Our investment ethos

We use a time-tested investment approach when it comes to building your long-term wealth. We’re not trying to pick winners, predict the future or time the market. We cut out the noise, reduce the costs and drags on growth, and focus on building your long-term savings. It isn’t sexy but it works and is recommended by many of the greatest thinkers in the finance world: Buffett, Kahneman, Bogle, Samuelson and there is significant evidence to support.

We seek to help New Zealanders build long-term wealth by getting the fundamentals of successful investing right. In a nutshell, less is more, as predicting the future for anyone is more luck than skill.

Our core product is unlisted index funds.

These systematically designed portfolios seek to match the composition and performance of a market index, like the S&P 500 or the S&P/NZX 20 index.  An index fund is built to essentially run within a pre-defined ruleset. Index fund managers (that’s us) generally believe two things which are repeatedly proven around the world.

The first that it is difficult if not impossible to consistently out-think and out-perform other investors, especially when the costs of research and trading are included. It gets harder and harder the bigger and more successful you become.

The second that market inefficiency and mispricing that does occur isn’t significant enough to take advantage of, as many hedge funds and algorithmic traders discover. Based on these beliefs, we try to match (and using our expertise, slightly beat) the expected index performance less our low fees, rather than rely on luck.

We launched in 2019 and our team came together to create Kernel as a response to our frustration with the failings we saw in New Zealand’s financial services industry, and the negative impact this was having on Kiwis’ financial futures.

Principles of successful investment.

  • Regularly contribute – “The best time to start was yesterday” is  the famous quote (in other words, don’t delay or wait), and then contribute regularly. If you are contributing regularly, you don’t need to worry about timing the market because you’ll be buying at the highs and the lows and averaging out the cost at which you’re buying. We’ve built numerous features to help you contribute on a regular cycle.
  • Keep costs low – Transaction and trading costs will destroy your returns, so if you are regularly contributing you want a provider that is going to put all your money to work. At Kernel you won’t pay a transaction fee on an order, EVER!
  • DiversifyDiversify, diversify, diversify. This means building an investment portfolio that’s made up of many different types of investments that behave in different ways. A single diversified index fund such as the NZ20 or Global 100 can do that on its own, or you can combine across asset classes. You can also think about your exposure to global sectors and emerging future themes.
  • FTW! – The simple fact is that the large majority of stock pickers and active managers fail to beat the market. Sure, they might get good returns one year, but can they get you industry leading returns year on year? Morningstar reporting to 31 March 2021 showed that only 2 out of 298 funds available in New Zealand outperformed the NZ20 over 10 years.  Countless other studies show a lack of persistence, meaning last year’s winners, are no more likely to be this year’s. If there’s one near-certainty in investing, it is “you get what you don’t pay for,” as the late Jack Bogle said.


Our approach to investment.

The word kernel  means the heart or “core” of something and at Kernel we believe that the core of your investment strategy should come from a diversified portfolio of index investments. This approach to investing is commonly referred to as the core-satellite investment approach.

It’s often said that a good investment strategy should be a boring one, because it is the switching and dabbling that almost never help but do hinter your outcomes. Unlike most aspect of our lives, more work, more attention and more interaction don’t create a better result. If you don’t believe us, benchmark yourself against our funds using our future you calculator.

At Kernel, we believe that 80%-90% of your portfolio should be held in asset classes that are well established, and in index tracking funds. These “boring” asset classes ultimately allows you to live a life you deserve, one that is enriched with the things and people that you love, rather than steering at your phone trying to pick winners all day. This would be the core of your core satellite investment strategy.

At the same time we do appreciate that for some the markets are exciting. If you simply love investing, or have a higher threshold for risk and want to pick something more speculative then have a punt. We just wouldn’t recommend putting the house on it. If the core of your portfolio is invested in index funds and you feel the need to be more speculative, trust your lucky charm, or feel you know something others don’t, spend some time researching and finding the next Apple, Tesla, or Pushpay. Just be careful of your costs and know that according to an MIT study you have a better chance of winning via sports betting!

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Have any questions? Call us on 0800 537 635 during 9am-5pm weekdays.