What a fund update says about returns, and what it does not
Every managed fund lodges a standardised return figure. The standard is real, and the basis it is calculated on is not yours.
On this page
- Who sets the format
- Regulation, not the manager
- Periods published
- Past year, and five years once the fund is old enough
- A five-year figure
- Average annual compound return
- Tax basis
- The highest prescribed investor rate
- Second row
- The same return before tax
- Distributions
- Assumed reinvested
- What this site publishes
- Charges
The figure exists, and it is standardised
It would be easy to assume returns are missing from this site because nobody publishes them in a comparable form. That is not the position. Schedule 4 of the Financial Markets Conduct Regulations 2014 tells every manager what a fund update has to contain, and a return table is part of it: the fund's return for the past year, the fund's return over five years where the fund has existed that long, and the return on a market index over the same periods. The shape of the table is prescribed down to its rows.
The definition behind those numbers is prescribed too. A return is the percentage change in the value of an investment over the period, calculated as though a single investment was made at the start and every distribution was reinvested, and where the period runs longer than a year it is stated as an average annual compound return. Two managers reporting under that definition are reporting the same thing.
The tax in it is somebody's, and probably not yours
The headline row is the return after charges, trading expenses and tax. The tax deducted is not the reader's: for a portfolio investment entity, which covers the bulk of retail funds, the regulation requires the figure to be calculated at the highest prescribed investor rate that applied across the period. An investor on a lower rate paid less tax than the published figure assumes, and their own outcome was higher than the number printed in the update.
The regulation anticipates this, which is why the table carries a second row: the same return after charges but with a zero prescribed investor rate applied. Both rows are true. They are different numbers for the same fund over the same period, and which one belongs beside a reader depends on a rate the reader sets themselves.
The prescribed investor rate guide on this site covers who sets that rate and what the two directions of error cost.
Two windows can put the same funds in two orders
The update publishes a one-year figure and a five-year figure side by side, and they are answering different questions. One year holds whatever the last twelve months did to that fund's asset mix. Five years, expressed as an average annual compound return, smooths the same mix across a longer run and buries the year that caused it.
A table sorted on the first column and a table sorted on the second are two different tables. Nothing in the regulation picks between them, because picking is not the regulator's job here: the update's task is to publish both on a stated basis and leave the choice visible. A comparison table that sorts on one of them has made that choice on the reader's behalf, and the sort order is the part a reader remembers.
What a five-year column cannot tell you
Two things sit outside the figure no matter how carefully it is calculated. A fund that closed during the window is in nobody's table today, so any set of surviving funds reads better than the market it came from. And a fund that changed its mandate or its manager keeps its name and keeps its history, so part of the published run belongs to a product that is no longer on sale.
Neither is a flaw in the disclosure regime. Both are reasons a past figure describes something other than the thing being bought.
So this site compares the other number
The same fund update carries the actual total fund charges for the fund, as a percentage of average net asset value for the most recent scheme year, broken into management and administration charges, the manager's basic fee, the balance, and performance-based fees. That figure is a cost the fund levied, on a basis the regulation fixes, and it does not depend on the reader's tax rate or on a window somebody chose.
That is why the comparison section here publishes charges. The KiwiSaver fund fee table is live, and the compare hub states the same position in one line: fees are comparable, returns are not. A fund's own update remains the place to read its return, published by the manager, dated, with its basis printed above it.