Low-cost KiwiSaver provider hopes to hold 20% of market in 5 years

The provider offered the best returns for Balanced and Conservative funds in 2018 and is in 'fast expansion mode'

Low-cost KiwiSaver provider hopes to hold 20% of market in 5 years

Low-cost KiwiSaver provider Simplicity topped the charts for returns for the 12 months to November 30, ranking #1 for Balanced and Conservative fund returns and #4 for Growth funds. According to managing director Sam Stubbs, Simplicity is growing very rapidly and hopes to hold one fifth of the market by 2024.

“We had a really good year, we doubled in size and we were the number one Balanced and Conservative fund, and fourth for Growth,” Stubbs told NZ Adviser. “That’s really a statement about how little added value the active managers gave last year, and that’s a function of their fee levels. If you think about a 1% fee – if you’ve only made something like 3%, that’s a third of all returns.”

“We’re in very fast expansion mode now, and we’re hiring. Looking at where an organisation like Simplicity should be in five years’ time, we should have about 20% of the market.”

Stubbs says low-cost managers in overseas markets would usually have at least a third of the market, and Simplicity is hoping to catch up to that mark fast. The non-profit has also been a part of several charitable initiatives over the past year, a part of the business which Stubbs says will only grow as its market share increases.

“Last year, we made kids’ membership free and we offered fee-free accounts to all foster kids in New Zealand,” he explained.  “What you’ll see is that the more we grow as a non-profit, the more we’ll continue to pass those benefits back to the members. We’ve given over $311,000 to charity since our inception, and what’s exciting is that we’ve done that with only 1% of the market! It’s been a wonderful year, and we now have 55 volunteers and 8 staff.”i

“People are really starting to pay attention to KiwiSaver returns because it’s done very well over the last few years, but now it’s going down,” he added.

“That really focuses people on their fees and returns, and when that happens, people like ourselves look very attractive. Bull markets and bear markets are a cycle, and that just reaffirms our strategy – focus on the things you can control. You can keep your investments very diversified, and keep fees as low as they possibly can be – that’s the way to maximise people’s wealth, and in our second year, we were the best performing KiwiSaver manager in terms of returns. That very much validates what we’re doing.”

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