There are more than 29 providers in New Zealand with numerous funds among them. This choice is good for us as investors as it promotes competition but can also lead to confusion when comparing KiwiSaver solutions. Many providers talk about how their funds have had the best performance in some time frame or the other, almost every provider has won some sort of award and most of them talk about ethical investing. So how do we choose? We can compare KiwiSaver perfomance on specific metrics which will be discussed below.
Note: The following information is general information and is not personalised advice. If you want personalised advice , please submit the KiwiSaver HealthCheck.
*Past performance is not necessarily indicative of future performance.
*All returns are per annum after fees and tax (28% PIR) as of the quarter ended 30th September 2024.
*Source: National Capital Research
Investing with a provider based on past returns is not the best approach, as past returns do not guarantee future performance.
We’re here to help you find the best KiwiSaver fund for you. National Capital specialises in KiwiSaver & Investment research in order to provide free and independent KiwiSaver advice to empower Kiwis towards financial security.
Complete our KiwiSaver HealthCheck and become a client of National Capital if you want personalised advice that is reviewed regularly to ensure your investment strategy remain aligned to your goals and circumstances on an ongoing basis.
As demonstrated in the latest data above, while one provider might be the top performer in a Growth Fund, another one may have the top performing Balanced Fund.
There are many different types of funds, so it’s important to first determine which type of fund is most appropriate for you when comparing KiwiSaver solutions.
Once you’ve determined the type (or types) of fund to invest in, you can move to compare different providers. While past performance may not necessarily be an indicator of future returns, it’s useful to recognise both the serial underperformers and outperformers.
Again, while evaluating their performance, it is important to compare apples to apples. Comparing the performance of a Conservative Fund with 20% growth assets to a Growth Fund with more than 75% growth assets could lead to a very biased picture.
We don’t think so. The last 12 months of performance is meaningless in most cases because it’s too short-term a time frame for proper comparison. You need a long enough time frame to ensure that your comparison of past returns is relevant and useful.
In the list above, we have taken the last 5 years’ performance of each provider into consideration. Investing is a long-term solution, and it’s important we evaluate performance in the same vein. The 5-year performance metric gives us a much better idea of the performance of the fund, by filtering out short-term volatility.
Traps To Avoid – KiwiSaver Comparison
Investors should not go and constantly scour for the best performing fund, often switching when they see what they believe is the “next best performing fund”. And there are a lot of reasons why.
Just because a fund is doing well right now, does not mean it is best for you. When comparing KiwiSaver choices, one should take into account factors such as your personal volatility capacity, how long it will be until you need the money and your other assets.
But here’s the kicker. The thing is that even if investors find the ‘top performer’ for a period of time, they can still lose out on returns.
The reason for this is because investors succumb to different investing mistakes that bring down their return levels significantly.
So to illustrate this idea, let us show you an example.
Peter Lynch is considered by some to be one of the best investors on Planet Earth. He is known for many things – for example, for writing the book “One Up on Wall Street”, which sold over one million copies.
But the thing he is probably most well known for is for being the fund manager of Magellan from 1977-1990.
During this time, the average annual return for the Magellan fund was 29.2 percent. The S&P 500 during this time only returned around 14 or 15 percent, with dividends reinvested.
Investors saw this large overperformance by Lynch, so decided to invest with Magellan to capitalise on this. As a result, the fund grew from $18 million in assets under management to $14 billion in assets under management.
Here’s the thing though. Despite investors actually finding a great performer, the average investor in the Magellan fund actually lost money.
And no, your eyes are not fooling you. The average investor actually did lose money.
The reason why this occurred is that not all investors bought and held the Magellan fund from 1977-1990. Instead, investors succumbed to mistakes that decreased their return.
So even when investors can find good investments, why do their performance results mimic poor performing funds?
According to a Dalbar study, three main reasons exist for this.
