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Low-Fee NZ Index Funds

We explain everything you need to know about index funds, including what to look for, how to choose one and where to buy them
Updated 30 September 2025
Summary: ​Index funds are becoming a popular investment choice for many New Zealanders. Championed by leading KiwiSaver schemes Simplicity and SuperLife, as well as the fast-growing Kernel Wealth, index funds are widely available to everyday investors. Offering a low-fee, no-hassle way to invest money, index funds are arguably one of the easiest and wisest long-term investments.

Index funds are easy to buy. In this guide, we explain how to buy index funds and highlight must-know tips for investing. We cover:

Know this first: Index funds explained

  1. An index fund follows an index (i.e. the NZX50 Index or S&P500) and aims to replicate the performance of the set index.
  2. When investors buy an index fund, they get a diverse selection of many shares in one bundle. This avoids the need to purchase the shares individually. The index fund directly invests into companies that fall within its investment criteria.
  3. Investments are ‘passive’. This means there isn’t a fund manager actively buying and selling shares trying to pick winners, so the costs are much lower.
  4. You can invest in almost anything with index funds. Want to invest in the Australian share market, top 500 America companies, or New Zealand's top 20 companies? There are funds for all of that, and a lot more.
  5. It is also a widely accepted fact that, in the long-term, no individual fund can outperform an index fund.
  6. If you’re a long-term investor, i.e. looking to build up savings over five, ten or even twenty years, index funds can deliver strong returns.
Disclaimer: Our top index fund list, published below, is journalistic in nature and only highlights low-fee options. It does not endorse the providers, nor does it constitute financial advice. The funds below are largely growth-focused investing in New Zealand and/or overseas and are seen as long-term investments that carry a varying degree of risk.

​Looking for other ways to invest? Check out our guide to investing in shares.
Your investor guide to Index Funds is sponsored by our friends at Kernel, a leading New Zealand-based index fund manager.
  • If you're looking to invest in index funds, this guide helpfully explains what they are, the pros and cons and the many options available.
  • Kernel is a strong-performing index fund specialist - our review explains more.
  • 100% NZ owned, Kernel is trusted by 20,000 Kiwis, and has over $1b in assets under management. 
  • Kernel offers expertly crafted equity and fixed income funds at a competitively low price. No transaction fees, minimums or hidden costs. 
  • Kernel is suitable for investors with a short, medium or long-term investment timeframe.

Pros and Cons of Index Funds

Advantages of investing in index funds:
  1. Index funds make investing easy and remove the need to research individual companies: The index fund manager buys and sells the companies within the index fund that replicates the index.
  2. Research backs up the investment: It's well-accepted that investors are, in most instances, better off buying into an index than individual shares, given that markets out-perform the vast majority of individual shares in the long run. Research backs up the investment in index funds.
  3. The fees are low: Index funds charge as little as 0.03% p.a. in management fees, whereas some actively managed funds charge as much as 2% p.a. That's 66 times higher.
  4. Index funds offer diversity: There are hundreds of investment options available from New Zealand platforms and fund managers.

Downsides of investing in index funds:
  1. No downside protection: Unlike an actively managed fund, index funds don't have the ability to buy/sell when markets are at a low point.
  2. Limited exposure to different investing strategies: Index funds simply follow an index, so if a new company lists on the sharemarket, it's unlikely any index fund will include it until it falls within the investment strategy. Also, if a company is performing poorly, the index fund will continue to hold it until it no longer meets the requirements of the fund - for example, the market capitalisation becomes too small. This means losses can be incurred while other investors sell off their poor-performing investments.

Want to compare the pros and cons of index funds (passive) with actively managed funds? Our Passive Investing vs Active Investing guide has you covered.

Getting Started and Investing in Index Funds

Buying into an index fund is usually a lot easier than picking individual shares. Yet it can be hard to know where to start. We believe it's a three-step process, which we outline in detail:
  1. Decide where to buy. In New Zealand, there are a number of platforms and specialist index fund investment companies. To find the right one for you, you’ll need to look at the fund selection and fees.
  2. Pick an index fund that you want to invest in. Funds available track well-known indexes like the NZX 50, ASX 200, S&P 500 or specific industries (with property being a popular example).
  3. Check the investment minimum and ongoing other costs. Find the right fund for your budget.

