News | The Investor
16 Aug 2025 19:01
NZCity News
NZCity CalculatorReturn to NZCity

  • Start Page
  • Personalise
  • Sport
  • Weather
  • Finance
  • Shopping
  • Jobs
  • Horoscopes
  • Lotto Results
  • Photo Gallery
  • Site Gallery
  • TVNow
  • Dating
  • SearchNZ
  • NZSearch
  • Crime.co.nz
  • RugbyLeague
  • Make Home
  • About NZCity
  • Contact NZCity
  • Your Privacy
  • Advertising
  • Login
  • Join for Free

  •   Home > News > Business > Features > The Investor

    Nyah Nyah To Morningstar

    One aspect of the recent Morningstar report on investors’ experience of managed funds - in which New Zealand came bottom out of 16 countries – got little coverage in the news media. Ironically, it’s about media coverage.


    “Our findings show that the media in most countries rarely indicate when a fund’s costs is high,” says the report. “Fees and expenses eat away performance, and the media ought to educate investors on the topic.”

    It continues: “The media do not sufficiently educate investors on the benefit of long-term investing, and evaluating manager records on long-term history rather than short-term performance.”

    Looking at New Zealand specifically, the report says “We recommend that the press pay more attention to these topics.”

    The first point may be fair enough. Certainly, I can’t claim to write about high-cost funds, because I almost never write about any individual funds.

    But I do say often - including in my book “The Complete KiwiSaver” - that fees make a big difference. “Take, for example, a non-employee investing $20 a week into KiwiSaver in a high-risk fund that returns 6% a year after tax,” the book says. “If fees are 0.5%, after 30 years the savings will total about $162,000. But if the fees are 2%, the savings will total just $124,000. It's not stupid to make fees the [“the” in italics] major consideration when you are choosing a provider.”

    I go on to say that “The only trouble is there is no really good way of comparing fees.” That’s an issue the government is looking into. Hopefully New Zealanders will soon be able to easily work out how high total fees are on all managed funds.

    On the second point, I feel a bit peeved, although I must admit that most of the New Zealand media have been naughty about judging short-term KiwiSaver performance.

    Predictably, as the scheme has caught on, people want to know how well the different funds are doing. In my recent reader survey, someone who is in KiwiSaver said they would like “Tables showing how different provider funds are progressing and making easily understood comparisons between similar funds.”

    Another reader said they might be encouraged to join KiwiSaver if there were “A regular independent review of the providers showing the performance of each (taking into account all fees charged by each provider). Perhaps this is something that could be posted to www.sorted.org.nz on a regular basis.”

    It sounds great, but I hope it doesn’t happen. Or at least not until KiwiSaver has been around for at least five years, preferably ten - and even then only if long-term numbers are shown.

    You can be badly misled by looking at the short-term performance of any managed fund, within KiwiSaver or not. People often move their money into funds that performed well in the last period. And lots of research shows this is frequently a bad move.

    To quote from my book again, “The most important point here is that last year's - or last half-year's or last decade's - best performing funds often don’t do all that well in the future. In fact, some research finds there's a tendency for them to do worse than average – perhaps because they tend to be high-risk funds, which are more likely to do particularly well and [“and” in italics] particularly badly. People who move their money around frequently end up worse off than those who don't.”

    So there you have it, a middle-aged writer saying “Nyah, nyah” to Morningstar.

    On a more positive note, whether or not Morningstar was being fair, it’s two messages are good ones. And they’ve now had another airing.

    © 2025 Mary Holm, NZCity

     Other The Investor News
     12 Sep: Fixed vs. floating rates – which is best for you?
     Top Stories

    RUGBY RUGBY
    All Blacks second five Jordie Barrett believes Billy Proctor is ready to take the mantle as the preferred centre More...


    BUSINESS BUSINESS
    Kiwis could be unknowingly investing in weapons, through their Kiwisaver providers More...



     Today's News

    Netball:
    The second-tier status of netball's ANZ Premiership ... compared to Australian Super Netball ... has been alluded to by former Northern Stars coach Kiri Wills 18:57

    Rugby:
    All Blacks second five Jordie Barrett believes Billy Proctor is ready to take the mantle as the preferred centre 18:37

    Law and Order:
    An incident at Waikato's Springhill Prison has ended after going into lockdown 18:27

    Law and Order:
    Hiker found dead after brown bear attack on trail in northern Japan, officials say 18:17

    Law and Order:
    Emergency services are standing down after an incident unfolding at Waikato's Springhill Prison 18:07

    Rugby League:
    The Warriors women have a vision of achievement that extends well beyond results on the field 18:07

    Soccer:
    Alleged racial abuse has marred English Premier League champions Liverpool's opening-day home win over Bournemouth  16:16

    Living & Travel:
    To provincial rugby ... on Gold Sport .. 16:07

    International:
    Vladimir Putin leaves Alaska with a complete victory over Donald Trump 16:07

    International:
    Donald Trump and Vladimir Putin have met in Alaska. After a rosy start, the summit had a very abrupt end 15:56


     News Search






    Power Search


    © 2025 New Zealand City Ltd