Investors are not perfect. We are humans, and because of this, we are biased. Behavioural biases are a big reason for average investors not outperforming the market. The Magellan investors kept buying into the fund after a period of very good returns and sold if the fund decreased in value. So basically they kept buying high and selling low. They lost money because they were chasing short-term returns. All they needed to do was stay invested long-term.
In other words, investors themselves get in the way of earning larger returns. In fact, we get so much in the way that in the 2017 Dalbar’s Investor Returns study, the average investor made 2.89% less every year than the market index!
This generally occurs because of a lack of financial planning. When investing in a fund, one should make sure that they:
In a recession, for example, people may get laid off or be in some financial difficulty. And it’s during these times that the share market can drop.
If an investor is in financial difficulty and has not got a large enough emergency fund, they might choose to use the money they were investing instead.
However, when people do this, they may end up selling their shares when the market has dropped (i.e. “selling low”). This is against investor logic which says we should “buy low and sell high”.
Due to this, the investor may miss out on the gains from any future rebound that the share market has.
Don’t make the mistake Magellan investors made, by only looking at performance and jumping into a fund just based on your ‘research’ of its past performance. Researching funds and using a returns comparison to compare returns in the market is a good step. But you need to do much more.
Using all this information we then recommend the appropriate fund for our clients.
Nothing. Our advice is absolutely free of charge to you. There are two reasons for this:
If you would like us to create a plan tailored to you, and select the appropriate fund based on that plan, please submit our HealthCheck using the button below to start the process. Our KiwiSaver comparison and advice process is 100% online so you can do it from the comforts of your own home. If you would prefer to talk to us on the phone or video, we are happy to do that too.
You can do your own research using the 8 KiwiSaver comparison factors listed below. These are not in order of importance.
Many people start and stop their research based on a fund’s past returns. However, this should not be the most important factor in choosing a fund let alone the only factor. It is crucial to be aware that at different times, different funds come out on top. Just because a fund performed well in the last quarter or year, it doesn’t mean it will continue to be the best.
In saying this, you may use past returns as a guide for finding the serial under or overperformers. In this case, you may find it difficult to invest in a fund that has underperformed for the past 10 years or feel more at ease with one who is a serial overperformer. This could help you feel more confident in your provider and reduce the risk of changing funds during some volatility.
KiwiSaver fees are an important consideration while comparing. By law, providers have to ensure their fees are “reasonable” but there is still quite a difference between fees for similar funds among providers.
It’s important to understand what your fees are paying for however. You don’t just go to the cheapest lawyer or doctor you can find, and in a similar way – rather than simply deciding based on fees, look deeper.
An actively managed fund will normally have higher fees than a passive one. This accounts for the extra work and research a manager of an actively managed fund has to perform. The expectation is that this extra work and research will lead to greater investment returns, but that is not always the case.
Additionally, a fund with more Growth Assets will normally have a higher fee than one with more Income Assets. The rationale behind this is it again takes more work and research to select Growth Assets because of the higher risk and volatility.
KiwiSaver fees are normally broken up into two parts.
Providers can change their fees over time, so it’s a good idea to keep monitoring your fee structure.
No. Fees are only a small component when comparing KiwiSaver choices. There have been studies performed that show other non-fee factors can contribute up to 7 times more wealth than lower fees. If you’re keen on a long read, a link to the study is here.
Ultimately what should be important to you is the net returns. This is the return you get after fees and taxes. Most comparison sites and providers list the funds’ net returns after fees.
Active funds are ones where their fund managers take a hands-on approach to investing. These fund managers generally look at a variety of investments and try to pick out the best ones.
In contrast, passive funds have fund managers that are more hands-off. Generally, these fund managers will instead invest in dozens or hundreds of investments and choose not to guess which investments might do best.
In reality, there really isn’t such a thing as a 100 percent passive fund.
Even passively managed funds require some active decision making. Take, for example, a fund that invests in the NZX 50 and nothing else. Someone has to actively make the decision to invest in the NZX 50, as opposed to the ASX 200 for example.