​Step 1. Decide where to buy

When you’re choosing where to buy an index fund, consider, there are a few things to consider:
  1. Fund selection: Do you plan to invest in one fund, or many? Platforms like InvestNow have a range of local New Zealand and overseas-focused funds, whereas Kernel Wealth has many that focus on New Zealand, as well as global indexes. Hatch Invest offers American exchange-traded index funds, as does Tiger Brokers (NZ), Stake and Sharesies.
  2. Access and management: Do you want to have access to research information to help you decide on funds? InvestNow, for example, has access to Morningstar’s database of investments which lets you examine and compare different aspects of their funds both in real terms, and relative to category peers. Other platforms may just list their funds and not offer comparisons. What platform you select depends on how involved you want to be as an investor, and how much research you want to do.
  3. Fees: We discuss management and membership fees below in step 3. Management fees are always a percentage of your fund, e.g. 0.30%. Membership fees are also charged by some platforms. Generally, the more you invest, the less the membership fees affect your net results. For example, if you’re investing $1,000, $30+ year in membership fees equate to a 3% cost. If you invest $10,000, that drops to 0.30%. 

​Step 2. Pick an index to invest in

MoneyHub does not offer or publish financial advice, so the best approach is to do your own research as to what fund is most appropriate for your needs. Things to consider include:
  1. Location: Do you have a preference for what country you invest in? There are plenty of New Zealand index funds that follow the top 10, 20, 50 or more companies. If you want to invest in the USA, there are hundreds of funds on platforms like Hatch Invest, Tiger Brokers (NZ), Stake and Sharesies.
  2. Company size: The market capitalisation of a company determines if it is included in an index or not. Market capitalisation is simply the number of shares issued multiplied by the share price. As the share price rises, the market capitalisation increases (and vice versa). Do you have a preference for small companies, mid-sized or big ones? Many funds track the biggest 50 or 200, but other funds invest in smaller growth companies.
  3. Business sector or industry: The choice is endless, with funds that invest in technology, bonds, cash, emerging markets, property and many more. 

Step 3: Check the investment minimum and ongoing other costs

Low fees and index funds go hand-in-hand and are one of the reasons so many people invest in them. However, not all index funds are ‘cheap’. Two funds that have the same investment profile, like following the NZX 50, may have different management fees:
  • One example is the Kernel NZX20 Fund, which tracks the NZX 20 and charges 0.25% p.a.
  • Other NZX 50-tracking funds charge 0.35% p.a. or even more. While the difference seems small, over time it adds up when considering the compounding effect of money.
 
Before you invest, check the following:
  1. The investment minimum: Some funds let you buy in with as little as $1, while others require $5,000 (or more). Funds that require more to invest are not necessarily ‘better’, and the minimum is often set to minimise administration costs. If you are starting out and don’t have thousands to invest, look for a fund that has a low minimum investment.
  2. Management fee: This is the major cost that is deducted from each fund by investment managers. It’s almost always a percentage of your investment. For example, 0.50% or 0.30%. For context, most index funds charge between 0.10% and 0.60%, with the average being around 0.30% to 0.40%. Bond and cash index funds usually, but not always, charge less than index funds that invest in shares.
  3. Membership fee: Some platforms, such as Kernel Wealth all charge monthly membership fees. Others, such as Hatch Invest, Sharesies and InvestNow, do not. These ongoing fees can add up, especially if your index fund is small, so should be considered before picking a platform or provider.
  4. Tax benefits: Check the index fund is a PIE. If it is, there are tax incentives to be had; you could reduce your top rate of tax significantly depending on your top tax bracket e.g. 33% to 28%, 30% to 17.5%. See our table below.

Looking for other ways to invest? Check out our guide to investing in shares.
PIE Tax Benefits Explained
PIE rates saves you money, even if you are not on the top tax rate. PIR rates are as follows:
  • total income including PIE is < $53,500 - PIR is 10.5%
  • total income including PIE is < $78,100 PIR is 17.5%
  • total income including PIE is > $78,100 PIR is 28%
 
Our PIR rates guide has more details

These PIE rates compare to standard PAYE tax rates as follows:
  • For every dollar of income up to $15,600 apply tax rate 10.5%
  • Between $15,601 and $53,500 apply tax rate 17.5%
  • Between​ $53,501 and $78,100 apply tax rate of 30%
  • Above $78,101 and below $180,000 apply tax rate of 33%
  • Above $180,000 apply tax rate of 39%
 
Therefore it is not only the top tax rate people who benefit. PIE tax advantages offer something for anyone earning over $15,600 

Want to compare the pros and cons of index funds (passive) with actively managed funds? Our Passive Investing vs Active Investing guide has you covered.
Your investor guide to Index Funds is sponsored by our friends at Kernel, a leading New Zealand-based index fund manager.
  • If you're looking to invest in index funds, this guide helpfully explains what they are, the pros and cons and the many options available.
  • Kernel is a strong-performing index fund specialist - our review explains more.
  • 100% NZ owned, Kernel is trusted by 20,000 Kiwis, and has over $1b in assets under management. 
  • Kernel offers expertly crafted equity and fixed income funds at a competitively low price. No transaction fees, minimums or hidden costs. 
  • Kernel is suitable for investors with a short, medium or long-term investment timeframe.

