SmartOZZY fund, which targets the 20 largest Australian firms, while the smartFONZ, smartMIDZ fund of NZ mid-caps and smartMOZY fund of ASX-listed mid-caps attract a 0.75 percent fee.

“We’re having a big push at the moment and looking at launching three new ETFs in the next few months,” said Sam Stanley, head of Smartshares, told BusinessDesk. He confirmed two would cover global equities and bonds while the third would be sector specific.

For example, “looking at MightyRiverPower, do you say I’ll put $100,000 into MRP or an energy ETF that covers the whole energy sector,” he said.

Stanley says ETFs provide an alternative investment option for people looking for low-fee savings. They are a retail product “that should also be in KiwiSaver funds.”

“In the US, 67 percent of fund managers don’t outperform their indexes, they underperform them,” he said.

The smartTENZ returned 29 percent in the past year, based on its June fact sheet and has returned 4.4 percent annualised since inception in 1996. SmartMIDZ, which counts Xero as its biggest holding, is up 31 percent in the year and 7 percent since it began in 1997.

SmartFONZ gained 30 percent in the past 12 months and 4.1 percent since beginning in 2004. SmartMOZY is up 3.3 percent in the year and 5 percent since 2004 and smart OZZY is up 15.7 percent and 8.5 percent respectively.

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