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Kernel Kiwisaver Plan Review

We review the Kernel KiwiSaver Plan, which offers exposure to international and local markets for New Zealanders looking to invest in a low-fee, index fund-based KiwiSaver scheme. We look at this innovative KiwiSaver plan's funds, fees, and pros and cons.
Updated 18 July 2024 
Kernel KiwiSaver Plan in a nutshell:
  • A wide selection of funds: Kernel promotes its High Growth Fund as its flagship KiwiSaver fund. It also allows investors the option to invest in any of its seventeen funds that focus on New Zealand, overseas, property and infrastructure and new technology companies. However, if you're looking for lower-risk conservative options, the Kernel Cash Plus fund or Kernel Balanced Fund are likely to be more suitable depending on your investment time horizon.
  • Option to choose between Kernel’s diversified funds or customise using a mix of Kernel funds: Depending on your preference, one of the High Growth, Cash Plus or Balanced Funds might be all you need. But if you would like to choose the exact make up of your KiwiSaver balance you can mix and match as you please. This provides an attractive way to add a sustainability lens or technology tilt to your investments without having to be "all in" on a particular sector or theme.
  • Low fees: No annual member fee. A 0.25% p.a. management fee for core funds and 0.45% p.a. management fee for the alternative funds (for example, the Clean Energy and Moonshot funds). According to recent Morningstar reporting, most investor money is invested in Kernel's core funds.
  • Tax advantage: All Kernel funds are registered as PIEs, which means you pay the tax later and only to a maximum rate of 28%. All Kernel funds replicate an index directly, minimising withholding tax leakage.

This guide outlines what the Kernel KiwiSaver Plan is, what it offers and how it differs from other KiwiSaver providers. We cover:
Please note: MoneyHub is not a Financial Adviser, and this guide has been published to explain the investment fundamentals and outline the pros and cons of Kernel as a KiwiSaver provider.​

The Specs of Kernel's KiwiSaver Funds

The Kernel KiwiSaver Plan offers three primary diversified funds, with the option to customise your plan instead, choosing between all their seventeen funds. In addition, you can see up-to-date performance data for each fund here.

Diversified funds:
  1. The Kernel High Growth fund invests 98%+ of its money into growth assets, such as shares and listed property.
  2. The Kernel Balanced fund which invests its money at around 60% equities and 40% fixed interest.
  3. The Kernel Cash Plus fund which invests into cash and cash equivalents, and interest-generating assets.

Additional 14 funds to choose from when customising your KiwiSaver Plan:
  1. The Kernel Global 100 fund invests in 100 blue-chip companies across major equity markets. Examples include Apple, Nike, Amazon, Nestle and Microsoft.
  2. The Kernel Global 100 Hedged fund which is a hedged version of the above fund.
  3. The Kernel S&P Global Dividend Aristocrats fund invests in global companies with a record of maintaining a high dividend over a sustained period. Examples include Subaru, CBA (owner of the ASB) and AT&T.
  4. The Kernel Global Clean Energy fund invests in clean energy-related businesses worldwide, including wind, solar, hydro generators, and renewable manufacturers.
  5. The Kernel S&P Kensho Moonshots Innovation fund invests in innovative US-listed companies that challenge or disrupt industries, such as CRISPR, Dropbox, ChargePoint and more.
  6. The Kernel S&P Kensho Electric Vehicle Innovation fund invests in a diversified mix of global companies involved in the electric vehicles sector and the companies supporting it, such as those specialising in energy storage systems, clean fuel technology, charging infrastructure and more.
  7. The Kernel NZ 20 fund invests in twenty of NZ’s largest companies (i.e. Spark, Fisher & Paykel Healthcare, etc.).
  8. The Kernel NZ Small & Mid Cap Opportunities invests in a broad range of smaller companies listed on the NZX, outside of the Kernel NZ 20 fund. It invests in 35+ companies valued at between $100 million and $1 billion.
  9. The Kernel NZ Commercial Property fund invests in several commercial property companies (Goodman, Kiwi Precinct)., and which includes investments in office buildings, industrial estates and shopping malls.
  10. The Kernel NZ 50 ESG Tilted fund invests in the S&P/NZX 50 companies and tilts their weightings in the fund based on their sustainability factors.
  11. The Kernel Global Infrastructure fund invests in utilities, storage and telecommunications infrastructure. Examples include gas companies, energy producers, airports and water companies.
  12. The Kernel Hedged Global Infrastructure fund which is a hedged version of the above fund.
  13. The Kernel Global Green Property fund invests in global companies owning and operating sustainable real estate.
  14. The Kernel S&P 500 fund invests in the 500 largest companies listed on stock exchanges in the United States. This fund is hedged against currency fluctuations.

Bonus: Unlike many other KiwiSaver funds that retain 5% or 10% in cash, even if they are growth assets, Kernel's equity funds (excluding the Kernel Cash Plus and Balanced Funds) are 99.9%+ invested in their underlying shares.