Popular Index Funds with Low Fees

We have listed index fund providers that have some of the lowest fees. Back in 2022, nearly 30% of any money invested in the USA tracked indexes, and we believe New Zealand is moving (slowly) in that direction.

Our top index fund list offers diversity and low fees, and include both local and overseas opportunities. Please note, this list is journalistic in nature and only highlights low-fee options and does not endorse the providers, nor does it constitute financial advice. The funds below are largely growth-focused investing in New Zealand and/or overseas and are seen as long-term investments that carry a varying degree of risk. These are examples of PIE funds, not recommendations, with no guarantee of future results.

Popular low-fee options include:

1. New Zealand Equity Index Funds

  • ​Kernel NZ 20 Fund (0.25% p.a.) - This fund invests in New Zealand's 20 largest companies by market cap, offering concentrated exposure to blue-chip NZ stocks like Fisher & Paykel Healthcare, Auckland Airport, and Mainfreight. The smaller basket (20 vs 50 stocks) means each company has more impact on returns, potentially offering higher growth but with slightly more volatility. Read our Kernel Funds review for more information.
  • Simplicity NZ Share Fund (0.10% p.a.) - The lowest-cost NZ equity fund available, tracking the NZX 50. At just 0.10% annually, this fund invests in the 50 largest NZ companies, providing broader diversification than the NZ 20. Simplicity's non-profit model means fee savings go directly to investors. Ideal for core NZ equity exposure. Read our Simplicity Investment Funds review for more information.
  • Smart NZ Top 50 ETF (0.50% p.a.) - Exchange-traded fund tracking the NZX 50 index, bought and sold like a share on the NZX. Offers real-time pricing and the flexibility to trade during market hours. The 50-stock portfolio provides solid diversification across NZ's largest companies including Spark, Contact Energy, and Meridian. Read our Smart review for more information.
  • Smart NZ Top 10 ETF (0.60% p.a.) - Ultra-concentrated exposure to just New Zealand's 10 largest companies, representing about 60% of the total NZX market cap. Higher concentration means more volatility but potentially stronger returns if these mega-caps outperform. Best suited for investors with strong conviction in NZ's biggest businesses. Read our Smart review for more information.​

2. Global Equity Index Funds

  • Kernel Global 100 Fund (0.25% p.a.) - Provides exposure to the world's 100 largest companies across all markets, including Apple, Microsoft, and Nestlé. Currency-hedged to NZD, reducing exchange rate volatility. Simple way to own the global giants without picking individual stocks or worrying about currency movements. Read our Kernel Funds review for more information.
  • Simplicity Global Share Fund (0.15% p.a.) - Exceptionally low-cost access to approximately 1,500 companies across developed markets worldwide. Unhedged exposure means you benefit from NZD weakness but face currency risk. The broad diversification and minimal fees make this an excellent core international holding. Read our Simplicity Investment Funds review for more information.
  • Kernel Global Infrastructure Fund (0.25% p.a.) - Invests in essential service providers like toll roads, airports, utilities, and communication towers globally. Infrastructure assets typically offer inflation protection and steady income streams. Higher fees reflect the specialised nature, but provides exposure to assets difficult to access directly. Read our Kernel Funds review for more information.
  • Vanguard Total World Stock ETF via Tiger Brokers (0.07% p.a.) - One of the world's most comprehensive funds, holding over 9,000 stocks across developed and emerging markets. Ultra-low fees from Vanguard's scale. Requires a Tiger Brokers account and dealing with FIF tax if holdings exceed NZ$50,000, but the rock-bottom fees may justify the extra admin.
  • iShares Core MSCI Total International Stock ETF via Tiger Brokers (0.09% p.a.) - Covers all developed and emerging markets outside the US, holding about 4,000 international stocks. Complements US-focused investments perfectly. Like Vanguard, requires international broker account and FIF tax considerations, but offers institutional-grade diversification at minimal cost.

