Switching fee
A fee charged when an investor moves money between funds within the same scheme. Most NZ retail PIE schemes do not charge switching fees but reserve the right under the PDS.
A switching fee is charged when an investor moves money from one fund to another inside the same managed-investment scheme — for example, switching from a manager's Balanced fund to its Growth fund. The fee is usually a flat dollar amount or a small percentage of the switched amount.
In current NZ retail PIE practice the majority of schemes disclose a switching-fee clause in the PDS but waive it in normal use, reserving the power for exceptional cases. Switching fees are more common in KiwiSaver schemes than in retail managed-fund schemes, and more common still on legacy life-company products.
Switching between two different schemes (e.g. between two managers) is a redemption and a new investment, not a switch — the buy/sell spreads of both schemes apply and tax is realised at the redemption point if outside a PIE.
Related terms
transaction spread
Buy/sell spread
A fixed percentage applied at the point of order to cover the transaction costs of investing inflows or liquidating to meet outflows. Charged once, not annually.
PDS
Product Disclosure Statement (PDS)
The headline legal document a NZ managed fund or KiwiSaver scheme provides to retail investors, summarising the fund, fees, risks, and how to invest.
OMI
Other Material Information (OMI)
A supplementary FMA-required disclosure document containing material information about a fund or scheme — typically conflicts of interest, related-party transactions, fee waivers, auditor/trustee/custodian identities — that is not included in the PDS.