Recently SuperLife and SmartShares lower the management fee on four ETFs. So it’s time to update the ETF cost comparison. Also, I am changing my initial recommendation on starting your investment with SmartShares then switch to SuperLife.
Both Superlife and SmartShares lower their cost on Total World, Europe, Asia Pacific and Emerging Markets ETF. The reason was Vanguard reduce their underlying fee, so SuperLife and SmartShares passed on the cost saving to its customer.
Should you start with SmartShare?
In the past, I recommended to start your ETF investment with SmartShares then switch to Superlife when the fund hit a certain amount. The main reason was Superlife charge a $12/year admin fee, it will cost more in terms of percentage for beginners with a small amount of investment. However, that calculation ignored the $30 one-off initial fee, the cost of setting up extra funds with SmartShares and the exit cost.
Let’s look the following example for an investor started NZ Top 50 ETF with $500 initial investment and $50/month contribution for 5 years. NZ Top 50 ETF 5 years annualized return is 16.49%. I’ve put it in a simple simulation to compare investment between SuperLife and SmartSharesand for 5 years.
SmartShaers started with $30 less due to the setup fee. That $30 initial different made Smartshares cost more for that first 3 years, (38 months to be exact). By the end of the 5 years, the different between Superlife and Smartshares is only $24.09. That’s about 2 years of SuperLife admin fees and represent about 0.44% of your holding. That percentage will decrease if we increase the investment amount. So, there are some saving with Smartshare, but the saving is insignificant.
Also, there are some other benefits with SuperLife.
- Better user interface compared to Link Market Service
- Easy to switch fund with no cost
- No setup cost for new fund
- More fund options included sector fund and passively managed fund
- No withdrawal cost
Personally, I think those benefit worth that $12/year with Superlife.
If you wish to invest in S&P500 ETF, NZ Cash ETF and Emerging Market ETF, start with SmartShares because their management fee is still lower than SuperLife.
(UPDATE at Aug 2017, InvestNow added S&P 500 on their platform. An investor can bypass the $30 setup fee with SmartShares while having the low management cost at 0.35%. Check out the details here )
For any other ETF, just go and join SuperLife. You will be much better off.
If you are currently holding SmartShares ETF and want to switch to SuperLife. There is a way to switch without open a brokage account and pay $30 to sell your Smartshare. However, you will have to email me on that.
Email email@example.com or follow me on Twitter @thesmartandlazy if you have any questions.
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A brilliant article! It is hard to find information like this and there should be more of it. I invest with Superlife and enjoy it.
Keep up the wonderful work you do, teaching all us Kiwi’s how to manage our money.
Thank you, I appreciate your kind words.
Thanks for all the info .. Really helped with my first steps into ETF’s and investing in general with some really good advice !! Simplifies what can be quite daunting initially .. Keep up the good work !!
Thanks for the kind words and I am glad I help you to start investing for your future.
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