When you make the decision to invest, it’s natural to seek comfort that your funds are being managed prudently. It doesn’t take much googling to find out that there have been many dodgy operators in the past and unfortunately, there will be in the future.
We wanted to highlight just how well protected your hard-earned money is when it sits with Kernel, whether that’s in Kernel funds, Shares and ETFs, Kernel Save products or the Kernel KiwiSaver Plan.
Over 60,000 Kiwi’s trust us with their savings, investments and KiwiSaver, and we take that responsibility seriously. New Zealand has strong laws designed specifically to keep investors’ money safe and protected from events such as finance company collapses.
So what safety measures are in place for your investments with Kernel?
Professional oversight and segregation
There is a layered system of regulators, supervisors, and custodians that sit between us and your money. Kernel is regulated by the Financial Market Authority and supervised by Trustees Executors Limited, who set our requirements to operate and receive regular reports from us.
By law, the supervisor has the responsibility to oversee our activities in the interests of all investors and to ensure we meet our obligations.
Further, the supervisor must approve key changes and is the legal owner of the assets in our funds and the Kernel KiwiSaver plan. They appoint an independent custodian to hold the investments and as the fund manager, we can only manage assets within the fund.
Funds are legal entities themselves, and the assets inside each fund are segregated from other funds, the assets of each company and held only for the benefit of individual investors in the funds.
Share units are held on bare trust by an independent custodian and kept entirely separate from their own and Kernel’s assets. The Securities Investor Protection Corporation (SIPC) provides an additional safety net, covering your investment up to US $500,000 in the unlikely case the independent custodian (broker-dealer) fails.
Kernel Save, our high-interest savings account, is held by Kernel’s custodian and with a New Zealand registered, Reserve Bank of New Zealand regulated, investment grade credit rated bank. This money is also covered by New Zealand’s Depositor Compensation Scheme (DCS), which is administered by the RBNZ and protects up to $100,000 per bank.
Note: Kernel PIE Save isn’t a deposit and is not covered by the DCS. It is protected by the same fund manager safeguards described above.
Every party involved has a legal responsibility to report any problems or discrepancies, as well as being backed by professional audits each year (Ernst Young for Kernel). All this means that Kernel, or its staff, cannot withdraw from your investments, plus there are three unrelated parties who can see what is going on.
If we had to close down, what happens?
In the extremely unlikely event that Kernel should get into financial distress, our Supervisor would step in and appoint a temporary manager.
The decision can be made by the Supervisor to wind up the holdings or find a substitute manager. Should they choose the former, they have the legal responsibility of distributing the investments back to the investors.
As explained above, customer money and investments are ring-fenced from any assets and liabilities of Kernel Wealth Limited. Therefore, these are not available for any creditors of Kernel Wealth Limited.
As a fund manager providing a service to our customers with personal and professional reputations at stake, we hold ourselves to the highest level of integrity and professionalism. We will always aim to do the right thing for our customers.
What are my chances of losing money?
When you are investing in equities, there is always the chance of your investment value declining. We strongly suggest you read our blog on risk to understand your comfort level before choosing to invest.
Generally, the diversified nature of our funds means that “losing” all your money is almost impossible. Even if one of the companies the fund invests in goes “bust”, that is only a fraction of the total investment.
If you invest for a short amount of time, there is a chance that the amount you withdraw is less than the amount you invested, as you don’t have the luxury of time to ride out market fluctuations and see your compound interest at work.
Learning more
We encourage all investors to read and understand the Product Disclosure Statement for any investment product they use. They are short, easy-to-read documents on a standard template (those who recall previous prospectus documents will be relieved!)
The PDS contains all the important information about how the investment works, what the risks and fees are and who is involved.
If you have any other questions about how Kernel works or understand your options with investment, get in touch via chat or call our team on 0800 537 635.
Kernel Wealth Limited is the manager and issuer of the Kernel KiwiSaver Plan and Kernel Funds Scheme. A Product Disclosure Statement is available at Kernel Wealth | Resources & Documents. Investing involves risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time. The information provided should not be relied upon as investment advice or recommendations and should not be considered specific legal, investment or tax advice.
