Chasing KiwiSaver Returns NZ (2026): Why Last Year's Top Fund Is a Bad Reason to Switch

Last year's top KiwiSaver fund is a weak reason to switch. Why winners rarely repeat, how league tables mislead, and what to judge a fund on instead.

TL;DR: Last year's top KiwiSaver fund is a weak reason to switch, because the leader changes from year to year and a single strong year is mostly noise. League tables rank funds over 3-month, 1, 3, 5 and 10-year windows, and the top names shuffle. Judge a fund on its risk level, its longer-run net-of-fees record, and its fees, not last year's ranking. Past performance is not a reliable indicator of future returns. ¹⁶

Every year a new "top KiwiSaver fund" makes the headlines, usually off the back of one strong twelve months. It is a natural pull: if a fund just returned more than everyone else's, surely that is where the money should be. The problem is that the thing tempting you, last year's number, is the one piece of information that tells you least about next year.

This article explains why top funds rarely stay on top, how the annual league tables mislead, and what is worth weighing instead. It is general information, not a recommendation to switch into or out of any fund.

Why does last year's top KiwiSaver fund tempt everyone?

The appeal is simple and human. A ranked list with a clear winner feels like an answer, and a big return feels like proof the manager is doing something right. When KiwiSaver assets sit close to NZD $145 billion across the market, the funds at the top of the table look like the obvious place to be. ⁵ Switching is also free and takes a few clicks, so the friction that might make you pause before a larger decision is not there. The headline does the rest: "top fund" reads like "best fund".

There is nothing irrational about wanting your KiwiSaver to do well. The issue is that a one-year ranking is a poor signal of which fund will serve you over the decades most people hold KiwiSaver, and the Financial Markets Authority's standing warning on every investment communication says exactly why: past performance is not a reliable indicator of future returns. ¹

Why don't top funds stay on top year after year?

Because a single year's return is driven mostly by which assets happened to run hardest in those twelve months, and that leadership rotates. A fund that tops the table is often the one most exposed to the asset class having its moment, not the one with the steadiest long-run discipline. When the cycle turns, the same exposure that put it on top can pull it down. The chart below illustrates the pattern: the fund holding the top spot tends to change from one year to the next, and rarely repeats two years running.

!Does last year's top KiwiSaver fund stay on top? A ranking-shuffle chart showing the top-ranked growth funds by year, where the leader changes and rarely repeats across consecutive years.

Does last year's top KiwiSaver fund stay on top? Top-ranked growth funds by year, showing how the leader changes and rarely repeats across consecutive years. Source: Smiths Financial, based on published KiwiSaver survey data. ⁶

There is also a timing trap built into chasing the leader. By the time a fund tops the one-year table, the gains that put it there are already in its unit price, so you do not capture them by joining late, you simply buy in after the run. If that run then reverts, as strong single years often do, you have sold a perfectly good fund to buy high in another. Our guide on how to read KiwiSaver returns works through this in more detail.

What is the difference between a fund being good and a fund being lucky?

This is the distinction that matters, and a one-year number cannot tell them apart. A genuinely good fund delivers a sensible return for its risk level, consistently, after fees and tax. A lucky fund posts one eye-catching year because its bets paid off in that window, with no guarantee the same approach repeats. A few ways to tell them apart:

• Look at the length of the record. One year is mostly noise. A fund that has kept pace with, or beaten, its category over five and ten years, through at least one downturn, has shown something a single year cannot.
• Check the risk level. A fund that "won" by taking more risk than its peers has not proven skill, it has proven it was positioned aggressively when aggression paid. That works both ways.
• Read returns net of fees and tax. The figure that matters is what lands in your account after costs, not a gross headline. Sorted's Smart Investor reports KiwiSaver returns this way.
• Compare like with like. A growth fund's year against a balanced fund's year tells you nothing except that one took more risk.

None of this means active managers add no value, or that a strong year is meaningless. It means one year, on its own, cannot distinguish skill from luck, and a switch deserves better evidence than that.

How do the annual KiwiSaver league tables mislead you?

The tables themselves are not wrong. The widely cited Morningstar KiwiSaver Survey is a careful, independent source that ranks funds over 3-month, 1, 3, 5 and 10-year periods and groups them by category. The misleading part is how the numbers get read once a headline gets hold of them.

Three traps recur. First, the eye goes to the shortest, most volatile window, the 3-month or 1-year column, even though it is the least informative. Second, an aggressive fund topping the list is compared, implicitly, against funds taking far less risk, so the "winner" is really the fund that took the most risk in a year that rewarded risk. Third, the same survey shows rankings shuffling year to year as managers move relative to their peers, which is itself the clearest evidence that last year's order is a weak guide to next year's. ⁶

What actually drives long-term KiwiSaver returns?

Over the timeframes most people hold KiwiSaver, a handful of things matter far more than which fund led the table last year.