There has been an ongoing debate in the last decade about whether active funds are better than passive funds.
Some may argue that passive funds are better than active funds because some studies that show on average in the past, active funds do not outperform the index after fees. However, using averages can be very misleading.
Averages are skewed to the downside by index huggers. An index hugger is an actively managed fund that performs similarly to a passively managed index fund. This may be because these fund managers are not as actively investing as you may think.
An index hugger that invests in New Zealand companies, for example, may mimic the NZX 50 in its returns. So as a result, people investing in these funds are paying more in fees to have their investment be actively managed, only for their investment to act as the index.
However, averages do not matter to an investor. It doesn’t matter if some active fund managers can’t beat the market. All an investor needs to do is find a few active fund managers that can do so. And at National Capital, we believe that’s possible because skilled fund managers do exist.
We believe that skilled fund managers show that the market is not efficient. With a little bit of hard work and some correct processes, it is possible to beat the market. Additionally, some expertise in a particular industry or investment area will help someone beat the market.
If you’re still unsure whether you’d prefer investing in an active or passive fund, you don’t even have to make a choice. Your portfolio could be a blend of active and passive managers. In fact, a well diversified portfolio could contain both.
With all of this though, there’s one thing to keep in mind.
What matters most to the final returns you get from your investments is what your asset allocation is and how you react to volatility in the market. And it’s these factors that matter more when comparing KiwiSaver solutions.
Read More: Active vs Passive KiwiSaver funds – which is better?
It is your right to know how your funds are invested and whether those investments are made in a socially responsible manner. As a result, along with the traditional investment funds, Kiwis now have the opportunity to choose a fund that matches their ethical preferences through a sustainable fund scheme which is in line with the United Nations Principles for Responsible Investment framework.
While the specific ethical and sustainable funds may differ depending on the provider, these funds are based on environmental, social and governance (ESG) factors. They normally exclude investing in specific industries that are at odds with strong public policies, involved with any unethical activities directly or indirectly. Some examples are
Some providers follow an accessing criterion which includes in-depth company analysis to identify how well they follow social governance factors, their investment principals and investment decisions. You need to ensure that your provider is guided by a Responsible Investment framework in terms of where to invest.
Read More: Digging deeper to find out if your KiwiSaver fund is truly ethical
It may be self-explanatory, but a bank KiwiSaver scheme is one that is run by a bank. Be that ASB, ANZ, BNZ or Kiwibank. Banks are currently dominating the KiwiSaver industry holding the greatest amount of investors money. The convenience of having your retirement savings integrated with your banking has something to do with it. Being called KiwiSaver you’d presume that it is run by Kiwis, however, four of our five major banks are actually Australian. ASB, ANZ, BNZ and Westpac are all Australian-owned and hold a great deal of our KiwiSaver money. New Zealand has a few Kiwi-owned banks and among them is Kiwibank – the largest NZ owned bank scheme provider.
We then have New Zealand-owned ones that are not run by a bank. Some of them are not-for-profit, some actively managed and some are niche, offered only to certain people such as the NZ Defence Force Scheme.
Many people may see banks as being safer and a less risky place to put your money. However, this isn’t really the case. All providers are licensed by the Financial Markets Authority (FMA). This means that they must all comply with all obligations detailed in the Financial Conducts Act 2013 and the KiwiSaver Act 2006.
In addition to this, providers don’t actually hold your money. In fact, your money is held by a third-party in something called a trust. For you, this means that, even if they went bankrupt, your provider wouldn’t use your money to pay off their debt.
Both bank-owned and NZ business owned have things to offer you as an investor. For a bank, this may be that, in some cases, they offer lower fees. This could be because, with lots of members, they are able to spread the costs of managing your investment more widely than smaller providers.
A reason that a number of Kiwis invest with bank-owned providers may be because they register to their own bank’s scheme. This is often quite convenient and offers a level of comfort to people as it may feel as though you are just opening another type of savings account.
Although low fees, convenience and comfort all sound great, it is definitely not a reason to immediately go and invest with your local bank.
