S&P500 vs Investment funds? (e.g. kiwisaver)

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Forums › Finance and wealth management › S&P500 vs Investment funds? (e.g. kiwisaver)

TechnoGuy001

853 posts

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#293945 23-Feb-2022 16:21

I've been looking around different managed funds from different companies, and seems most, even there "growth" funds are falling behind S&P500 ETFs (e.g. VOO).

Was just wanting to get some thoughts on why people opt to invest $$ into actively managed funds when the returns are lower than sticking them in an S&P500 ETF via say Hatch (though some do offer S&P500 matched funds).

Are funds deemed a safer investment? Or is it just that it's historically been tricky to invest in stocks or ETFs directly, so people stick with what they know.

Or am I missing something, are there TAX implications with Hatch S&P500 investment (as far as I know both investment funds and hatch ETFs have the same TAX costs).

Maybe it's the USD/NZD exchange that worries people, since S&P500 is USD.

IDK, just trying to understand why there can be so many investment companies around (offering kiwisaver and managed funds), all doing similar things.

mattwnz

20163 posts

Uber Geek

#2873369 23-Feb-2022 16:43

I am not a financial adviser. Now is a really volatile time with rising interest rates, covid unknowns and potential war, and many tech stocks have plunged in value. So comparing them at the moment is not the best snapshot to be using IMO.

TechnoGuy001

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#2873387 23-Feb-2022 17:05

mattwnz:

I am not a financial adviser. Now is a really volatile time with rising interest rates, covid unknowns and potential war, and many tech stocks have plunged in value. So comparing them at the moment is not the best snapshot to be using IMO.

Hmm, that's a good point. I'll keep monitoring them and see how things look when things are more "normal"/

Handle9

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#2873390 23-Feb-2022 17:17

The significant majority of actively managed funds are generally poor net performers compared to passive funds but produce good fees for the managers. There are a lot of incentives for the market to keep selling active funds.

I don't invest in actively managed funds, only ETFs, loosely following a boglehead philosophy. I also invest a significant percentage in bonds, which provides some diversification and counter cyclical impact.