Ever wondered what your investment fees pay for? (Investment Funds)

April 2018

You get what you pay for. It’s a commonly used term, but when it comes to your investments, what exactly do you get? What goes on behind the scenes to generate your returns? You may have seen the fee debate around charging for 'passive' versus 'active' investment approaches. But what’s the difference and how does this translate to investment performance? First off though, you probably want to know exactly how much you’re paying in fees.

Soon, it’ll be easy see the total amount of fees you pay

New-look investment fund statements will shortly be arriving in your letterbox. We’ve completely redesigned them to give you better information so you can make informed decisions about your savings. We believe they’re a leap forward in terms of transparency because they’ll now show the fees you’ve paid as a dollar amount.



We have a simple fee structure

As an investor in one of ANZ’s investment funds, when it comes to fees, we have a straightforward approach. We charge just a single fee which covers absolutely everything that’s involved in the management of your investment. It’s called the annual fund charge, and it’s a percentage amount based on the fund (or funds) you’ve chosen to invest in. It’s also a maximum – we make sure you don’t pay any more than the percentage stated.

Importantly, the annual fund charge pays for the investment management of the fund – that is the skills and expertise of our investment team who carefully manage the money you have invested in it. The charge also covers things like the fee of the fund’s supervisor, and some expenses.

The good news is we don’t charge anything else. Whenever your contributions hit your account, you make changes to your fund choice or ask for a withdrawal, there aren’t any additional charges. Likewise, we don’t charge you any extra fees just because your fund is performing well. After the annual fund charge, and any taxes, the return you receive from your investment is always yours.

"We also applaud the drive to lower fees across a broad range of its funds in recent years, which we hope will continue."

Are you getting bang for your investment buck?

The first thing to remember is that not every fund provider is equal – each has a different investment approach and will offer their investors a different level of service.

At ANZ, we favour an ‘active’ investment approach, whereby our investment team undertake a high level of research and analysis in their pursuit of delivering above-average long term returns for our investors. They utilise a proven and repeatable process, one which has diverse international reach when it comes to finding the best investments for our funds. And on the topic of investing responsibly  – an area we know is of particular importance to our investors – it means we can take a hands-on approach, ensuring we consider both financial and non-financial criteria when selecting and monitoring our investments. Find out more about our active investment approach here.

What’s more, we deliver regular information and updates direct to your inbox, and we have the tools and information available on our website to help you with your investment decisions.

We’re able to deliver these services through the fee we charge. Ultimately it’s up to you to decide whether these are reasonable for the level of service and the investment returns you get.

However, while fees are important, we’d suggest it’s as important to look at our ability to deliver you with long term investment returns after fees, as this is one of the primary factors that’ll determine how much money you have in your investment fund account when you need it.

Switching to a low-cost fund is not necessarily the answer

If you’re concerned about the amount of fees you pay, some providers will argue that investing in a low-cost fund will let you hold onto more of your savings, thereby leaving more dollars in your account at retirement. But choosing a fund solely on fees means you may miss out on greater returns and a bigger balance in your investment account when you need your money.

Providers of low-cost funds tend to use a ‘passive’ investment approach to managing money, where they aim to deliver returns that closely follow the performance of a market index. While they charge a few less dollars each month, it says nothing about whether they can deliver you with above-average returns over the longer term, or their ability to navigate the ups and downs in markets. 

At ANZ, our track record speaks for itself and our active investment approach has, over the long term, delivered you with above-average return1.

"ANZ Investments continues to lead the way in multi-asset-class investing."

Don’t just take our word for it!

A recent Global Fund Report dated 16th March 2018 by research company, Morningstar, who provide financial advisers with independent analysis of various multi-asset-class providers in New Zealand, said:

“ANZ Investments continues to lead the way in multi-asset investing. There’s a continuity of people and process no one else in New Zealand can match."2

In its report, Morningstar assigned a ‘Silver’ rating to the ANZ Investment Funds. This rating is currently the highest rating for a diversified fund in New Zealand.

On the subject of fees, the report said:

“We also applaud the drive to lower fees across a broad range of its funds in recent years, which we hope will continue."2

Since the inception of the ANZ Investments Funds, we have, over time, incrementally reduced fees for our multi-asset-class funds by between 14% and 17%.

So, look beyond fees and focus on the ability of your provider to deliver above-market returns over the long term. And make sure you make the most of the help and support that’s available to you so you can maximise your investment savings.

Published April 2018

¹ Above-average returns are based on FundSource performance data February 2018.

² Morningstar Global Fund Report, dated 16th March 2018.

Important information

ANZ New Zealand Investments Limited ('ANZ Investments') is the issuer and manager of the ANZ Investment Funds. Important information is available under terms and conditions. Download the guide and product disclosure statement.

This material is for information purposes only. We recommend seeking financial advice about your situation and goals before getting a financial product. To talk to one of our team at ANZ, please call 0800 736 034, or for more information about ANZ’s financial advice service or to view our financial advice provider disclosure statement see anz.co.nz/fapdisclosure