NZ-owned schemes are becoming increasingly popular. Firstly, and potentially being something of importance to you, it is great to know that any profits are going straight into Kiwis’ hands. In comparison, you cannot be certain of this when you register to a bank scheme as the profits may well be going overseas.
Also worth mentioning is that most consumers don’t actually trust their banks a whole lot. Consumer NZ discovered that only 48% of consumers believe banks are trustworthy with only 38% agreeing they have their best interests at heart.
Even though we have provided this comparison for you, it is something that we believe you should ask yourself. It is not necessarily a question of bank or non-bank but rather which specific fund is right for you?
Read More: Should I be in a Bank KiwiSaver scheme or an NZ owned KiwiSaver scheme?
Asset allocation describes how your money is distributed towards different investments. More specifically, asset allocation describes what type of investments your money is being put towards.
It is important to be aware of the different types of assets your scheme invests into. So, below is a breakdown of these three different types of assets:
Asset allocation varies greatly between funds. While there are guidelines, there is no single specific allocation for each fund class.
Therefore, it is important not to pick a fund simply because of its name. Despite many funds having similar names, they all have their significant differences.
Comparison Factor 6 – Investment Processes
This is a very important factor when comparing KiwiSaver solutions and deciding whom to invest your hard-earned money with. The differences between funds can be seen in the way providers invest money.
Each provider will have their own unique methods they use to invest your money. This is because different providers hold different philosophies and beliefs. It is very worthwhile looking into how your provider chooses to invest your money as it may affect the final outcome for your balance.
We would ‘run out of space’ if we covered all 30+ of them below. So instead, we will compare and contrast just three. This will show the wide range of methods that they can use to invest your funds.
The great thing about National Capital is that if you want more information about a specific provider, you can view the list at the bottom of this page to see the research we have gathered on each of them.
To demonstrate the variety of the investment processes, here are the three providers we will discuss:
Let’s start with Milford. They are active managers which means they buy and sell investments with the aim of beating the market. This approach allows them to take advantage of opportunities whilst minimising downside risks. When deciding which investments to make, they assess the economic backdrop, the valuation of different assets, and the potential futures of the companies themselves.
Milford starts their process with “negative screening” which excludes certain investments. From there, they do economic and investment analysis followed by an investment forum meeting whereby the research is presented and discussed by portfolio managers. Finally, a decision is made as to which investments to buy and sell.
Next, we have JUNO which is also actively managed. They aim to buy assets when they’re considered low and to sell when they’re high. They also try to minimise unnecessary volatility and draw-downs while still seeking returns.
JUNO has four key stages of their investment process:
The ‘identify’ stage involves looking for assets that possess certain characteristics. The research stage requires talking to well-informed people in the market as well as the management teams of companies they invest in. In the research stage, JUNO looks at qualities such as what their financial futures may look like or their performance compared with similar companies.
The construct stage is self-explanatory and is where they build the portfolio. And review is the final stage which states that they will continuously reevaluate their investments and adjust accordingly.
Finally, Simplicity differs from the other two providers as it is passively managed. They do not actively choose individual investments and therefore, their investment process is quite different.
Simplicity invests in a wide range of assets and types of assets in order to diversify the portfolio where your money is invested. With the presumption of efficient markets, they believe that index funds are the way to go and may even decrease fees for investors. Vanguard is one of the largest providers of index funds and is where Simplicity invests a substantial amount of money.
As you can see, each manager has their own investment strategy. It’s beneficial for you to understand how your money is being invested in order to feel confident in the long term.
Comparison Factor 7 – Who are the people managing your money?
With over 7 billion people on Earth, each unique, there is bound to be variety in the people managing your money too. Every fund manager brings their own set of talents, experiences, and expertise into the equation. This is why it could be a good idea to look into the people in charge of your investment while comparing KiwiSaver choices.
