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'Show me the incentive, I'll tell you the outcome' - Andy Mahony runs an expert analysis of Default KiwiSaver funds to see if low fees result in better ...

Slightly off topic example, but investors in Theranos could attest to this with the Board consisting of several notable figures from the worlds of government and business e.g. George Schultz, Henry Kissinger... Ultimately, an investor needs to be aware of what they are investing in, caveat emptor – ‘let the buyer beware’. Like any consumer product, the consumer should undertake the appropriate due diligence to decide which KiwiSaver fund is most suitable for them. 6. Investment Fees – these are assessed on a relative basis in line with the relevant peer group of the fund. The Research IP rating is a forward-looking tool that shows the degree of confidence Research IP has that a manager can achieve the fund’s stated objective. What other criteria can you use to make an assessment of the funds? There are a number of notable omissions in the new list of Default providers. Make sure any alternatives in the fund are more lowly correlated to the rest of the portfolio, ideally in times of extreme stress. The management of growth assets can be more time intensive and harder to access, so this could be another reason why the fees for Default funds are comparatively lower than the non-default funds. The difference in fund charges range from 0% to 0.87% per annum, where the Default fund is the same or less than the equivalent non-default balanced fund. A key observation is that the Default funds have the same or less growth assets than the non-default balanced funds. Are the Default funds loss leaders for the providers, hoping to pick up more members? What do the new Default funds look like and how do they compare to the fund managers’ equivalent non-default balanced fund?