Have the cheapest KiwiSaver funds been producing the highest returns?


The KiwiSaver retirement savings initiative commenced in July 2007. Over the last 10 years and a bit since then, about 2.8 million Kiwis have opened KiwiSaver accounts and in aggregate accumulated close to $50 billion in savings.

Members choose the Scheme and the fund or funds where they want their savings invested from about 250 different fund options. The 22 Providers offering retail KiwiSaver schemes have designed funds to cater to a variety of investor tastes either by investing in one type of asset (single sector funds) or by creating a mix of different assets (diversified funds). Fees and costs associated with these funds vary widely and as expected so has performance returns.

The report is an observation of how KiwiSaver funds have performed over time, in the context of the annual fees they charge.

Summary of this report was published on NZ Herald on the 3rd of July


The study considered all retail KiwiSaver funds currently on offer.

The selection criteria included:

  • all funds with at least a 5-year history as of March 2018
  • all diversified funds

Based on these criteria, 103 funds were identified.

The study relied on publicly available data on returns and fees and considered net returns (after fees and tax).

For the period ending March 5-year rolling returns were considered as far back as possible – in this instance the 5 years to March 2013.

The 10-year returns of funds that have a 10-year history were also calculated. There were 70 funds identified in total on that basis.

Funds were assigned into different categories based on their asset allocation.

For each category and for each time-period the cheapest 15% of funds were compared against the highest performing 15% of funds.


In the first round, all funds were assigned to 5 categories based on their asset allocation and on that basis the following resulted.

Point to note: Given there were only 5 categories, the spread of asset allocation within each category was broad, which would impact the results. For the cheapest 15% and the highest returning 15% of funds the asset allocation ranges were noted as below.

In three instances highlighted in the table above, at least one of the cheapest 15% of funds featured in the list of the highest performing 15% of funds.

In the second round we narrowed down the asset allocation ranges within the three specific categories. As a result the number of funds reduced as expected, to 47.

On that basis the following results were observed:

In two instances highlighted in the table above, at least one of the cheapest 15% of funds featured in the list of the highest performing 15% of funds.

Applying the same principles over a 10 year period on the narrow range of asset allocation resulted in the following observations:

Points to note

  • KiwiSaver funds launched in the last five years were not included, given their short history. Some of them happen to be the cheapest available. As such, over time the above observed trends are likely to change.
  • The study was purely a point-in-time analysis across a 10-year period and does not provide any guidance on future direction of such trends. In KiwiSaver’s short history, for a majority of the time, markets have been buoyant and as such in recent years these funds have not seen a major downturn.
  • The periods considered are only 5 year rolling returns and arguably too short. An observation of 10 year returns to March 2018 also reflected a lack of meaningful overlap between the cheapest versus the highest returning funds in each of the category. But, note that given the short history of KiwiSaver only one set of 10-year data exists.
  • 5 year rolling returns for the period to June-end each year were also observed – with very similar outcomes as above.
  • When it comes to KiwiSaver funds, ‘you get what you pay for’ does not hold true. Given that returns are not guaranteed, but fees are charged regardless of gains or losses in the fund, a higher fee is a guaranteed drag on returns. As such, it is a significant determinant of future savings balances. Paying more fees does not necessarily mean earning more from those funds.
  • Choosing the right category of funds is critical to your future savings balance. Then focus on identifying funds that are value for money. It is prudent to consider returns net of fees and taxes.

Remember, you can always compare KiwiSaver funds using our simple comparison tool to find the right fund for you.

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The PocketWise Team


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