There is another thing that is also important to note. You may think the employees at your chosen scheme are the ones who do most of the work choosing your investments and allocating your money. This, however, is sometimes not the case.
To explain what we mean, let’s look at companies that hire their own portfolio managers versus schemes that use external managers.
Some will let you know clearly who their portfolio managers are by listing the portfolio managers on their website.
Portfolio managers are hired for their expertise to help manage your money. They do a variety of activities such as research and analysis to do exactly this.
Examples of companies that list their portfolio managers on their websites are:
Take for example the first one, Milford Asset Management. Milford manages their funds actively, so to help with this, they have hired some portfolio managers.
Others use external fund managers or underlying investment managers to take care of your money. This means that some other organisation or company is given the task of managing your money. They will choose where to invest it, and how they think it is best to invest it.
For example, as of when this was published, BNZ had three underlying investment managers (source) they used to manage their client’s funds. These managers were:
Now one may ask, “Why would a provider give my money to someone else to invest?”
The reason is that different schemes have different ideologies and beliefs. As a result, some of them will choose to give the underlying investment management decisions to someone else because they believe it is best to use external experts rather than do everything in-house.
Simplicity invests a lot via DWS Asset Management because they believe that investors will gain higher returns in the long run by using low-fee index funds (source).
When comparing KiwiSaver and considering your strategy, it’s important to keep external factors in mind too.
A lot of times, people may do something less suited for them because they are listening to generalised advice. Generalised advice makes a lot of assumptions. The problem with that is that these assumptions may not apply to you.
While generalised advice can be good, it is best to get advice for your specific situation instead. So here are two different personal factors someone should keep in mind when comparing KiwiSaver solutions.
Here’s an example when general advice may not be right for someone.
Older people (e.g. in their 60’s or above) generally get told that their KiwiSaver money should be in a fund with fewer growth assets. This means that their fund will be less volatile, but they may miss out on some potential future returns.
Now what if someone had let’s say $400,000 in term deposits that they could use for retirement before touching their KiwiSaver savings? And what if also, this person was currently receiving NZ Superannuation, and would only spend $45,000 a year on their expenses?
In such a case, it would be a number of years before this person would even consider using their KiwiSaver. As a result, this person may be best off investing some or all of the KiwiSaver money in a more volatile fund, like a balanced or growth fund, to maximise the returns.
One should make sure they analyse their KiwiSaver comparison strategy as a part of your whole financial plan. By doing this, you can help yourself make the financial decisions that are best for you.
Read More: Why you shouldn’t ignore your investments outside of KiwiSaver.
Some people also have religious concerns. Maybe they want their investments to align with their religious beliefs, for example.
The Christian KiwiSaver Scheme is a scheme made with Christians in mind. This provider allows active Christians, as well as a few other people, to invest in their fund.
Their choice of investments is influenced by a number of things. For example, the Bible is one area that they turn to in order to justify the areas they do not wish to invest in.
This scheme makes ethical judgements regarding what and what not to invest in. For example, they aim to avoid investments “in cases where animals are subject to unjust suffering” (source).
The scheme has three different types of funds as of writing – a growth fund, a balanced fund, and an income fund.
AMA
Always Ethical is a boutique fund management group based in Auckland, New Zealand. They specialise in providing ethical investment solutions to New Zealand and international investors.
AMP
AMP Capital and AMP Wealth Management are part of the AMP Group. They share a heritage that spans almost 170 years. They started back in 1849 as the investment management arm of AMP Group.
ANZ
ANZ is one of the world’s largest banks and their businesses serve more than 5 million customers. ANZ manages six funds under its ANZ KiwiSaver scheme and OneAnswer KiwiSaver Scheme, and has total Assets Under Management (AUM) of more than $NZD 14 billion and 581,054 members.
AON
The Aon KiwiSaver Scheme is a relatively smaller KiwiSaver provider. They offer thirteen KiwiSaver funds, ranging from a lower-risk cash fund to a higher-risk growth fund.
