Quote Originally Posted by stoploss View Post
This will show you over the last 5 years who has a good track record. Past performance is no guarantee of future performance. However the guys/girls in the top 3 on the active growth must be doing something right when you compare them to some of the lower performing funds ..... Don't get too caught up in the free fees .. I'd rather be making 14 % PA and paying a reasonable fee, than paying nothing and only getting 6 % .
Think of your fund manager as a sports team ...who would you back to win the World Cup , NZ or Tonga .
I won't pretend to have done a full literature search, but everything I've read on the subject agrees that past performance really is no guarantee of future performance (example http://papers.ssrn.com/sol3/papers.c...act_id=1578808) and that on average actively managed funds perform worse than index investing (due essentially to increased costs, UK centred example https://www.institutional.vanguard.c...vesting-uk.pdf). So the average active fund does badly, and you can't tell which the above average funds will be.

I don't have a kiwisaver just yet (not a full resident yet), but when I do I'm planning to build a Superlife index portfolio, mostly of overseas shares, as they're cheapest. Higher fees are the only thing I can be absolutely sure about that will impact on my returns. 1% versus 0.5% doesn't sound like a lot, but if you made 5% returns one year, the difference is 10% of your profit, which winds up being a huge amount of money over time. It's also worth pointing out I'm a huge hypocrite as I actively manage my own portfolio outside of kiwisaver but I only have myself to blame for what happens there, and although trading costs are significant I don't have to pay a %age just to hold what I already own.

The Mercer example looks like it's a gremlin in the sorted system, they definitely quote fees on their website https://secure.superfacts.com/web/IW...tionsFlyer.pdf