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What is Index Fund (Passive Fund)?

An index fund tracks a published market index — like the S&P/NZX 50 or MSCI World — rather than picking stocks individually.

Detailed Explanation

Index funds aim to match the index return at low cost. Annual fees inside KiwiSaver are typically 0.25%–0.50%, materially lower than actively managed funds (often 0.80%–1.50%+). Multi-decade FMA data shows few active funds beat their benchmark net of fees.

Example

A passive global growth fund tracking MSCI World might charge 0.30% annually and deliver returns within a fraction of a percent of the index.

Frequently Asked Questions

Do all KiwiSaver providers offer index funds?

No — but several specialise in passive products. Compare on FMA Disclose or via FundCompare.

Related Terms

Passive ManagementActive ManagementBenchmark
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