On that last point, the everyday levers are worth getting right first. The minimum employee and employer contribution rate is 3% each on this date, rising to 3.5% each from 1 April 2026 and 4% each from 1 April 2028. ² And contributing at least $1,042.86 across the KiwiSaver year (1 July to 30 June) secures the full government contribution of $260.72, paid at 25 cents per $1 of your contributions since 1 July 2025, provided your taxable income does not exceed $180,000. ³ No fund ranking can match the certainty of those.

Fees deserve the same attention. Because they are charged whether a fund wins or loses, the difference between a low-fee and a high-fee fund of the same type compounds quietly across a working life. Sorted's KiwiSaver Fund Finder lets you compare funds on fees and services rather than last year's position; our guides on active versus passive funds and fees versus performance set out how to weigh them. ⁴

When is switching for performance reasons justified?

Rarely on the strength of one good year for another fund, but there are situations where a change is reasonable. The honest version of this question is less "which fund won" and more "is my current fund still the right fit". A switch may be worth considering when:

• Your fund is consistently behind its category over five and ten years, after fees and tax, not just last year. Persistent underperformance against genuine peers is a real signal in a way a single year is not.
• Your risk level no longer matches your timeframe. If you are nearing a first-home withdrawal or retirement, moving to a lower-risk fund can make sense, and that is a risk decision, not a performance one.
• You are paying clearly more in fees than comparable funds of the same type without a clear reason.
• Your fund's strategy or mandate has materially changed in a way that no longer suits you.

Equally, there are weak reasons: a single strong year for a different fund, a headline crowning a new "top fund", or a short-term dip in your own balance during a market fall. Switching also carries costs that are easy to overlook, including selling low after a downturn and buying into a fund that has already had its run. Our guide on when to switch KiwiSaver funds goes through the trade-offs.

How should you judge a fund instead of by last year's ranking?

A more reliable way to look at a fund puts last year's number near the bottom of the list, not the top, roughly the order an independent review tends to follow.

1. Risk level first. Confirm the fund type, conservative, balanced, growth or aggressive, actually matches how long until you need the money. This decision swamps most others.

2. Longer-run, net-of-fees record. Look at five and ten-year returns after fees and tax, compared against the same category, rather than a single year.

3. Fees. Check the total annual fund charge against comparable funds of the same type. Lower, certain costs beat uncertain outperformance over time. ⁴

4. Consistency through a downturn. A fund that held up reasonably in a falling market has shown something a fund measured only in a rising one has not.

5. The free wins. Make sure you are on the correct PIR and contributing enough for the full government contribution before fine-tuning fund choice. ³

6. Last year's ranking, last. Useful context, never the deciding factor.

If you want this mapped to your own balance, timeframe and PIR, an independent review can line it all up without a product to sell at the end.

Frequently asked questions

Should I switch to last year's top-performing KiwiSaver fund? Almost never on the strength of one year alone. The fund leading the table is often the one that took the most risk in the asset class that ran hardest, and leadership rotates year to year. By the time a fund tops the one-year table, the gains that put it there are already in its unit price. Compare funds of the same type over five and ten years, after fees and tax, before changing anything. Past performance is not a reliable indicator of future returns. ¹⁶

Why do KiwiSaver league tables change so much each year? Because a single year's return is driven mostly by which assets happened to perform well in those twelve months, and that leadership rotates. The surveys rank funds over 3-month, 1, 3, 5 and 10-year windows, and the rankings shuffle as different active and passive managers move relative to their peers. That shuffle is itself the reason one year is a weak guide to the next. ⁶

Does that mean returns do not matter at all? No. Returns matter a great deal, read the right way: after fees and tax, like for like, over long periods rather than a single year. A fund that keeps pace with or beats its category over a decade, through a downturn, is showing something a one-year winner is not. Last year's ranking is simply a poor substitute for that longer record. ⁶

What should I look at instead of last year's ranking? Risk level first, because matching the fund type to your timeframe matters more than picking the "best" fund within a type. Then the longer-run, net-of-fees record against the same category, then fees, then how the fund behaved in a downturn. And make sure you are on the correct PIR and claiming the full government contribution before fine-tuning fund choice. ³⁴

How much do fees matter compared with chasing returns? Fees are charged every year, in good years and bad, and compound against you for decades, which makes them a more reliable predictor of net long-term outcomes than a recent ranking. Sorted's KiwiSaver Fund Finder lets you compare funds on fees and services rather than last year's position. Outperformance is a hope; a fee is a certainty. ⁴

Is it ever right to switch funds for performance reasons? Yes, but the signal is persistent underperformance against genuine peers over five and ten years, not a single weak year, alongside reasons such as your risk level no longer matching your timeframe or clearly higher fees without a clear benefit. A single strong year for another fund is not a sound basis on its own.

General information, not personalised financial advice. Seek advice tailored to your situation before acting. Returns are not guaranteed. The value of investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future performance. KiwiSaver is a long-term savings scheme; government contributions, contribution rates, withdrawal rules and tax (PIR) settings are set by the Government and can change. Figures are correct as at 22 March 2026 — check current rules at ird.govt.nz, kiwisaver.govt.nz and sorted.org.nz, and the relevant scheme's Product Disclosure Statement. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 22 March 2026.