How can I find more information about the funds and their performance?

Recent returns, fees and a description are published for each fund here: NZ 20, NZ Property, Global 100, Global Infrastructure, Hedged Global Infrastructure, Global Dividend Aristocrats, Kensho Moonshots Innovation and Kensho Electric Vehicle Innovation, NZ ESG Tilted Fund, S&P Global Clean Energy Fund, Global Green Property Fund, S&P 500 Fund, High Growth Fund, Cash Plus Fund and Balanced Fund.

You can also download the latest Statement of Investment Policy and Objectives (SIPO), which outlines the Plan's philosophy and strategy via the Kernel KiwiSaver Plan website.

Know this - Kernel also offers portfolio-based investing, so your KiwiSaver performance won't align with any one fund

  • Kernel offers investors seventeen funds to build a personalised portfolio, so your KiwiSaver money will be split up into the Kernel funds based on your selection and apportionment.
  • For example, an investor may decide to invest 25% of their money into the Global Infrastructure Fund, 50% into the Global 100 Fund and 25% into the S&P Clean Energy Fund. Investors can alter this allocation at any time.
  • Investing in a custom portfolio of funds is optional - Kernel's High Growth Fund, Balanced Fund and Cash Plus Fund are all diversified funds, so investors are diversified even if they invest in only one fund.

Who is the Kernel KiwiSaver Plan Suited to?

  • Best for: Short, medium and long-term KiwiSaver members looking for a low fee, high quality KiwiSaver option. Kernel’s index funds are tax efficient, meaning more money in your pocket at the end of the day.
  • Also suitable for: Anyone wanting to go beyond standard 'Growth' KiwiSaver fund (investing in the US, Australia and New Zealand share markets). Plus those who want to construct their own custom portfolio of funds.
  • Unique to many existing KiwiSaver options currently in the market, the Kernel High Growth Fund comprises of 98+% holdings in equities. Comparatively, most other providers have 20 – 25% of their growth funds in non-growth assets such as bonds and/or cash. Being primarily growth assets, the Kernel High Growth Fund can be more susceptible to short-term fluctuations yet have greater long-term growth potential.
  • Not suitable for: KiwiSaver participants looking for active funds that aim to beat the markets year on year.

Standout Features:
  1. The Kernel KiwiSaver Plan offers the ability to customise your portfolio and invest in some funds that are arguably unique to KiwiSaver schemes. These include speciality funds that invest in the clean energy sector, green property, electric vehicle-related companies and other technology-based innovations. These funds complement the standard Kernel funds, which invest into the S&P500, global infrastructure, NZX and the 100 largest companies listed across the globe.
  2. Kernel's fees are some of the lowest around and lower than Simplicity which offers passively managed funds. The 0.25% p.a. management fee (for its core funds, excluding its thematic funds such as Moonshots Innovation, Electric Vehicle and Clean Energy which charge 0.45% p.a) is considerably lower than actively managed KiwiSaver funds which charge between 1% and 2% p.a.
  3. Kernel doesn't charge a member or account fee for any KiwiSaver member. While some schemes are eliminating this annual fee, many still charge it.

Kernel KiwiSaver Plan - Frequently Asked Questions

Kernel is an easy KiwiSaver scheme to understand, but we've listed some common queries and helpful answers below to bring to attention what we feel is important and useful to know:

Who invests my money?

Kernel manages its fund by buying companies to match their weight in the respective index the fund tracks. We address the safety and regulation of Kernel in the 'is it safe for me to invest?' question below.

If I invest with Kernel, is my money going into the sharemarket?

Yes - all of Kernel's funds invest in shares, although all of the funds are diversified, so you are protected if and when one or two companies get into trouble.

How big is Kernel?

We define 'big' as the total funds under management. The Kernel KiwiSaver Plan was launched in mid-2022, so the funds are small. That said, Kernel is an established index fund manager with hundreds of millions invested on behalf of thousands of investors from around New Zealand.

The Kernel KiwiSaver Plan started in 2022 – can I trust it, and is it safe for me to invest?

  • Yes - all KiwiSaver providers must comply with many strict rules to ensure the funds of their clients (i.e. what KiwiSaver investors put in) are kept completely separate from the funds used to run their schemes (i.e. money to pay the staff and run the business).
  • Kernel has appointed Adminis to provide fund custody and administration while Trustees Executors is the plan's supervisor.
  • Kernel is also registered with the Financial Markets Authority. 
  • ​Should Kernel close down, your funds would transfer to another provider under the rules of the KiwiSaver. With regards to whether it’s safe to invest, no fund performance is guaranteed, but the risk profile indicates where your money will be invested. This is the case with any KiwiSaver scheme and not unique to Kernel.
  • For example, if a Kernel fund went ‘bad’ and dropped significantly in value, your investment value would drop. If you've invested in other funds, this may lower the overall decrease (if the other funds have performed better). Each fund has specific risks. Many Kernel funds have performed well to date, but there are always risks. One Kernel fund, which is particularly high-risk, and with a suggestion long-term time horizon (7+ years) - is the S&P Kensho Moonshots Innovation Fund. It has has fallen by over 50% since launching in early 2021. This is arguably an incentive to always consider fund diversification as part of any investment decision-making and why Kernel suggests most investors should start with the High Growth fully diversified fund.

