The Kogan.Com Ltd (ASX: KGN) share price is currently down 1.4% after the online business announced its latest product.
Kogan will be working with Mercer to launch a ‘no frills, ultra-low fee’ super fund. Kogan wants the super fund to be one of the cheapest superannuation options on the market.
It seems Kogan has found a quality partner as Mercer has more than US$11 trillion under investment advisement and over US$240 billion of assets under delegated management globally.
Kogan will provided the branding and marketing services whilst Mercer will bring the investment management, administration and customer service.
There will be more details released closer to the launch date, which is expected to be in early 2019.
Kogan’s low-cost mantra could work very well in the super space, particularly with all the pressure from the Royal Commission on the big banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).
As you know, the lower the investment fees the more net returns there are for the holder of the investment.
Kogan would need to offer very low fees to be competitive in the superannuation space. Industry funds are designed to offer low fees and the economies of scale of AustralianSuper and others will be hard to beat for Kogan & Mercer.
The Kogan share price has been on a rollercoaster over the past year with it going from $3.54 to $9.80s back down to the $2.70s.
Each recent new Kogan product announcement then came with a fear-inducing management sale of shares. Hopefully that’s not about to happen again!
I like the idea of Kogan Super, it certainly fits the mantra of what Kogan aims for. If Kogan is able to continue growing revenue and profit at a decent rate then today’s share price could be very good value at 19x FY18’s earnings.
It’s hard to tell what’s going to happen in the future after Amazon’s arrival. Kogan is either going to significantly surprise the market over the next year or two, or see its growth come to a halt. I’d be willing to put a small part of my portfolio to Kogan at these levels, but it could be worth waiting for the half year result in a few months.
I can totally understand if you’d rather stick with a reliable, good value ASX growth stock like this one over Kogan at the moment.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.