Vanguard launched a much-anticipated ramp in the A$3 trillion and Australian superannuation market last week, pitching a 0.58% annual fee on default options.
The index giant flagged the move almost three years ago, dumping about A$100 billion of institutional money in Australia and New Zealand in 2020 ahead of a retail supergrab.
In a release last Friday, Vanguard Australia chief Daniel Shrimski said the Super Savesmart range “combines true simplicity with smart, global investment expertise.”
“We want to provide our members with a low-cost, high-quality super fund that includes default offers designed to move with them throughout their lives,” said Shrimski. said.
Low by Australian standards, Vanguard’s super commission is almost three times the cost of the cheapest KiwiSaver fund. The SmartShares default option price is 0.2%. The Simplicity Kiwi Saver Scheme, which primarily invests in Australia-based Vanguard funds, also boasts headline fees of 0.31%, while several others are below 0.58%.
The average annual fee for comparable Australian superfunds is around 1%, Shrimski said.
In addition to the default lifecycle options, the new Vanguard Super Suite includes 5 diversified funds and 6 single sector options priced from 0.39% (for cash) to 0.58%.
More than half of the default Vanguard fees cover 0.35% administrative costs, with investment (0.21%) and transaction (0.02%) costs accounting for the rest.
Vanguard waives most administration fees for Superfund balances above A$850,000. For member accounts under AUD$6,000, the administrator limits the combined administration and investment fees to her 3% of the total balance.
However, Vanguard Superfund members may also be charged bid/ask spreads and life insurance premiums.
The group plans to add pension options and an advisor platform in the near future, Shrimsky said.
“We are new to the Australian superannuation industry for the first time in several years and have won an RSE. [responsible entity] Licensed and launched despite industry consolidation, we are here to improve retirement outcomes for Australians and catalyze much-needed change in the industry. Because I truly believe that I can become
Shrimski told media that Vanguard had canceled its institutional business in Australia and New Zealand. This is due to several bank-owned KiwiSaver schemes, especially as he calls ANZ scramble to fill index vacancies with other providers, to clear the deck of the superscheme.
“We were managing retirement, but we don’t want another superfund between us and those clients,” he said. “We want to be that superfund.” ”
Vanguard already has about 90,000 direct Australian customers on its existing investment platform and has received 20,000 inquiries about its new super product, Shrimski said.
The group may also consider a takeover in Australian supermarkets, which is currently heating up in merger and acquisition activity, he said.
“If the opportunity presents itself, we will certainly consider it,” Shrimski told the press.
After an institutional divorce, Simplicity, now at $5 billion, is Vanguard’s largest NZ client, holding several Australian unit trusts.
but it is understood Simplicity is contemplation An option to create a more tax efficient NZ based fund which may see a change in the underlying manager.
A Simplicity spokesperson said in a social media post in September: If possible, we plan to complete the changes later this year. Certainly, by the end of the fiscal year 31 March 2023. “
https://investmentnews.co.nz/investment-news/as-vanguard-takes-super-down-under/ …just like the Vanguard drops Super Down