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
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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.
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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.
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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.