Green kiwi piggybank with gold coin dropping into slot

NZDF Schemes – how do they compare?

Overall, the NZDF Schemes continue to perform strongly. Pleasingly, the performance after fees and tax of the NZDF Schemes remains strong in comparison with the remainder of the investment market.

Despite this, one area we have been recently questioned about is the fees charged on investments. It’s no secret that some fund managers have quite aggressive marketing around the low fees on their investment offerings. However, fees are only one of the many areas to consider before making an investment decision. Focusing on fees can quite literally come at the expense of other areas, and can create a hazardous situation where an investor finds themselves with a cheap, but potentially undesirable investment.

Of course, rather than looking at headline price, the main thing that an investor should truly care about when investing is their return after fees and tax, and ensuring they haven’t accepted undue risk to get that return. In other words, while the fees on the NZDF Schemes are low, it’s the net investment return (the return after all fees and taxes have been paid) that should be focused upon. This is where the NZDF Schemes are performing solidly, and especially in the Growth, High Growth, and Shares investment options. Pleasingly, these are the funds where the active decisions of a fund manager usually have the largest difference. This reflects Mercer’s skill as investors – which is supported by independent research.

Additionally, some of the cheap investment providers with cut-price offerings have significant constraints or drawbacks, such as minimum investment amounts, contribution fees (basically a hidden fee), and limited assistance available to the investors. One such fund manager doesn’t even have a phone number, and if someone has a query, the provider makes people enter their details online for a callback later! Compare this with the NZDF Schemes where members have flexible investments with no minimum thresholds, instant access to professional financial advice from Milestone Direct, and no hidden fees. Add in the other benefits of the NZDF offerings, such as prize draws, and the overall package is impressive.

So, the next time you hear of something going cheap, keep in mind what your overall aim is – otherwise you could end up costing yourself a lot more over the long run. While past performance is no guarantee of future returns, the impressive returns of the NZDF Schemes in comparison to most other offerings, below average fees, and the high rating of Mercer as a fund manager are all very good signs for the future.

For further information on anything mentioned above, or to discuss something else, please contact us.