Skip to main content

Passive Index KiwiSaver Funds NZ: Passive vs Active Explained

Updated

KiwiSaver funds are either actively managed, where portfolio managers decide which shares to buy and sell, or passive index funds, which track a market index and often charge lower fees. Some providers mix the two.

This page covers how the two approaches differ, what the evidence says, and which schemes offer index funds.

What Is a Passive Index Fund?

A passive index fund tracks a specific market index — for example:

  • The NZX 50 (New Zealand’s top 50 listed companies)
  • The S&P 500 (US’s 500 largest companies)
  • The MSCI World Index (thousands of global companies)

Instead of a portfolio manager deciding which stocks to buy, the fund simply holds all (or a representative sample of) the companies in the index, in proportion to their size.

The key advantage: No expensive research team, no active trading costs, no manager judgement risk. This translates to dramatically lower fees.

Passive vs Active: The Fee Difference

Provider Growth fund fee (approx.)
Pathfinder ~1.35%
Generate ~1.25%
Booster ~1.24%
Fisher Funds KiwiSaver Plan ~1.13%
Milford ~1.05% base fee, plus any performance fee
ANZ ~0.95%
ASB ~0.70%
SuperLife (Smart) ~0.61%
Westpac ~0.55%
BNZ ~0.45%
Kernel 0.25%, no admin fee
Simplicity 0.23%

On a $100,000 balance, the difference between a 1.35% fee and a 0.23% fee (the Pathfinder and Simplicity figures in the table) is $1,120/year, every year, compounding against you. A higher fee can be offset only by a higher return before fees; whether an active fund has done that is a question of its after-fee return record, which the cheapest vs highest-returning KiwiSaver comparison covers. Current fees for all funds are in the KiwiSaver fee comparison by fund type.

Does Passive Outperform Active in NZ?

Whether an active fund beats an index after fees depends on the fund and the period. For the five years to 30 June 2026:

  • Simplicity’s passive Growth fund returned 7.23% a year after fees and tax, ahead of Milford’s Active Growth fund (6.60%), Pathfinder’s Growth fund (6.44%) and the Fisher Funds KiwiSaver Plan Growth fund (4.46%)
  • Generate’s actively managed Focused Growth fund (which Sorted classes as aggressive) returned 8.03% a year after fees and tax over the same five years, more than Simplicity’s Growth fund (Generate’s fund update for 30 June 2026). Milford’s Active Growth fund returned 6.60% a year over the same five years, behind Simplicity’s Growth fund at 7.23% (both after fees and tax), a reminder that a lead over index funds is not guaranteed to continue
  • The mathematical headwind for active managers is the fee drag — to beat an index after fees, an active manager must outperform the index before fees by at least their fee amount, every year

The implication: an active fund’s past outperformance can be checked against current after-fee data, but it is not guaranteed to continue; a passive fund’s lower fee is known in advance.

Which KiwiSaver Providers Offer Passive Index Funds?

Providers are listed alphabetically.

Kernel

Kernel offers a range of index funds:

  • Individual index funds include NZ 20, Global 100, S&P 500 and Global Property (NZD Hedged)
  • Diversified funds: High Growth and Conservative (index funds), plus the actively managed Balanced and Cash Plus funds
  • Fee: approximately 0.25% to 0.45% depending on fund, with no flat admin or membership fee for KiwiSaver

See the Kernel KiwiSaver review.

Simplicity

A mostly passive KiwiSaver provider (Simplicity says it predominantly invests its funds passively). Simplicity charges 0.23% with no admin fee, and operates as a not-for-profit.

Funds: Defensive, Conservative, Balanced, Default, Growth, High Growth (mostly passively managed)

See the Simplicity KiwiSaver review.

SuperLife (Smart)

SuperLife is managed by Smartshares Limited (Smart), a wholly owned subsidiary of NZX; Smartshares adopted the Smart brand in October 2024. SuperLife describes a long-term, index-tracking approach, and members can build their own mix from over 40 funds.

Arguments For and Against Active Management

For active management:

  • Some active funds have out-returned passive funds after fees over particular periods: over the 5 years to 30 June 2026, Generate’s Focused Growth fund (8.03% a year after fees and tax) returned more than Simplicity’s Growth fund (7.23%). Which funds lead changes over time.
  • Active managers can change holdings in a market dislocation (for example March 2020), which an index fund does not do.
  • In less efficient markets, such as smaller NZ companies, active managers may have more room to add value.

Against:

  • Past outperformance does not guarantee future results.
  • The fee difference applies every year, whatever the result; outperformance is uncertain.

The cheapest vs highest-returning KiwiSaver comparison sets out current after-fee returns alongside fees, and KiwiSaver returns by fund type and provider lists the after-fee figures.

Index Funds and Diversification

A well-constructed passive index fund is inherently diversified:

  • Simplicity’s growth fund holds exposure to thousands of global companies via index tracking
  • Kernel’s Global 100 holds the world’s 100 largest companies

This broad diversification is one of the underrated advantages of index funds — you’re not reliant on a manager’s judgement about which 30 stocks to hold.

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.
  • The provider's latest fund update: gives the fund's current fees, returns and holdings.

Frequently Asked Questions

Are passive index funds safer than active funds? Not inherently. A passive growth fund can still fall sharply in a severe market downturn, as an active growth fund can (KiwiSaver in a market downturn). “Passive” refers to the investment method, not the risk level. Fund type (conservative, balanced, growth) determines your risk exposure.

Can I combine passive and active KiwiSaver? No. You can only be in one KiwiSaver scheme at a time. However, some providers’ funds mix passive and active investing; Booster, for example, says some of its funds use a predominantly passive investment approach.

How do low-fee index funds compare with active funds on returns? Over the five years to 30 June 2026, Simplicity’s passive Growth fund returned 7.23% a year after fees and tax, ahead of Milford’s Active Growth fund (6.60%), Pathfinder’s Growth fund (6.44%) and the Fisher Funds KiwiSaver Plan Growth fund (4.46%). The cheapest vs highest-returning KiwiSaver comparison has current figures.

What index does Simplicity track? It doesn’t track a single index. Simplicity’s statement of investment policy uses a mix of benchmarks, including the Morningstar New Zealand Index for NZ shares, the Bloomberg DM ex NZ ESG Screened Index for global shares and the Bloomberg MSCI Global Aggregate Sustainability Select SRI index for global bonds. Simplicity manages the listed NZ assets itself and outsources global investment management to DWS.

Does Kernel charge an admin fee that makes it expensive for small balances? No. Kernel does not charge a flat admin or membership fee on its KiwiSaver plan; its cost is purely the percentage-based fund fee (approximately 0.25% to 0.45% depending on fund). At small balances, Kernel’s percentage-only structure compares favourably; always check Kernel’s current pricing page, as fund-level fees vary. See the KiwiSaver fee comparison by fund type.