KiwiSaver fees and fund performance: why looking at fees alone can miss the bigger picture

Do lower KiwiSaver fees mean better returns? Learn why after-fee performance, long-term results and fund value matter when comparing KiwiSaver funds

When comparing KiwiSaver funds, it is easy to focus on fees. They are clearly disclosed, simple to compare and can affect how much money remains invested over time.

But fees are only one part of the equation. Lower KiwiSaver fees do not automatically mean you are netting better returns.

What ultimately matters is the return a fund delivers after its fees have been deducted. A fund with lower fees may not leave an investor better off if its performance is also lower. That is why it is important to consider fees and long-term fund performance together, rather than treating either measure in isolation.

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Are lower KiwiSaver fees always better?

Lower fees can be an advantage, because every dollar paid in fees is a dollar that is no longer invested. However, the lowest-fee option is not automatically the strongest-performing option.

Comparing KiwiSaver funds based on fees alone doesn't tell you:

• how the fund has performed after those fees

• whether it has delivered consistent results over different market conditions

• how it compares with similar funds

• whether its level of risk is appropriate for the investor

• whether the fund is actively or passively managed

For example, a fund charging a lower fee but producing weaker returns may deliver a lower net result than a fund with a higher fee and stronger performance.

The more useful question is not simply, “What does this fund cost?” It is, “What has this fund delivered after its costs?” KiwiSaver fees and performance should be considered together.

Why KiwiSaver returns after fees matter

After-fee returns provide a clearer picture of what investors have actually received from a fund’s investment performance.

This is important when looking at independent rankings. Morningstar’s KiwiSaver rankings compare funds using returns after fees and before tax. That means the effect of each provider’s fees is already reflected in the performance result.

For example, Generate’s Focused Growth Fund recently ranked 1st out of 10 funds for 10-year returns in the New Zealand Multi-Sector Aggressive category as at 30 June 2026*.

Because this ranking is based on returns after fees, it is not a ranking that ignores cost. It shows how the fund performed once fees had already been taken into account.

The Generate Focused Growth Fund has continually ranked in the top three for 10-year returns in every quarterly Morningstar report since it first became eligible for a 10-year ranking (June 2023)**. Quarterly positions can fluctuate, but this record provides a useful view of its consistency over time, bearing in mind that past performance does not guarantee future performance.

In the same report, the Generate Moderate Fund ranked 3rd out of 16 funds for 10-year returns in the New Zealand Multi-Sector Moderate category as at 30 June 2026. It has ranked in the top three for 10-year returns in 92% of quarterly Morningstar reports since becoming eligible**.

Additionally, the Generate Growth Fund ranked 4th out of 17 funds for 10-year returns in the New Zealand Multi-Sector Growth category as at 30 June 2026. It has ranked in the top three for 10-year returns in 77% of quarterly Morningstar reports since becoming eligible**.

Past performance does not guarantee future performance, but long-term after-fee results can help investors assess how a fund has performed relative to comparable funds.

How the Morningstar KiwiSaver rankings work

Morningstar is an independent global financial services company that publishes its KiwiSaver 360 report each quarter. They are not affiliated with any KiwiSaver provider.

The report is designed to help New Zealand investors assess the past performance and other characteristics of KiwiSaver options. It includes fund returns over three months and one, three, five and 10 years.

Funds are grouped into categories so that broadly similar funds are compared with one another. For example, an aggressive fund is compared with other funds in the aggressive category, rather than with conservative funds that have a very different investment mix and risk profile.

The rankings used here are based on returns after fees and before tax. This creates a more meaningful comparison because each fund’s fees have already been deducted from the reported return.

Generate has nine KiwiSaver funds, but only its three original funds – Moderate, Growth and Focused Growth – have been operating long enough to have 10-year returns available. The other funds will become eligible for longer-term comparisons as they build a longer performance history.

Why the lowest fee may not deliver the highest net return

Imagine two similar funds:

• Fund A charges lower fees but earns a lower investment return.

• Fund B charges higher fees but earns a sufficiently higher return to more than offset the difference in fees.

After fees are deducted, Fund B may still leave the investor with the stronger result.

The chart above is an example to show the values of net returns and does not represent the returns of any Generate fund.

This does not mean higher fees are always justified. Nor does it mean investors should choose a fund based solely on whichever one ranked first in a particular period. It means fees should be assessed alongside after-fee performance, risk, investment approach and consistency.

The goal is not to find the cheapest fund at any cost. It is to understand the overall value being delivered.

Why long-term KiwiSaver performance is more useful than short-term results

KiwiSaver is generally a long-term investment, so longer performance periods can provide more useful context than a single strong quarter or year.

Short-term returns can be influenced by market movements, currency changes or temporary conditions that may not persist. A 10-year result includes a wider range of environments and can give investors a better sense of how a fund has performed through different market cycles.

Morningstar itself presents KiwiSaver returns across multiple periods, including one, three, five and 10 years, so investors can consider both recent and long-term results.

Long-term rankings should still be viewed carefully. They describe what has happened in the past, not what will happen next, and they do not replace consideration of risk or personal circumstances.

What to consider when comparing KiwiSaver funds

When reviewing KiwiSaver options, consider the full picture:

• returns after fees

• performance over several time periods, not just one quarter or year

• consistency relative to similar funds

• the level of investment risk

• the fund category and asset mix

• the fund’s fees and costs

• whether the fund suits your goals and investment timeframe

Aside from factors related to performance and fees, you also might want to consider:

• whether the provider can offer advice sessions, if you would like further information and review down the track

• whether the provider has a good reputation for customer service and trust

A fee figure by itself cannot answer all those questions. An after-fee performance ranking can add useful context because it shows the combined result of the investment approach and the fees charged.

The key takeaway

Fees matter, but they should not be considered on their own.

The Morningstar rankings already account for fees when comparing fund returns. So when the Generate Focused Growth Fund ranks 1st out of 10 funds for 10-year returns in its category*, that position reflects performance after fees and before tax – not performance before costs are deducted.

For investors comparing KiwiSaver funds, the better approach is to look beyond the headline fee and consider what each fund has delivered after fees over the long term.

* See Disclaimers section below.

** Source: Data from successive quarterly Morningstar KiwiSaver reports, June 2023 to June 2026 comparing 10-year returns in the multi-sector moderate, growth and aggressive KiwiSaver categories. Returns are calculated after fees and before tax.