As of 5th April 2021, there were more than 25 KiwiSaver Providers in New Zealand with a total of more than 300 funds among them. That is a lot of KiwiSaver funds. This choice is good for us as investors but also can lead to confusion and difficulty in choosing. Many fund 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 use a KiwiSaver scheme comparison.
Our professional KiwiSaver advisers at National Capital have come up with this comprehensive guide on how to choose the best KiwiSaver scheme and fund for your needs. So read on and hope it helps you get closer to your decision.
Note: The following information is general information and is not personalised advice. If you want personalised advice on which KiwiSaver is most appropriate for you, please submit the KiwiSaver HealthCheck.
*Past performance is not necessarily indicative of future performance.
*List is of the highest 5-year returns A-rated funds as per our Investment Selection Process.
*All returns are per annum after fees and tax (28% PIR) as of the quarter ended 30th September 2024.
*Source: National Capital Research
We’re here to help find the best KiwiSaver fund for you. Our team are financial advisers specialising in KiwiSaver & Investment research. We provide free KiwiSaver advice, with the goal of empowering one million Kiwis to become financially secure.
By taking a few minutes of your time to complete our KiwiSaver HealthCheck questionnaire, you will receive an instant recommendation tailored specifically to your goals and beliefs.
Our system combines the latest figues and technology to provide the most suited recommendations. Nonetheless, whether you take us up on the advice, is completely up to you.
Most of us start our search looking for the best KiwiSaver provider. But is that the right place to start?
Every provider has different types of funds within their KiwiSaver scheme. So while one provider might have the best performing Growth fund, it could be another one that has the best 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 before KiwiSaver sign up.
Once they know the type (or types) of fund they need to be invested in, Kiwis then move to compare their past performance usually using a KiwiSaver performance
comparison.While past performance may not necessarily be an indicator of future returns, it’s important to keep an eye on the performance of KiwiSaver providers and their funds to recognize 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. That is something to consider when you change KiwiSaver.
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 when creating the list of best performing KiwiSaver funds. KiwiSaver is a very long-term investment, 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.
Why you should stop looking for the best performing KiwiSaver funds?
Investors should not go and constantly scour for the best performing fund, transferring KiwiSaver 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 a “best performing fund”, does not mean it is best for you. When choosing a fund, one should take into account factors such as your personal volatility capacity, how long it will be until you need the money and your assets outside of your KiwiSaver account.
But here’s the kicker. The thing is that even if investors find the “best performing fund” 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 returns 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 performing fund, 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. That is something I often have to remind myself with my KiwiSaver too.
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!
If average investors could just stay put and not fiddle around with their portfolios, they could easily end up earning more in returns.
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 into the share market.
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. We should point out that the rules make accessing KiwiSaver at these times difficult and thus shielding the majority from panic selling.
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 the best fund and using a returns comparison to compare returns to other KiwiSaver funds 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.
No. Our KiwiSaver advice is absolutely free of charge to you. There are two reasons for this:
Watch the 2 min video of our KiwiSaver advice process to know more.
If you would like us to create a KiwiSaver investment plan for you, and select the appropriate fund based on that plan, please submit our HealthCheck using the button below to start the process. Our KiwiSaver 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 KiwiSaver research using the 8 comparison factors listed below. These are not in order of importance.
Many people start and stop their KiwiSaver 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 when your KiwiSaver account drops.
KiwiSaver investment 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 note 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 KiwiSaver investment fees, look deeper. A fee comparison can be a handy tool to use before joining KiwiSaver.
We have to ensure we are comparing apples to apples when looking at fees. 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. You can do so through your KiwiSaver login.
No. Fees are only a small component of what determines how much you will finally be able to grow your KiwiSaver investment to. 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 on your KiwiSaver money after fees and taxes. Most comparison sites and providers list the funds’ net returns after fees.
Read More: Should I just choose a KiwiSaver fund with the lowest fees?
Active KiwiSaver 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. Through my KiwiSaver login, I can find my KiwiSaver results and compare them against the market index over a range of time. That way I can see whether my KiwiSaver has outperformed, matched, or underperformed the market index.
