Simplicity and Milford represent the two dominant philosophies in New Zealand KiwiSaver: passive index investing at minimal cost, versus active management by a team of professional portfolio managers. This is one of the most common comparisons NZ members make when choosing or switching providers.
The answer is less obvious than fee advocates claim — and more nuanced than Milford’s performance record alone suggests.
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Quick Comparison: Simplicity vs Milford
| Feature | Simplicity | Milford |
|---|---|---|
| Investment approach | Passive index (tracks market) | Active management (stock picking) |
| Structure | Not-for-profit | Commercial fund manager |
| Growth fund fee | 0.31% | ~0.85%–1.05% |
| Growth fund 5-yr return (indicative) | ~8.2%–8.8% p.a. | ~9.5%–10.2% p.a. |
| Default provider (2021) | Yes | Yes |
| Ethical screening | No | No (some ESG in decision-making) |
| Funds under management | Significant (growing rapidly) | One of NZ’s largest |
| Admin fee | No | No |
| Member portal | Clean online dashboard | Full member portal |
The Fee Gap
Simplicity’s growth fund fee is 0.31% — the lowest in the NZ market. Milford’s active growth fund runs at approximately 0.85%–1.05%, depending on the specific fund and year.
On a $100,000 balance, the annual fee difference is approximately:
| Balance | Simplicity fee (0.31%) | Milford fee (0.95%) | Annual difference |
|---|---|---|---|
| $50,000 | $155 | $475 | $320 |
| $100,000 | $310 | $950 | $640 |
| $200,000 | $620 | $1,900 | $1,280 |
| $500,000 | $1,550 | $4,750 | $3,200 |
Simplicity can charge less because it runs passive index funds (no research team, no active trading costs) and operates as a not-for-profit — surplus goes back to members and charitable causes.
The Performance Gap
Here’s where Simplicity’s low-cost case runs into a real complication: Milford’s growth fund has outperformed Simplicity’s after fees over 5 years.
5-year after-fee returns (growth funds, indicative to December 2025):
- Milford Active Growth: ~9.5%–10.2% p.a.
- Simplicity Growth: ~8.2%–8.8% p.a.
The difference is approximately 1.0–1.4 percentage points per year after fees in Milford’s favour.
On $100,000 over 10 years:
- Simplicity at 8.5% p.a.: ~$226,000
- Milford at 9.8% p.a.: ~$255,000
- Difference: ~$29,000
Over 20 years, the compounding widens substantially. This is not a trivial gap.
Why Milford Has Outperformed
Milford’s track record is not luck — it reflects a genuine investment edge in the NZ context:
- Active management with a small-fund advantage: Milford’s active growth fund was smaller for much of its history, allowing nimble positioning in smaller-cap opportunities
- Home bias: Milford has historically held a higher proportion of NZ and Australian equities than passive global index funds — and NZ/AU markets had strong periods that boosted returns
- Experienced team: Milford’s investment team has a credible long track record under consistent leadership
However, the key question is whether past outperformance predicts future outperformance — and this is genuinely uncertain.
The Active Management Risk
Passive investing (Simplicity’s approach) is built on a simple empirical observation: the majority of active fund managers underperform their benchmark index after fees over long time periods. The evidence globally is robust.
Milford is one of the exceptions — so far. But risks include:
- Key person risk: Milford’s performance has been driven by specific fund managers. Personnel changes could affect results.
- Size risk: As Milford’s FUM grows, it becomes harder to generate alpha from small-cap positions — the “too big to outperform” problem that has affected many active managers
- Reversion to mean: Academic research shows active managers tend to revert toward index returns over very long periods
- No guarantee: Five-year outperformance is not a contractual commitment
Simplicity’s returns, by contrast, will always approximate the underlying index minus 0.31% — predictable, if unremarkable.
Who Should Choose Simplicity?
- Long-term passive investors who trust the index and want minimal cost
- Members skeptical of active management based on global evidence
- Those approaching retirement where fee certainty matters more
- Those with large balances where the fee difference in dollar terms is significant
- Members who don’t want to monitor fund performance year to year
Who Should Choose Milford?
- Members comfortable paying for active management in exchange for potentially higher returns
- Younger members with a long investment horizon — sufficient time to benefit from compounding and to absorb potential underperformance years
- Those who have reviewed the 5-year track record and accept the risk that future results may differ
- Members who want a default provider with a proven long-term record
The Verdict
This is a genuinely close call — one of the tightest comparisons in NZ KiwiSaver.
Choose Simplicity if you prioritise fee certainty, trust passive indexing, and don’t want to rely on a specific active manager’s continued outperformance.
Choose Milford if you’re comfortable with active management fees and want to back a proven NZ manager with a 5-year track record of after-fee outperformance — while accepting the risk that this doesn’t continue.
Do not choose Milford purely on last year’s returns. Base the decision on 5-year data and the qualitative factors above.
Frequently Asked Questions
Has Simplicity ever outperformed Milford? In specific short time periods, yes — particularly in years when Milford’s NZ-heavy positioning lagged global markets. Over 5-year periods, Milford has held a consistent lead. Over very long time horizons (20+ years), the outcome is genuinely uncertain.
Can I switch between Simplicity and Milford easily? Yes. Switching is free and typically takes 10 working days. See our switching KiwiSaver providers guide.
Does Simplicity’s not-for-profit status affect the fund’s stability? No. Simplicity is a registered KiwiSaver scheme supervised by the FMA. Its not-for-profit status affects how profits are distributed (back to members and charity), not the security of your investment.
Is there an ethical option at either provider? Neither Simplicity nor Milford offers a dedicated ethical/ESG KiwiSaver fund. For ethical investing, consider Pathfinder or Booster’s SRI range.
What to Read Next
- Bank vs Independent KiwiSaver NZ — the broader provider landscape
- Milford vs Fisher Funds KiwiSaver — two active managers compared
- ANZ vs Simplicity KiwiSaver — bank giant vs low-cost index
- Cheapest vs Best Performing KiwiSaver — does low cost always win?
- Simplicity KiwiSaver Review — full Simplicity provider review
- Milford KiwiSaver Review — full Milford provider review
- KiwiSaver Fees Comparison — all providers ranked by fee
- Best Performing KiwiSaver Funds NZ — full ranked performance tables