Fund type, not manager the key driver of KiwiSaver returns, Simplicity economist says
Advisers are likely to add the most value by helping KiwiSaver clients make sure they are in the right type of fund, rather than picking the right manager, Simplicity chief economist Shamubeel Eaqub says.
He has released new research that shows that, while some more expensive managers were able to outperform over the past 10 years, they only generally did so by as much as the fees they were charging. He said, as a result, people in more expensive funds ended up no better off than those in cheaper funds.
Eaqub said the funds that advisers worked with tended to charge more, about 1.1 percent a year on average against 0.85 percent for the rest of the market.
The gap was narrowing as newer schemes such as Koura and Pie started to work with advisers at a lower fee. Advisers might also be charging a fee on top of that.
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