KiwiSaver Questions, Investing Concepts

Should you just choose a KiwiSaver fund with the lowest fees?

Written by Bridget Morris
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It may seem tempting to sign up for the KiwiSaver provider with the lowest fees, but is that the right way to find the best KiwiSaver fund for you? We looked into if fees should be the most important factor in your decision-making process and here is what we found.

But first, let's talk about fees.

KiwiSaver Fund Fees

Your provider will charge different types of fees such as account membership, management, performance, and administration fees. These can come in a couple of different forms; a percentage of your balance or a set charge. Every provider charges their own fees, and these can vary dramatically between providers depending on what extra services they offer.

It’s important to understand and monitor your provider's fee structure, as even a slight percentage difference can cause a considerable change to your net (after fees) returns. Some Kiwis may only take these charges into consideration when comparing different funds and subsequently pick a fund with the lowest fees. 

However, it’s important to note that there are a range of reasons why fees vary across different providers, and it may be in your best investment interest to consider these factors in your decision-making process. 

Returns after fees

Comparing returns or performance between providers can be tricky, with varying fee structures, it can be difficult to know how much you are being charged. Typically, a KiwiSaver fund will involve set fees and/or percentage based fees. Set fees are usually a membership and administration fee, and percentage based are asset and performance based. If you’re interested in looking into providers’ returns after all these fees have been taken into account, take a look at National Capital's Performance reports. We compile important information from many different funds and summarise it to form an easy to read document for you to read.

We have pulled together some growth funds to show you what a difference fees can make on performance. You can see that the lowest fee does not necessarily provide the highest performance.


Growth funds

Annual Membership fee

Annual Asset based fees

Gross Returns (5 year average)

Returns after asset based fees

Fisher Funds Growth





Milford Active Growth





Generate Growth





OneAnswer Growth





Mercer Growth





Source: National Capital

While your first instinct may be to pick a fund with the lowest fees, as we can see above, it does not always give you the best result. If we look at returns after fees in this example, the fund with the highest fees seems to also have one of the better performances in comparison to the others. Therefore, it may be worth paying higher fees if the provider delivers a greater after-fee performance. In saying this, it is also important to remember that past returns do not guarantee future performance.  

Why do fees change between providers? 

There are rules in place that ensure providers provide value for money, but there are no set requirements of what providers can or cannot charge. Of the 30 KiwiSaver providers, fees range from an average of $78 up to $400 per year (based on a $20,000 balance). We know that providers must follow the rules of providing value, therefore providers who charge higher fees, will most likely offer more services above the minimum.

If this concept is a little confusing, put it like this: when looking to buy a vehicle, you don’t just walk into the lot and ask for the cheapest car. Instead, you search for a reasonably price-vehicle of the quality to require. This is essentially about getting what you are paying for and can be used to explain the varying KiwiSaver fees. By quality, we are referring to additional services such as the type of fund and level of advice. We've listed a few value adds below for which you may pay a little bit more in fees.

1. Financial Advice

Financial advice is a service where a professional advises you on the best fund for your circumstances. The degree of advice can vary, from an online tool that has limited personalised features, to a one-off independent financial advisory service where they look into your personal circumstances and wider lifestyle. As you can imagine, independent financial advisors cost your provider money, and this cost will probably be passed onto you - the customer. 

However, this isn’t a bad thing. Research has shown that individuals who received KiwiSaver Financial advice earned an average of 4% higher returns on their investments. Chances are, the difference in fees you would pay between a basic low cost provider, to a top of the line independent financial advice provider, is a lot less than 4%. Therefore, it may be well worth paying for a provider who offers advice, especially if you are not confident with the involved logic.

Note: National Capital works with many providers to offer independent financial advice, free of charge! We can tell you both which provider has the best fund for you, and how best to invest your money. Because we work with a very wide range of providers, our research will surface the best one for your needs. To start the process, simply submit the KiwiSaver HealthCheck.

2. Active versus passive funds

There are two types of KiwiSaver funds; passive and active. 

