Pinnacle Investment Management’s head of retail, Ramsin Jajoo, believes cash ETFs should be offered without fund management fees.
Speaking at the boutique fund manager’s Investment Summit in Sydney yesterday, Jajoo told a room full of advisers and investors that Australians “shouldn’t have to pay for their cash to be managed”.
Jajoo pointed out that Australia is behind the US where providers… (including) Fidelity and SoFi already offer exchange traded funds with zero management fees.
“A couple of years ago when I landed in the US the cheapest ETFs were three basis points,” Jajoo said. “When I was at university, I could never fathom that there could be a price in the market place where you could invest in $10,000 and have your portfolio managed for the price of a bad cup of coffee from Starbucks. Last year that changed very quickly.”
Pinnacle will launch a new cash ETF in August, to be called ‘Z3RO’, will charge no management or performance fees but will levy a capped 0.15 per cent fee for “recoverable expenses”.
Comparable cash ETF funds such as the $1.6 billion Betashares Australian High Interest Cash ETF and Blackrock’s $500 million iShares Core Cash ETF charge management fees of 0.18 per cent and 0.07 per cent respectively. They do not charge separately for expenses.
Pinnacle’s executive director, Adrian Whittingham, told Professional Planner low fees across the board are a win for clients. “Even if you have iShares and Betashares, that’s fantastic. The whole thing is providing clients with a much bigger experience and return,” Whittingham said.
“It’s part of the proposition that we’re trying to bring to clients,” he added. “We know effectively we won’t be making money on it.”
Cash management ETFs are low risk investment options that typically invest in major bank deposits and tend to yield circa 2 per cent, or marginally more than the RBA’s cash rate.
Pinnacle invests in and provide services to boutique fund managers, who benefit from its distribution and infrastructure support. It currently has 13 fund “affiliates” that collectively manage over $52 billion.