The Competition - Kernel vs Simplicity vs SuperLife KiwiSaver

Kernel is arguably most rivalled by Simplicity and SuperLife, which also offer KiwiSaver growth-focused index funds and compete on fees. The specifics are as follows:
  1. Kernel: Seventeen with a 0.25% p.a. or 0.45% p.a. management fee.
  2. Simplicity: Four funds with a 0.31% p.a. management fee.
  3. SuperLife: Many funds with a ~0.5% p.a. management fee, and a $30/year member fee.

Let's calculate the annual fees on a $10,000 KiwiSaver balance:
  • Kernel = $10,000 X 0.25% = $25
  • Simplicity = $10,000 X 0.31% = $31
  • SuperLife = $10,000 X 0.50% + $30 = $80

And, for those with a larger balance, we calculate the annual fees on a $50,000 KiwiSaver balance:
  • Kernel = $50,000 X 0.25% = $125
  • Simplicity = $50,000 X 0.31% = $155
  • SuperLife = $50,000 X 0.50% + $30 = $280

The Bottom Line:

  • The Kernel KiwiSaver Plan is, in a nutshell, low-fee, innovative and offers diversification. All of their funds are the most tax efficient in the market, which also saves investors more returns over time.
  • Similar to most other KiwiSaver schemes, Kernel offers KiwiSaver funds suitable for investors with short, medium and long-term investment time horizons. Specifically, Kernel offers a High Growth Fund, Cash Plus Fund and Balanced Fund. Kernel also offers investors the option to customise their KiwiSaver plan and choose to construct their portfolio using a mix of their seventeen funds.
  • Kernel offers its arguably successful DIY fund investing platform to any KiwiSaver member. This gives KiwiSaver members the ability to manage their savings, investments and KiwiSaver online with one login.
  • This approach (multiple fund choices and mixing allocations) is similar to that of SuperLife and InvestNow KiwiSaver
  • The Kernel KiwiSaver Plan delivers a friendly user experience; your dashboard breaks down your total fund invested into components, including returns since you joined. Fund performance is updated twice per week.
  • The Kernel KiwiSaver Plan is suitable for those with a short, medium or long-term time horizon. It offers competitively low fees and the choice to customise with all Kernel funds, or choose between three jet diversified funds.

Be aware:

  • Despite the innovation, fund diversity and low fees, Kernel KiwiSaver won't be for everyone, for example those who are looking for actively managed schemes like Milford KiwiSaver or Fisher Funds KiwiSaver.
  • If you are an active KiwiSaver investor and want a fund manager to continuously pick shares.

Must-Know Facts about the Kernel Kiwisaver Plan

Your KiwiSaver balance will be largely based on the rise and fall of sharemarkets

Depending on the performance of the underlying Kernel funds you're invested in, the movements in New Zealand, Australian and overseas share prices will affect the value of your investment.

We believe long-term investment growth is essential to deliver a worthwhile retirement. What's important is not to look at the day-to-day, but the year-on-year return, which Kernel makes widely available in its fund performance table. Of course, markets are volatile, and individual shares are more so. Still, as every company on the share market is profit-orientated, over time, the value of the share index will increase, and so will your investment.

Kernel's KiwiSaver fees are some of the lowest in New Zealand

Within the Kernel KiwiSaver Plan, fourteen funds charge a very low 0.25% p.a. management fee, arguably making them the cheapest KiwiSaver funds available. Kernel has kept its fee structure simple with no annual membership fee, performance fee or withdrawal fees etc.

Low fees in KiwiSaver make a huge difference to your overall fund value over time due to the benefits of compounding interest and returns. In short, low fees are excellent. 

Kernel offers a proven investment model by investing in index funds

Index funds historically outperform managed funds. According to SPIVA, the S&P 500 (an American sharemarket index) outperformed more than 89% of all active funds over 15 years. Given the low fees an index fund charges and the reliability in outperforming active funds, it's a relatively conservative approach to investment for your retirement. 

Kernel takes a flexible approach to KiwiSaver

Traditional KiwiSaver schemes put you in one fund, be that 'growth', 'conservative' or 'balanced'. Kernel allows you to choose between doing this, or investing 100% of your KiwiSaver in any of its funds. These cover everything from New Zealand property to global infrastructure assets. Kernel also has ethical funds and funds which are technology-focused. In summary, the Kernel KiwiSaver Plan is cheap, diverse and flexible.

Kernel isn't the only index fund on the market

Within KiwiSaver, Simplicity and SuperLife are two of a handful of index-based KiwiSaver schemes. However, when it comes to fees, Kernel is the cheapest when it comes to annual fees for most funds.

How does Kernel compare with other options?