Passive is when a portfolio of companies are invested in at the formation of a fund. The investment selection is kept the same and the fund runs off the set investment. Basically, it trucks along passively, without active input from financial professionals and this allows it to be run on lower fees. I.e. a cheaper investment option for you. In terms of returns, it aims to follow market index returns which is where an active fund may sound more appealing.

In an active fund, analysts, researchers, and managers take a more hands on approach by buying and selling assets to beat market index returns. They are constantly updating the mix of investments, which means that these types of funds can come with a higher fee to cover the added employment and expertise expenses. When buying and selling assets within a portfolio, there are also transaction costs. You don’t need to know too many details about this, but just note that this most likely involves an additional cost passed onto you.

In theory, a higher level of activeness of these types of funds should result in higher returns for investors. Historically, this hasn’t always been the case however, so it would pay to look into your own fund to find out how it is invested. While you’re there, check the fees you are paying to make sure you are happy with them and they align to the type of services you receive.

3. Ethical Investing  

A lot of Kiwis want to ensure their KiwiSaver is invested ethically. Ethical investing can mean a host of different inclusions and exclusions, which varies between people. Common examples are wanting to invest sustainably, excluding sin stocks, socially responsible investments, and the list goes on. Research has shown that although a lot of Kiwi’s have an interest in investing ethically, it is an area of confusion and even with the intention of responsible investing, some just don’t know where to start. 

As you can imagine, there are increased costs associated with ethical research and these costs are passed onto customers. You can therefore expect these types of providers to charge a premium.

We are here to help, so have compiled a small list of providers you could start to have a look at. These providers are all well known in the finance sector to be ethically aligned and are good picks if you are wanting to begin your responsible investments journey, but not too sure where to start.


KiwiSaver Provider

How they invest

What it means for you

Booster Socially Responsible Funds

Socially Responsible (SRI)

SRI funds have 9 exclusions: 

  • Fossil fuels
  • Nuclear power
  • Military weapons
  • Civilian firearms 
  • Tobacco
  • Alcohol
  • Gambling
  • Adult Entertainment
  • Genetically modified organisms

Fisher Funds

Has a rigorous ethical investigation process 

Have developed their own Environmental, Social, and Governance (ESG) investing committee. They actively monitor all of the companies they invest with and rigorously vet all companies who they consider investing with. They have vetted and excluded over 1000 companies and accepted only 90.


NZ owned and operated

New Zealand’s largest NZ based KiwiSaver provider with all of their funds verified as responsibly invested by the Responsible Investment Association Australasia (RIAA).


Sustainability focused 

Well known to be a carbon zero provider, but they are now able to say they are the only below carbon zero provider in their funds, which is a huge win for sustainability.

What do you need from your KiwiSaver?

The best fund and provider for you will depend on how you are wanting to use it. If you are a first home buyer, you may be able to withdraw your funds to help with all or some of your house deposit. If you are wanting to purchase a home in the near future with the help of your KiwiSaver, it is likely that you should be investing your money into a low volatility fund such as a conservative or cash fund.

If you need your savings for retirement and still have a decent amount of time before then (i.e. more than 7 years), it is likely that you can afford to take higher volatility in your investment and invest in a growth or aggressive fund. 

What is important for you?

One last, but very important factor to consider is, what is important for you? You might want to pay the least amount in charges, or you might not care about the best returns, more wanting to ensure you’re investing in socially responsible companies. You might have a long horizon before needing to use your savings, but are not comfortable with many ups and downs in your investment. 

These are all valid concerns, and at the end of the day it is your money to invest and you can decide how you want to do that.

National Capital specialises in KiwiSaver Investment research, and is here to help you figure out the right type of fund for you. Our financial advisers include your situation, financial goals, investment timeframe, volatility tolerance, and other important factors in our selection process, to make sure that we are recommending the most suitable fund for you. Submit our KiwiSaver HealthCheck to get free and personalised advice.


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Choosing the right type of KiwiSaver fund will make a big difference to your KiwiSaver payout.

Spending 10 minutes to complete our KiwiSaver HealthCheck form may be the most important thing you can do for your KiwiSaver account right now.


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