Passive vs Active KiwiSaver Funds, Which One’s Right for You?

When it comes to KiwiSaver, one of the key factors to consider when choosing a provider is whether to go with a passive or active investment style. Not sure what the difference is? We break it down into a simple overview so you can feel confident about where your money is invested.

What’s a Passive KiwiSaver Fund?

Passive funds are kind of like the “set and forget” option. Instead of trying to pick and choose the best individual investments, passive funds simply aim to copy the performance of a specific market index (like the S&P 500). If the market goes up, your fund goes up. If it drops, your fund does too.

The upside?

• Lower fees – because there’s less hands-on management.

• Steady, long-term approach – historically, markets tend to go up over time.

• Good for patient investors – if you can ride out the bumps, passive can work well.

What’s an Active KiwiSaver Fund

Active funds are more hands-on. Fund managers actively choose which companies or investments to back, aiming to outperform the market. They’ll tweak your fund depending on what’s happening in the economy - keeping a keen eye on trends and new opportunities.

The upside?

• Potential for higher returns – especially in tricky markets where a good manager can spot opportunities.

• Flexible strategy – they can adjust your investments to try to avoid downturns.

But there are a couple of things to keep in mind:

• Higher fees – because of all the research and decision-making involved.

• Not guaranteed to beat the market – even experts can get it wrong.

So, Which One’s Right for You?

There’s no one-size-fits-all answer, and with over 30 different providers, finding the right one can be challenging. That’s where we come in. At MoneyGuide, we help everyday Kiwis figure out what matters most to them, and match them with the KiwiSaver fund that fits. Get in touch for free advice that’s simple, straight-up, and tailored to you!