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 in determining which KiwiSaver options are best for you.
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
Have you checked how ethical your current KiwiSaver provider is?
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 BNZ, ASB, or ANZ KiwiSaver login 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 bank KiwiSaver provider as of November 2020.
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. That convenience shows through having your ANZ KiwiSaver login and banking through the same online portal for example.
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? You can always consider changing KiwiSaver companies when you decide.
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 and Kiwi Saver options. 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.
For illustrative purposes, we have collected the target asset allocations of a variety of “Growth”, Balanced and Conservative funds. It is not to say that one fund is better than another, but to show you how funds compare and urge the importance of digging deeper.
|
Name of Fund
|
Type of Fund
|
Growth Assets
|
Income Assets
|
Cash
|
|---|---|---|---|---|
|
Fisher Funds Two - Growth Fund
|
Growth
|
75.0%
|
15.0%
|
10.0%
|
|
Mercer - Growth Fund
|
Growth
|
75.0%
|
21.0%
|
4.0%
|
|
Aon Russell - Lifepoints Growth Fund
|
Growth
|
75.0%
|
25.0%
|
0.0%
|
|
Milford KiwiSaver - Active Growth Fund
|
Growth
|
78.0%
|
16.0%
|
6.0%
|
|
Fisher Funds - Growth Fund
|
Growth
|
80.0%
|
16.0%
|
6.0%
|
|
Superlife - Superlife Growth
|
Growth
|
80.0%
|
19.0%
|
1.0%
|
|
Generate - Growth Fund
|
Growth
|
82.5%
|
12.5%
|
5.0%
|
|
Booster - Asset Class Growth Fund
|
Growth
|
90.0%
|
9.0%
|
1.0%
|
|
Superlife - US Large Growth Fund
|
Equity
|
99.0%
|
0.0%
|
1.0%
|
As we can see in this sample, the growth assets range from 75-99%, income from 0-25% and cash from 0-10%. The proportions of these assets will have an impact on both potential returns and volatility within the funds. The volatility, for example, is expected to be a lot greater in the Superlife US Large Growth Fund than the Fisher Funds Two Fund.
We would also like to point out that Superlife’s US Large Growth Fund is actually an equity fund and the word ‘growth’ in this case is referring to the type of companies rather than assets. These are companies that have the potential to expand faster than others in the same industry or economy as a whole. Once again, we can see the importance of checking the asset allocation to be sure.
Furthermore, if you compare the target allocation to the current, there are huge differences in what you are actually investing in! Often, in times like 2020, fund managers will need to adjust their investment strategy due to things such as very low interest rates. Based on Amanah Growth Fund’s Sep 2020 quarterly update, they only had 59.4% in growth assets compared to their 80% target.
|
Name of Fund
|
Type of Fund
|
Growth Assets
|
Income Assets
|
Cash
|
|---|---|---|---|---|
|
ANZ - Balanced Fund
|
Balanced
|
50.0%
|
40.0%
|
10.0%
|
|
Mercer - Balanced Fund
|
Balanced
|
55.0%
|
35.0%
|
10.0%
|
|
Fisher Funds - Balanced Strategy
|
Balanced
|
56.5%
|
32.0%
|
32.0%
|
|
Fisher Funds Two - Balanced Fund
|
Balanced
|
57.0%
|
37.0%
|
6.0%
|
|
Superlife - Balanced
|
Balanced
|
60.0%
|
39.0%
|
1.0%
|
|
Aon Russell - Lifepoints Balanced Fund
|
Balanced
|
60.0%
|
40.0%
|
0.0%
|
|
Booster - Balanced Fund
|
Balanced
|
60.0%
|
35.0%
|
5.0%
|
|
Milford KiwiSaver - Balanced Fund
|
Balanced
|
61.0%
|
31.0%
|
8.0%
|
|
AMP - Responsible Investment Balanced Fund
|
Balanced
|
65.0%
|
25.0%
|
10.0%
|
The balanced funds above vary from 50-65% in growth assets, 25-40% in income and 0-11.5% in cash. While AMP invests almost two-thirds in growth assets, ANZ only aims for half. You can actually check this through the ANZ KiwiSaver login for example.
