KiwiSaver investors have been warned to keep a close eye on fees, after a survey found big gaps between what providers charge.
Research house Morningstar's quarterly KiwiSaver survey for June focused on fees, which have become much easier to compare thanks to a new reporting regime.
KiwiSaver providers are now required to report a total expense ratio (TER), which is separate to the dollar-based administration fees most schemes charge.
Morningstar found TERs varied considerably, even between funds in the same category.
Fees for conservative funds averaged 0.72 per cent per year but this ranged from 0.36 per cent charged by ASB to the 1.05 per cent charged by Aon Russell Lifepoints, the best-performing conservative fund over the past five years.
Moderate funds averaged 0.89 per cent, balanced funds averaged 0.97 per cent, growth funds averaged 1.12 per cent and aggressive funds averaged 1.3 per cent.
The most expensive fund in the survey was Staples Rodway Growth, with a TER of 1.99 per cent (on top of an administration fee of $40 per year).
"There is huge variance in what providers charge and it is not necessarily indicative of the returns they produce," Morningstar Australasia co-head of fund research Chris Douglas said. "Given the amount of information available to investors, it is in investors' best interests to investigate how much of their return is being taken by their providers.
"The breakdown of the TER also provides an insight into how the fee is being charged." While higher fees did not equate to better performance within fund classes, the survey shows investors in higher-growth funds have been getting better returns even after the higher fees.
The after-fee return for conservative funds over the past five years was 6.45 per cent, well below the 10.66 per cent achieved by aggressive funds as markets rebounded after the global financial crisis.
Moderate funds averaged 7.89 per cent, balanced funds averaged 9.21 per cent and growth funds averaged 10.30 per cent.
The survey found the aggressive category performed strongest in the June quarter, with an average return of 3.06 per cent, while conservative funds had the weakest return with 1.78 per cent.
Funds with high international exposure outperformed as New Zealand's sharemarket growth slowed.