Understanding Fees vs Performance

15 January, 2024

1 Minute Read

The basics on KiwiSaver

When you invest, you are aiming to make ‘returns’ off the money you have invested. So, a good way to compare funds is on their performance - which is the return they make on the fund, after fees have been deducted.

You usually see returns in percentages. For example, an 8% 10-year return per annum means that the fund has had a return of 8% on average each year for the last 10 years after fees and before tax.

The best performance reference point for most KiwiSaver funds is their benchmark (sometimes called market index). A benchmark is a hypothetical portfolio that represents the performance of a section of the market, tailored to the fund type that is measuring against it. If your fund does better than its benchmark, then it’s outperforming. If it does worse, it’s underperforming.

Morningstar KiwiSaver Surveys are released every three months – they clearly show the different funds, the performance of each fund after fees and the average performance (return for period).

Just remember that past performance is not a reliable indicator of future returns.