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Is not-for-profit better?

Section: 3.8

Industry funds often describe themselves as 'not-for-profit', meaning their fees generally match their costs because they do not need to make a profit for any shareholders. Retail funds, i.e., master trusts, on the other hand, because they are operated by commercial entities must try to make a profit and so they have to charge fees that are more than their costs.

But while being not-for-profit sounds noble, the hard-nosed question is whether being not-for-profit makes a fund better, or does it just make it different?

One should always compare funds' investment returns, choices, fees, insurance and extra features. Being not-for-profit doesn't make the fund better, it just explains its background and where it came from.

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

Last modified: Friday, November 13, 2020