Managed funds pool money from multiple investors to buy a diversified portfolio of assets: shares, bonds, property and other investments. In New Zealand, most managed funds are PIE funds, which tax returns at your prescribed investor rate rather than your marginal rate.
A managed fund pools your money with other investors, and a fund manager invests it across many assets. NZ managed funds that are PIE funds tax investment returns at your Prescribed Investor Rate (PIR), capped at 28% regardless of your marginal rate. Low-cost managed funds in NZ include Simplicity (0.23%, no member fee), InvestNow Foundation Series (fees vary by fund, from ~0.03% to 0.37%), and Kernel (0.25%).
What Is a Managed Fund?
A managed fund (also called a collective investment scheme or unit trust) works like this:
- You invest money into the fund by buying units
- Your money is pooled with thousands of other investors
- A fund manager invests the pooled money across a portfolio of assets
- Your units increase or decrease in value based on the fund’s performance
- You can sell your units (redeem) at any time — typically within 2–5 business days
Why use a managed fund instead of buying shares directly?
- Instant diversification — even $1,000 invested in a managed fund gives you exposure to hundreds of companies
- Professional management — (passive or active) — you don’t need to pick stocks
- Lower transaction costs — the fund buys in bulk; you couldn’t buy 500 companies directly without huge brokerage
Active vs Passive Managed Funds
| Type | What the manager does | Fee | Expected performance |
|---|---|---|---|
| Passive (index) | Tracks a market index — holds same stocks in same proportions | 0.10–0.35% | Index return minus fee |
| Active | Manager picks stocks trying to beat the index | 0.80–1.50% | Varies by fund and period, after fees |
A passive fund’s return is the index return less its fee; an active fund’s return after fees can be above or below its index. In NZ, low-cost passive managed funds are offered by providers such as InvestNow (Foundation Series), Kernel and Simplicity.
→ See: Passive vs Active Investing NZ
The PIE Tax Advantage
Portfolio Investment Entity (PIE) is a NZ tax structure. Managed funds structured as PIEs:
- Tax income and gains at your Prescribed Investor Rate (PIR) — not your marginal rate
- PIR is capped at 28% regardless of your actual marginal rate
- So for people on the 33% or 39% marginal rate, PIE returns are taxed at less than their marginal rate
Example:
- Marginal rate: 33%
- Investment return: $10,000
- Tax in non-PIE investment: $3,300
- Tax in PIE fund (28%): $2,800
- Difference: $500 on that $10,000 return
Because the difference applies to each year’s return, it builds up over time for investors whose marginal rate is above the top PIR.
→ See: PIR Rate NZ: Choosing Your Rate for PIE Funds
Types of NZ Managed Funds
By structure
| Structure | Tax | Access |
|---|---|---|
| PIE Unit Trust | PIR (max 28%) | Most common — Simplicity, InvestNow, Smart (formerly Smartshares) |
| KiwiSaver | PIR (max 28%) | Locked until 65 (limited exceptions) |
| Term deposit (managed) | PIR (max 28%) | Various term deposit PIE funds |
| Superannuation scheme | PIR (max 28%) | Less common for new investors |
By asset class
| Fund type | What it holds |
|---|---|
| Growth/equity funds | Primarily shares (NZ, global, or mix) |
| Balanced funds | Mix of shares and bonds (e.g., 60/40) |
| Conservative funds | Primarily bonds and cash |
| Bond funds | Government and corporate bonds |
| Property funds | Listed REITs, unlisted property |
| Cash/money market | Short-term instruments, near-cash |
Low-Cost Managed Funds in NZ Compared
Providers are listed alphabetically.
InvestNow Foundation Series
| Fund | Fee | Focus |
|---|---|---|
| Foundation Series US 500 Fund | 0.03% | Low-cost US equities |
| Foundation Series Total World Fund | 0.06% | Broadest global coverage |
| Foundation Series Balanced Fund | 0.37% | Diversified 60/40 growth/income assets |
| Foundation Series Growth Fund | 0.37% | Diversified, growth-tilted |
Minimum: $250/fund. No platform fee (Core Equity Funds carry a 0.50% buy/sell transaction fee; the Diversified Funds don’t). PIE structure. Over 100 funds total on InvestNow across all managers.
