Ever wondered what your investment fees pay for? (KiwiSaver)

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.

We have a simple fee structure

As a member of one of ANZ’s KiwiSaver schemes, when it comes to fees, we have a straightforward approach. You pay fees in two ways – and these cover absolutely everything that’s involved in the management of your investment.

First off, there’s a membership fee, which is a flat rate of $1.50 a month for members aged 18 and over. It helps to pay for the day-to-day administration of your KiwiSaver account. There is no membership fee for members under 18.

You also pay an annual fund charge, which is a percentage amount based on the fund (or funds) you’ve chosen to invest in. Most importantly, it pays for the investment management of that fund – that is the skills and expertise of our investment team who carefully manage the money you have invested in it.

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.

"It's pleasing to see fees come down as assets have grown. All up, we continue to have a high degree of conviction in this approach"

Are you getting bang for your KiwiSaver buck?

The first thing to remember is that not every KiwiSaver scheme provider is equal – each has a different investment approach and will offer their members 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 members. 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 members – it also means we can take a hands-on approach. Find out more about our active investment approach here.

You also have easy access to KiwiSaver advice, and you can view and transact on your KiwiSaver account online and via your mobile phone. 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 fees 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 KiwiSaver account when you reach retirement.

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 KiwiSaver account at retirement.

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.

Focus on low fees to the detriment of your long-term savings

Recent findings from Australian research company, SuperRatings, drew similar conclusions when it came to KiwiSaver scheme providers, and showed that focusing on low fees and choosing a low cost provider could be to the detriment of your long-term savings:

“Fees are not the sole determinant of value, and in fact our research shows that those funds providing the highest net benefit are not always the ones with the lowest fees.”¹

It believes KiwiSaver scheme members would do better to consider the ability and track record of their chosen provider and their ability to grow and protect their savings along the way. So, look for those funds which are delivering the highest returns to clients once fees have been deducted.

Our track record speaks for itself

At ANZ, our track record speaks for itself and the good news is that we continue to deliver our members with above-average returns at below-average fees²; this alongside a range of services to help you make the most of your retirement savings. In fact a recent Global Fund Report dated 16th March 2018 by research company, Morningstar, who provide investors with independent analysis of the various KiwiSaver scheme 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.”³

While on the subject of fees and our investment approach, it said:

“It’s pleasing to see fees come down as assets have grown. All-up, we continue to have a high degree of conviction in this approach.”³

So, look beyond fees to build meaningful retirement savings

It’s true that fees are an important determinant of investment performance and are something every investor should pay attention to. However, it’s important not to allow fees alone to dominate your decision making process. Focus on the quality of your scheme provider and its ability to deliver you with long term investment returns after fees. And make sure you make the most of the help and support that’s available to you so you can plan for an enjoyable retirement.

While we acknowledge that fees aren’t the only factor to consider, ANZ has dropped its annual fund charge for members of the ANZ KiwiSaver Scheme and OneAnswer KiwiSaver Scheme by around 20% since 2009

Top tips

  • Do: When you get your account statement, you might be tempted to compare the fees you pay with those of your friends and family. If you do, make sure you compare apples with apples. Fees for growth funds tend to be more expensive than those for conservative funds and, if you have vastly different KiwiSaver account balances, the amount of fees you pay in dollar terms could be quite different.
  • Do: Check out useful resources, such as those provided by the FMA  and Sorted to see how your chosen KiwiSaver scheme stacks up in terms of fees and performance.



1SuperRatings media release, 14 November 2017.

2Returns are based on 10-year figures from the Morningstar KiwiSaver Survey December Quarter 2017 report. Fees are based on the Sorted KiwiSaver fund finder tool, which compares total fees (fund fees and membership fees), according to the most recent fund update or quarterly disclosure statement – as at 11 April 2018, using an average KiwiSaver account balance of $14.4k, and excluding the Aggressive Category where ANZ Investments only have single-asset-class funds.

3Morningstar Global Fund Report, dated 16th March 2018.

Important information

ANZ New Zealand Investments Limited ('ANZ Investments') is the issuer and manager of the ANZ KiwiSaver Scheme and the ANZ Default KiwiSaver Scheme (together, the 'schemes'). Important information is available under terms & 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