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What is Performance Fee?

A performance fee is an additional fee some KiwiSaver funds charge when returns exceed a benchmark.

Detailed Explanation

Some actively managed funds charge a performance fee on top of the base management fee. This is typically 10-20% of returns above a specified benchmark. Not all funds charge performance fees.

Example

If a fund has a 15% performance fee and beats its benchmark by 10%, you pay an extra 1.5% (15% of 10%) on top of the base fee.

Frequently Asked Questions

Are performance fees worth it?

Research shows funds with performance fees do not consistently outperform cheaper alternatives after fees.

Do all funds charge performance fees?

No, most index funds and many active funds do not charge performance fees.

Related Terms

Management FeeBuy/Sell Spread
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