Smartshares charges around 0.5 per cent for its index funds but has a much lower entry point with investors needing $500 to start or $50 a month.
Its funds are also listed on the stock exchange.
Sam Stubs, chief executive of Simplicity, said the fees on its index funds were in line with developed markets overseas.
"Kiwis should have access to products at the same price as investors in big developed markets. Now they do," Stubbs said.
Index funds - those that track a particular group of shares or bonds- have been growing in popularity in recent years with big international players like Vanguard and Black Rock gaining in popularity.
Simpicity launched 18 months ago and has around $400 million invested with it.
Stubbs said that growth meant it now had economies of scale enabling it to expand its range of investment products.
"As a non-profit, we only charge what it costs, and that means management fees
much lower than our profit-making competitors," he said.
"Now we're managing over $400 million. Economies of scale are kicking in, and
we can pass those on to our members."