4 Apr 2022

FMA expects continued improvement in value for money for investors in managed funds

2:29 pm on 4 April 2022

The Financial Markets Authority is expecting to see a continued improvement in the value for money consumers get when they invest in managed funds.


A recent report by financial research firm Morningstar has marked New Zealand down to average, from above average, when it comes to being an investor-friendly market in terms of fees and expenses.

Among the concerns raised were New Zealand lagging behind global best practice for its lack of transaction fee reporting for managed funds.

Other concerns included the large performance fee earnings consumers were charged, which reflected market movements rather than manager skill.

FMA's director of investment management Paul Gregory said there was more work to do but the regulator saw a quick improvement in April last year after it released some guidance on what it expected funds managers to deliver in terms of value for money.

"And this will also have been influenced by the changes in [KiwiSaver] default provider fees," Gregory said.

"We saw a number of providers make quite significant changes for their fees - they eliminated some fees and reduced others."

The FMA had been running a pilot project to test its value-for-money guidance with the results to be made public mid-year.

The Morningstar report was useful in setting a benchmark for the industry, Gregory said.

"The next time around for the Morningstar survey, we would expect to see some improvement."

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