As an investor, you may be interested in a less volatile Balanced fund. If you don’t look into the proportions of assets within the funds, then you could end up in a much more volatile investment than you are prepared for. This is risky as your time horizon or tolerance levels may not allow you to handle that much volatility and therefore result in you losing money.
|
Name of Fund
|
Type of Fund
|
Growth Assets
|
Income Assets
|
Cash
|
|---|---|---|---|---|
|
Milford KiwiSaver - Conservative Fund
|
Conservative
|
18.0%
|
76.0%
|
6.0%
|
|
Mercer - Conservative Fund
|
Conservative
|
20.0%
|
50.0%
|
30.0%
|
|
Aon Russell - Lifepoints Conservative Fund
|
Conservative
|
20.0%
|
80.0%
|
0.0%
|
|
Fisher Funds Two - Balanced Fund
|
Balanced
|
57.0%
|
37.0%
|
6.0%
|
|
Superlife - Balanced
|
Balanced
|
60.0%
|
39.0%
|
1.0%
|
|
Aon Russell - Lifepoints Balanced Fund
|
Balanced
|
60.0%
|
40.0%
|
0.0%
|
|
Booster - Balanced Fund
|
Balanced
|
60.0%
|
35.0%
|
5.0%
|
|
Milford KiwiSaver - Balanced Fund
|
Balanced
|
61.0%
|
31.0%
|
8.0%
|
|
AMP - Responsible Investment Balanced Fund
|
Balanced
|
65.0%
|
25.0%
|
10.0%
|
The difference between Conservative Funds and Growth or Balanced Funds is that the majority of Conservative Funds assets aim to be in cash and income assets, instead of growth assets. We can again see substantial differences between the asset allocations of the sample above with 18-30% in growth, 50-80% in income and 0-30% in cash.
There is a clear stand out being Aon Russell Lifepoints as they don’t intend on investing anything in cash but rather more in income assets. When you come across examples such as this, it may be worth asking why it is they do such a thing. Sometimes they may have a really good reason for doing so and so you shouldn’t necessarily be put off by this.
Because of the variation in asset allocation between funds, different KiwiSaver funds may be suited for different sets of people, despite them both being the same ‘type’. As a result, it is not enough to simply invest in a fund that’s named conservative, balanced or growth but rather dig into the specifics of each.
Read More: Asset allocations of different KiwiSaver funds – what’s the difference?
Comparison Factor 6 – Investment Processes of different KiwiSaver Funds
This is a very important factor when setting up KiwiSaver 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 KiwiSaver provider chooses to invest your money as it may affect the final outcome for your KiwiSaver account.
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 click this link here and 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. You can check performance through the Milford KiwiSaver login or their public quarterly statements.
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. You can consider switching KiwiSaver if the investment process is not what you believe in.
Read More: Investment processes of KiwiSaver providers – how does yours compare?
Comparison Factor 7 – Who are the people managing your KiwiSaver money?
With over 7 billion people on Earth, each unique, there is bound to be variety in the people managing your and my KiwiSaver money. 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 KiwiSaver scheme while selecting one.
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 clearly on their website.
KiwiSaver 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. As of writing, their portfolio managers include William Curtayne, David Lewis, and Jonathan Windust.
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 six 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 into Vanguard funds because they believe that investors will gain higher returns in the long run by using low-fee index funds (source).
Read More: Who are the people managing your KiwiSaver money?
When figuring out your KiwiSaver investment 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. My KiwiSaver login balance is completely different from yours, and thus general advice doesn’t cut it. So here are two different personal factors someone should keep in mind when choosing the most appropriate KiwiSaver investment strategy.
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 account? 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 investment. As a result, this person may be best off investing some or all of the money in their KiwiSaver account in a more volatile fund, like a balanced or growth fund, to maximise the returns.
Remember: investing in KiwiSaver is done as part of your whole financial strategy.
As a result, one should make sure they analyse their KiwiSaver investment 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.