ASB
The ASB Kiwisaver scheme has a total Assets Under Management (AUM) of over $10.5 billion and a total number of over 530,000 members.
BNZ
The BNZ KiwiSaver Scheme manages six funds. They have total Assets Under Management (AUM) of over $NZ 2.7 billion and 178,146 clients.
BOO
Booster Investment Management Limited currently manages 16 funds. They have total Assets Under Management (AUM) in their KiwiSaver scheme of over $1.85 Billion and 154,417 members.
PAT
Pathfinder manages seven funds under their KiwiSaver scheme, varying in levels of risk from the Cash Fund to the Shares Fund. As of March 2022, the total Assets Under Management (AUM) for Pathfinder is over $162 million.
CHR
The Christian KiwiSaver Scheme has total Assets Under Management (AUM) of over $NZ 54 million and 1,941 clients.
CRA
Craigs Investment Partners KiwiSaver has Assets Under Management (AUM) of over $NZ 290 million and 5,777 members.
FF
Fisher Funds provides a number of services, including KiwiSaver, managed funds, premium services tailored to wealthy individuals, workplace LifeSaver plans geared towards retirement, and financial advice and they manages seven funds under the KiwiSaver scheme and has an AUM of over NZ $4.16 Billion and 146,952 members.
FFTWO
Fisher Funds Two manages eleven funds under the KiwiSaver scheme and has an AUM of over NZ $2.28 Billion and 103,255 members.
GEN
Generate is a New Zealand owned and operated specialist. The Generate KiwiSaver Scheme manages seven funds and has Total Assets Under Management (AUM) of over $1.7 billion and 83, 213 members, as per the annual fund report of March 2020.
JNO
KW
The Kiwi Wealth KiwiSaver Scheme manages six funds and has total Assets Under Management (AUM) of over $NZ 4.4 billion and 216,616 clients.
Kōura
The Manager of the Scheme is Kōura Wealth Limited, a company incorporated in New Zealand under the Companies Act 1993 on 20 February 2019. Kōura manages the investments of, and administers, the Scheme. Kōura is 100% New Zealand owned, we are very proud of our Kiwi heritage.
LS
The Lifestages KiwiSaver Scheme manages eight funds and has total Assets Under Management (AUM) of over $462 million and 19,200 clients.
MAS
The Medical Assurance Society KiwiSaver Scheme has a total Assets Under Management (AUM) of over $NZ 769 million and 15,117 clients.
MER
The fund management division of Mercer is ranked 82nd in the world for the total assets under management, with Assets Under Management (AUM) totaling $199.7 billion as of 2019. Mercer manages seven funds under their KiwiSaver scheme, varying in levels of risk from the Cash fund to the Shares fund. As of June 2019, the total AUM for Mercer KiwiSaver scheme was over $2 Billion.
MIL
The Milford Plan manages six funds with over 45,000 members and has total Assets Under Management (AUM) of over $2,632 million NZD (as of 30th Sep 2020).
NIK
The Nikko AM KiwiSaver Scheme manages six funds and has a total Assets Under Management (AUM) of over $NZ 7.3 million and 77 clients.
OAK
The OneAnswer Scheme is run by the ANZ bank. Most of its funds are very similar to those in the ANZ KiwiSaver Scheme.
QS
TheQuayStreet KiwiSaver Scheme manages ten funds and has total Assets Under Management (AUM) of over $NZ 187 million and 2,611 clients.
SIM
The Simplicity Kiwisaver scheme has total Assets Under Management (AUM) of over $980 million and 34,062 members.
SUM
The Summer KiwiSaver Scheme manages nine funds and has total Assets Under Management (AUM) of over $NZ 166 million and 4,356 clients.
SUP
The SuperLife Kiwisaver scheme has a total Assets Under Management (AUM) of over $890 million and 4,685 members (As at August 2019).
WES
The Westpac KiwiSaver scheme has six investment options, a cash option, and five diversified options. It has a total Assets Under Management (AUM) of over $6.8 Billion.
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