ETF specialist expands its global footprint to New Zealand with five funds tracking Betashares’ flagship ASX-listed products.
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In its first product launch outside Australia, the $27bn manager will offer five index-tracking funds within NZ’s portfolio investment entity (PIE) regime, covering Australian equities, fixed income and global shares.
The offering, which opened in June, would expand the range of low-cost, index-hugging products available in that market, Betashares chief executive Alex Vynokur said.
“We’re providing access to our leading investment strategies in a familiar vehicle that works for New Zealand investors given local tax settings.
“The launch of the PIE funds represents our initial step in building our business in New Zealand.”
The launch will boost growth over the next decade for Betashares, which is majority-owned by private equity firm TA Associates and manages 80 funds in Australia.
While the New Zealand ETF market is held in monopoly by the local exchange, Betashares says it is considering offering ETFs products in that market in the future.
The launch comes at a time when volatility in financial markets is leading some large investors to shift to stock picking and active funds management, instead of cheaper, passive styles such as ETFs.
However, Mr Vynokur said active managers rarely outperformed their benchmarks over multiple years.
“We encourage investors to do their homework before buying into the promise of outperformance,” he said.
The PIE funds will invest in Betashares’ flagship ASX-listed ETFs, which have $7.5bn in funds under management, including its global and Australian sustainability funds, a top 200 Australian equities fund, and a global “quality leaders” fund that tracks the performance of 150 global companies that meet certain criteria.
They will also include a PIE fund buying its ASX-listed corporate bond ETF, which tracks the performance of a portfolio of fixed-rate bonds issued by Australian companies including NBN Co, WestConnex, GPT and Wesfarmers.
That ETF is up 2.7 per cent after fees so far this year, but down 0.9 per cent in the three year horizon, according to its website. Fees for the funds vary from as low as 0.23 per cent for the Australia 200 fund at the cheapest end, to 0.77 per cent for the most expensive option, the sustainability leaders fund.
The fees represent a premium of between 9 and 19 basis points over the management fees for the Australian ETFs, to account for extra operational and management costs. They are, however, lower than the weighted average management fee of 0.951 per cent for NZ-domiciled PIE funds, according to a Betashares analysis of Morningstar data.
Betashares is also building a team in Auckland to manage the funds, but in the meantime it will offer practice development services to financial advisers from its Sydney offices.
The PIE funds are targeted at advised clients and wholesale investors.