How styles of investment management affect returns and fees

Fees play an important part in your KiwiSaver savings. However, they shouldn't be the only consideration. It’s important to think about investment performance after fees, as this is a key factor in determining the outcome of your retirement savings over the long term (of course, along with your fund choice and level of contributions).

The style of investment management is one factor that will have an impact on the level of returns you can expect to receive and the fees you will pay.

  • We are an active manager and are committed to the philosophy of active investment management. We believe that with active management, we can deliver long-term returns after fees that will be superior to other providers. We do this by taking a long-term view to investing, ensuring we don’t take undue risk, and by selecting quality investments that we believe will perform strongly. Because there is a higher level of decision-making and analytics involved, active managers typically charge a higher fee – however ANZ’s KiwiSaver schemes’ members benefit from fees that sit below the fees charged by the majority of other providers¹.
  • There are KiwiSaver providers that employ passive management for aspects of their funds management. Passive management aims to deliver performance that follows the performance of a market index for each asset class. Because this approach requires less analytics and decision-making, managers who employ some passive management are at the lower end of the fee range.

How after-fees returns can impact your retirement

According to the September Morningstar KiwiSaver survey, the:

  • ANZ KiwiSaver Scheme Growth Fund delivered after-fees returns of 2% higher than the average return delivered by other providers over the last five years²
  • ANZ Default KiwiSaver Scheme Growth Fund delivered after-fees returns of 0.8% higher than the average return delivered by other providers over the last five years².

It’s important to note that’s after fees. Even a 1% per year positive difference in after-fees returns in your KiwiSaver account over time could give you an additional $100,000 when you retire³. This highlights the importance of not using fees as your only consideration in choosing a provider.

 

 

 

¹Based on a comparison of total fees (fund fees and membership fees), according to the most recent fund update or quarterly disclosure statement as at 3 November 2016, for a balanced fund at the average KiwiSaver account balance of $12.5k, across providers that represent 99% of the market (by funds under management).

²Morningstar - KiwiSaver Survey September Quarter 2016 

³Based on a 22-year-old contributing 3% of a $45,000 salary, along with employer contributions of 3%, until they’re 65. 

Watch our video to learn more about performance and how it affects your retirement savings.

How does our investment team stack up?

Of course, active management relies on the expertise of the investment team. So how does our investment team stack up? Here’s what independent research house Morningstar has to say:

“The depth and tenure of the ANZ investment team is unmatched amongst the KiwiSaver providers.”

Morningstar Research Report, published 29 September 2016.

Independent research houses review each provider’s people, processes and performance on your behalf. Their ratings represent their view on how the provider is likely to perform in the future. ANZ is proud to hold the top ratings of any KiwiSaver scheme with both Morningstar and SuperRatings:

  • Morningstar Analyst Ratings™

Our multi-asset-class funds have a Morningstar Analyst Rating™ of 'Silver', assigned on 29 September 2016. 'Silver' is currently the highest rating for a fund in a KiwiSaver scheme.

  • SuperRatings 2017 KiwiSaver Ratings

We're proud to have received SuperRatings' 'Platinum' rating for the third year running for all three of our KiwiSaver schemes.'Platinum' is the highest rating available.

See our full awards history, ratings and disclaimers.

We can offer you free advice if you need it

If you would like to discuss this in more detail, you can call our team of ANZ Authorised Financial Advisers on 0800 269 238, email wealthdirect@anz.com, or speak to your own financial adviser.

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Published October 2016

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