3. Diversified Growth-Focused Index Funds

  • Kernel High Growth Fund (0.25% p.a.) - Typically 90-100% in growth assets with minimal defensive allocation. Designed for long-term investors (10+ years) who can weather short-term volatility for potentially higher returns. Despite the name, still provides instant diversification across hundreds of underlying investments globally. Read our Kernel Funds review for more information.
  • ​Simplicity Growth Fund (0.24% p.a.) - Approximately 80% growth assets (shares) and 20% defensive assets (bonds/cash), automatically rebalanced. All-in-one solution removing the need to manage multiple funds. The mix targets long-term growth while smoothing volatility. Perfect for set-and-forget investors wanting professional asset allocation. Read our Simplicity Investment Funds review for more information.
Important: General Disclaimer
  • MoneyHub provides this guide for informational and journalistic purposes only and does not constitute personal financial advice, investment advice, or a recommendation to buy, sell, or hold any financial product, including KiwiSaver funds, investment funds or other investment options.
  • The funds or schemes highlighted on MoneyHub are selected based on historical performance data (e.g., from Morningstar or similar sources), fees, structure, and general market observations. Past performance is not a guarantee of future results.
  • Any opinions, preferences, or "favourite" designations reflect the editorial views of MoneyHub and are not guarantees of future performance. Past results are not indicative of future returns, and all investments carry inherent risks, including the potential for capital loss.
  • MoneyHub is not a financial adviser under the Financial Markets Conduct Act 2013, and we are not regulated by the Financial Markets Authority (FMA) to provide personalised financial advice. Readers should seek independent advice from a qualified, licensed financial adviser or use official tools before making any investment decisions. We strongly recommend considering your personal circumstances, risk tolerance, and financial goals, and consulting a professional to assess suitability.
  • The information in this guide is based on historical data and may become outdated as a result. We do not accept liability for any loss or damage (including consequential loss) arising from reliance on this content, errors, omissions, or changes in market conditions. While we strive for accuracy, market data and fund performance can fluctuate. We encourage regular review of official fund reports or consultation with providers to ensure accurate information. 
  • MoneyHub may have commercial arrangements with certain schemes or providers for general promotional purposes. However, fund selections are based on merit and editorial judgment, not payment. For the latest details, contact the relevant fund provider directly.

Other Important Facts to be Aware Of

Index funds have become one of the most popular ways for New Zealanders to use due to their low-cost, diversity and returns that typically beat active funds. To make sure you invest in an appropriate fund, we suggest making a few additional considerations:
  1. Is the index fund performing? New Zealand law requires the index fund to show it’s performance beside its benchmark. The returns won’t be identical (due to fees) but should be similar. For example, if you were in an NZX50 tracking fund and the index went up 10%, your fund’s performance should be similar. If the fund performance drags behind the index it tracks by more than the fees percentage, something probably isn’t right.  
  2. Are you new to investing? If so, don't rush. This guide explains the basics to let you navigate to reach your financial goals.
  3. Financial Advisers don’t often recommend index funds, although there are exceptions. Read more about Financial Advisers here.
  4. How much will you need to retire? Use our retirement calculator to track your progress.

Frequently Asked Questions

What's the difference between an index fund and an ETF?

Both track indexes, but ETFs trade on the stock exchange like individual shares (you buy/sell during market hours), while index funds are bought/sold directly from the fund company at end-of-day prices.

How much should I invest in index funds?

Start with what you can afford to invest for at least 5 years. Many funds accept as little as $1 to $250. A common approach is investing 10-20% of income after building an emergency fund.

Should I invest in New Zealand or international index funds?

Most experts recommend diversification - perhaps 20-40% in NZ funds and 60-80% in global funds. NZ represents less than 0.2% of world markets, so going global provides better diversification.

What are the tax implications of index funds?

If the fund is a PIE (most NZ funds are), you'll pay tax at your PIR rate (max 28%) instead of your income tax rate (up to 39%). For overseas shares over $50,000, FIF tax rules apply unless held through a NZ PIE fund.

Can I lose all my money in an index fund?

While index funds can decline in value during market downturns, losing everything would require all companies in the index to go bankrupt simultaneously, which is extremely unlikely for broad market indexes.
Your investor guide to Index Funds is sponsored by our friends at Kernel, a leading New Zealand-based index fund manager.
  • If you're looking to invest in index funds, this guide helpfully explains what they are, the pros and cons and the many options available.
  • Kernel is a strong-performing index fund specialist - our review explains more.
  • 100% NZ owned, Kernel is trusted by 20,000 Kiwis, and has over $1b in assets under management. 
  • Kernel offers expertly crafted equity and fixed income funds at a competitively low price. No transaction fees, minimums or hidden costs. 
  • Kernel is suitable for investors with a short, medium or long-term investment timeframe.

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