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Kernel launches high growth KiwiSaver and high interest savings account

Fuseworks Media
Fuseworks Media

New Zealand’s fastest-growing fund manager is now a low-cost KiwiSaver provider, and offers a savings account with competitive returns, Save, alongside its Invest product.

Kernel gives Kiwis the opportunity to invest across 13 local and global index funds with specific profiles, such as those focused on electric vehicles - a New Zealand-first - commercial property or infrastructure, and three sustainability-themed funds.

"Introducing KiwiSaver and Save marks a shift toward building a more full-service personal finance platform", says founder and CEO Dean Anderson.

"We’re now giving people a wider range of tools to help them achieve financial freedom."

Kernel’s KiwiSaver Plan offers diversified investment options optimised for the long haul, with a recommended minimum time frame of 5-7 years and an ideal horizon of 20-30 years.

While most legacy providers have twenty to twenty-five per cent of their growth KiwiSaver funds in bonds and/or cash, the Kernel funds are pure equities, which can be more susceptible to short-term fluctuations yet have greater long-term growth potential.

The target customer has many years until retirement, or has already purchased their first home. With time on their side, the higher rewards that may come from investing in equities can be an appealing choice and align better with long-term goals.

Just like Invest, members can pick between the expert-curated High Growth Fund or DIY it with a custom mix of funds - more choice than an average bank, which typically offers 3-5 buckets/funds.

All funds are passive and data-driven, tracking a market index or specific market segment to determine what to invest in - no unqualified hot takes in sight.

Management fees are some of the lowest on the market at 0.25% per annum (or 0.45% for Kernel’s three thematic funds), and there are no transaction, foreign exchange, brokerage or account fees.

Anderson believes that KiwiSaver is a good ‘demystifier’ as it often represents people’s first experience with investing.

"KiwiSaver is likely your second most valuable asset, and recent volatility has got us talking about it, and about investing and saving more generally. Kiwis are questioning banks and the status quo. They want their money to work harder."

Kernel Save is a high interest savings account for those who may not be ready to invest, or have specific short-term goals (which can be categorised, e.g. Long Overdue Overseas Holiday) and wish to earn additional interest on their savings. Money is held directly at Reserve Bank of New Zealand-registered banks.

The Notice Saver account offers a highly competitive rate of 1.40% per annum with a 34 day notice period to make withdrawals - more flexible than a term deposit.

"Viewing your investments and savings together is handy, and pretty motivating - giving you full oversight of your money and investing journey in one easy to use platform", says Anderson.

"Keeping savings separate from your everyday account and having to give some notice also removes the temptation to ‘dip in’."

KiwiSaver and Save significantly widens the scope of the challenger provider while responding to a convergence of consumer trends.

Kiwis may be tidy, but not thrifty - reported as some of the worst savers in the OECD - yet Covid-19 forced many to think about their futures, and adopt behaviours such as budgeting and comparing financial products, according to consumer research group Finder.

The six largest KiwiSaver providers have steadily lost market share over the past two years, as Morningstar reports show. The FMA found younger members (aged 25-36) were switching funds at a rate almost double that of other groups, and banks saw a disproportionate increase compared to other providers. In Consumer NZ’s annual survey last year, 32% of Kiwis claimed to not trust their bank.

"Our world has changed, and money can be stressful", says Anderson.

"Because Kernel is digital-first, our solutions are low-cost and low-fuss. But we’re also proud of our in-house expertise and human touch that removes the layer of uncertainty lots of people have about their finances. We just want Kiwis to be sweet for the future."

The Kernel Kiwisaver Plan and Notice Saver will be publicly available in the coming weeks, with an On-Call Saver and additional, more conservative diversified funds in the works.

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