Kernel
| Fund | Fee | Focus |
|---|---|---|
| Kernel High Growth | 0.25% | Broad global mix |
| Kernel Global 100 | 0.25% | Large global companies |
| Kernel S&P 500 Fund | 0.25% | US exposure |
| Kernel NZ 20 Fund | 0.25% | Top NZ companies |
Minimum: $1 (no minimum). No platform fee. PIE structure. KiwiSaver also available.
Simplicity
| Fund | Fee | Focus |
|---|---|---|
| Simplicity Growth Fund | 0.23% | Growth assets, long time horizons; no member fee |
| Simplicity Balanced Fund | 0.23% | 60/40 allocation |
| Simplicity Conservative Fund | 0.23% | Lower-risk allocation |
| Simplicity NZ Bond Fund | 0.10% | Fixed income only |
Minimum: $1,000. No platform fee. PIE structure.
How to Invest in a Managed Fund in NZ
- Choose a platform: platforms with no platform fee include InvestNow, Kernel and Simplicity
- Select your fund: growth, balanced and conservative funds differ in how much they hold in shares, and each fund’s product disclosure statement gives its risk indicator
- Open an account: Online, identity verification required (NZ driver licence or passport)
- Set your PIR: Provide your PIR rate to the fund — they use it to tax your returns correctly
- Fund your account: Bank transfer to the platform
- Set up auto-invest: Regular contributions (weekly, fortnightly, or monthly) for dollar-cost averaging
Managed Funds vs ETFs in NZ
| Feature | NZ Managed Fund (PIE) | NZ-listed ETF (Smart, formerly Smartshares) | US-listed ETF |
|---|---|---|---|
| Fee | 0.03–0.40% | 0.20–0.59% | 0.03–0.20% |
| Buy/sell | Direct with provider | NZX during trading hours | US exchange trading hours |
| Minimum | $1–$1,000 | $500 direct with Smart; from $1 via a broker (fractional units) | 1 share (~$400+ for VOO) |
| PIE tax | ✅ Yes | ✅ Yes | ❌ No |
| FIF tax above $50k | ❌ No (PIE) | ❌ No (NZX listed) | ✅ Yes |
| Auto-invest | ✅ Yes (most) | Through some brokers or Smart’s regular plan | Through some brokers |
| Intraday trading | ❌ No | ✅ Yes | ✅ Yes |
The tax treatment differs: PIE managed funds and Smart (formerly Smartshares) NZX-listed ETFs tax returns at your PIR, while US-listed ETFs held directly fall under the FIF rules above $50,000 of overseas shares and are taxed at your marginal rate. How you buy them also differs; the full comparison is in ETF vs managed fund.
→ See: ETF vs Managed Fund NZ
Where to check the latest data
Rates, fees and returns change often. Before deciding, check current figures yourself:
- Sorted Smart Investor: compares fees, returns and risk levels of KiwiSaver and managed funds.
- Disclose register: holds each fund's product disclosure statement and quarterly fund updates.
- Financial Service Providers Register: shows whether a provider is registered to offer financial services in New Zealand.
- The provider's own website: has its current rates, fees and full terms; these change more often than any comparison page.
Common Questions
Can I lose money in a managed fund? Yes. Managed funds that hold shares will fall in value when markets fall. A growth managed fund can fall 30–40% in a severe market downturn. Over long periods (10+ years), global equity managed funds have historically recovered and grown — but short-term losses are a normal part of investing.
Are managed funds safe? NZ managed funds offered to the public are regulated by the Financial Markets Authority (FMA) and must publish a Product Disclosure Statement (PDS). A licensed supervisor (such as Public Trust) oversees the manager, and the fund’s assets are held separately from the manager’s own. That separation protects against the manager failing; it doesn’t protect against falls in the investments’ value.
How long should I invest in a managed fund? Each fund’s PDS states a minimum suggested investment timeframe, which is longer for funds holding more shares. A longer timeframe gives more time for the fund to recover from market downturns.