For these people, there are a few KiwiSaver schemes on the market that may suit you. As of the time of writing, there are two of these schemes. These are Amanah KiwiSaver Limited (or simply Amanah) and the Christian KiwiSaver Scheme.
Amanah is a provider for those with Islamic values. They aim to comply with their ethical mandate while providing a return to investors over the long run.
Amanah makes sure all its investments “comply with the rules on permitted business activities and business financial requirements defined by the AAOIFI Shari’ah standards” (source: Amanah SIPO).
Amanah’s ethical mandate is dictated by hundreds of years of scholarly discussion by Clerics of Islam, Christianity, and Judaism. And in accordance with Islamic principles, their ethical mandate excludes them from some investment areas, such as lending money, pork, gambling, and weapons.
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.
Similar to Amanah, 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.
Read More: Are there KiwiSaver schemes that invest as per our religious beliefs?
Some employers have arrangements in place with a particular provider to default all their employees into a particular scheme. This means, when joining KiwiSaver as an employee, the organisation will choose the provider for you without much thought into your own personal circumstances.
Advantages of this might be that the scheme has agreed to give some additional benefits such as financial advice to employees. However, just because you get these benefits, doesn’t necessarily mean you should stay.
In fact, there is no obligation to remain within the ‘default’ scheme chosen by employers. They cannot discriminate against employees by forcing them to be in a particular scheme by offering additional employer contributions towards one scheme as compared to others.
Furthermore, there is a chance that the employer-chosen default scheme is not the best for the employee’s situation. Everyone has their own unique financial situation and it is not right to place all employees into the same fund. No one fund is suitable for everyone. Of course, if you join KiwiSaver self employed, you don’t have a recommended scheme to consider.
There are a bundle of factors that need to be considered before selecting a fund that goes beyond returns and fees and choosing the wrong fund may impact your ability to retire comfortably. For example, being in the lowest returning aggressive fund earning only 5.8% per annum as opposed to the highest at 9.6% can leave you with less than half the money 40 years later.
Ultimately it is your money, so do not rely on your employer to make a decision for you. Do your own homework or otherwise, seek financial advice. Pretend you are joining KiwiSaver self employed and the option is solely your choice.
Read More: Joining your employer chosen KiwiSaver scheme – a mistake?
Employment restricted KiwiSaver schemes are those that only allow people working in a certain organisation or industry to join them.
Some of these providers may offer incentives like extra contributions to your KiwiSaver account. However, just because an employment-restricted scheme offers incentives, does not mean you should automatically join them. Only by research can you find out which provider is best for you.
This section will break down the three current employment-restricted schemes out there.
The New Zealand Defence Force’s (NZDF) Scheme is open for past and present NZDF members, as well as their immediate families. It is run by Mercer.
The NZDF Scheme offers some incentives for joining KiwiSaver. This includes the $50,000 they give out through participation rewards raffles for their eligible members. You can read the NZ Defence Force KiwiSaver Scheme Booklet if you’d like more information regarding this.
However, as warned earlier, just because a scheme offers rewards to its members, does not mean that you should rush to join them immediately. Other factors such as fees, returns needed, and investment personality should be taken into account.
The Supereasy scheme has been set up for those that work in local government, as well as their immediate family members. Local government includes regional councils, district councils, and city councils.
This scheme is run by Civic Financial Services Ltd, a company which is owned by the local government.
The Medical Assurance Society (MAS) scheme is for professional service workers. The name of the scheme may imply that only medical professionals can join the scheme. However, this is not the case.
The people that can join this scheme include architects, accountants, doctors, veterinarians, lawyers, engineers, and dentists. Immediate family members of these groups can join too. Even students studying to be doctors, veterinarians, or dentists can join.
The Medical Assurance Society’s Scheme has around 14,000 members and around $750 million under management. Therefore, they are the largest restricted scheme out there.
They offer seven funds as of writing: a Global Equities Fund, an Aggressive Fund, a Growth Fund, a Balanced Fund, a Moderate Fund, a Conservative Fund, and a Cash Fund.
Read more: Employment restricted KiwiSaver schemes – are they worth joining?
