Index fund vs active fund
An index fund mechanically tracks a published market index. An active fund's manager makes discretionary buy/sell decisions trying to beat or differ from a benchmark.
An index fund (also called a passive fund) mechanically tracks a published market index — for example, the S&P/NZX 50 or the MSCI World. The manager does not pick stocks; they replicate the index, with periodic rebalancing as the index changes. Index-fund fees are typically 0.10–0.50% p.a.
An active fund's manager makes discretionary buy/sell decisions, aiming to either outperform a benchmark on returns, deliver lower volatility, or invest in a way the benchmark does not (e.g. responsible-investment screens, concentrated NZ-equity portfolios). Active-fund fees are typically 0.50–1.50% p.a., reflecting the analyst and manager cost.
Funds in this comparison span the full active/index spectrum. ManagedFundsNZ's screener filters by both — see the responsible-investment and ETF flags, which together approximate the active/index axis for most funds.
Related terms
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etf-vs-managed-fund
ETF vs managed fund
An exchange-traded fund (ETF) is a managed fund whose units trade on a stock exchange like a share. A traditional unit-priced managed fund is bought and sold directly with the manager or platform at the fund's daily NAV.
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AFC · Total fund charge · MER
Annual fund charge
The total ongoing percentage charge paid out of a NZ managed fund each year — covering management fees, supervisor/custodian fees, audit, and other operating costs.
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FMA risk indicator
Risk indicator (1–7 scale)
A standardised 1–7 risk score every NZ retail managed fund must publish, calculated from the fund's price volatility (standard deviation of weekly returns) over the past five years.