Build your own KiwiSaver vs Leaving it to managers
Build your own schemes are set up to provide investors the ability to control what they are invested in. Compared with most providers, a build-your-own provider allows you to not only invest in a range of funds but also a range of fund managers.
More control and choice ultimately allows you to tailor your KiwiSaver portfolio to your investing preferences and financial goals. You may even find that you are paying fewer fees and have been able to diversify your portfolio better by taking into account all your assets.
However, with this also comes some concerns. Greater control means when you select or at least feel as though you have selected the wrong investment, you are more likely to panic. This may cause you to sell your funds at the wrong time and significantly impact your potential gains. Therefore, having confidence in what you’ve invested in is very important.
If you plan to enter into a build-your-own-fund, thorough research should be taken before deciding which assets to select. This requires having both significant knowledge of fund manager research processes as well as the time commitment to the research and monitoring of your investments.
For this reason, we believe Kiwis should only consider this scheme if they have a broad knowledge of the investment market and/or access to financial advice.
The great thing about fund managers is that they do all the research and monitoring for you. Although you have less control and have to be happy with someone else’s investment decisions, managers will likely have more knowledge as they work in this area day in and day out.
Technically, if you want to DIY your own KiwiSaver funds, you can do this by creating your own portfolio anyway. Just requires greater self-control not to touch it or switch KiwiSaver assets at the wrong time.
Awards exist for many different industries. And the KiwiSaver scheme industry is no exception.
With KiwiSaver awards, there is no one award-giving organisation. Nor does the Government, or someone like the Head of KiwiSaver give these awards.
Instead, there are a few independent organisations that give awards to providers based on certain criteria.
Now, what is this criteria you may ask?
That’s a good question. The thing is that there is no one set of criteria.
So to give you an idea of the criteria that different fund managers use, below is a rough summary of the rating/award giving criteria of three separate organisations.
| Canstar KiwiSaver Star Ratings (Source) | Zenith NZ Fund Awards (formerly known as the Fundsource Awards) (Source 1 and Source 2) | Good Returns (Source) |
• 70% based on performance • 20% based on features of the fund • 10% based on price | • Funds must pass through a “rigorous” qualitative and quantitative analysis first • After passing this test, funds get analysed on a “performance based approach” | • Funds are measured on quantitative and qualitative criteria. • Fund performance is a key measure. • Measures commitment to NZ market • Allows people to “have their say” for some of their awards |
One thing that should be noted from this is that the performance of a fund is weighted heavily in the criteria for rating providers. But while performance is important, performance is not everything.
Other criteria should be kept in mind when choosing a fund, such as risk tolerance, and your values. This is where using National Capital’s KiwiSaver HealthCheck can help you find the right KiwiSaver scheme and fund for you.
We go into more detail about the potential pitfalls of relying on only performance to decide which provider to invest with in our detailed blog post about the award-winners.
Despite the heavy focus on performance, different KiwiSaver award-giving organisations come up with different winners.
In other words, the award judges that figure out which one is “best” do not always come to a consensus as to which one that is. This is another reason to not rely solely on awards.
The table below will illustrate this for you.
| Canstar Awards 2020 – KiwiSaver (Source 1, Source 2 and Source 3) | Zenith Fundsource Awards 2019* KiwiSaver Manager of the Year (Source) | Good Returns 2020 KiwiSaver Manager of the Year (Source) |
Provider of the Year: Milford Funds Ltd Most Satisfied Customers: Simplicity Outstanding Value: BNZ, Fisher Funds and Milford Funds Limited | Winner: ASB Group Investments Finalist: Booster Investment Management Limited Finalist: Fisher Funds Management Ltd | Winner: Simplicity KiwiSaver Finalist: ANZ KiwiSaver Finalist: Fisher Funds KiwiSaver Finalist: Milford KiwiSaver |
* Zenith did not give out a 2020 KiwiSaver Manager of the Year Award due to Covid-19.
The verdict – are KiwiSaver awards that useful?
At National Capital, we think that KiwiSaver awards are something that can be kept in mind. However, they should not be your only consideration when choosing a provider.
Remember – award-giving organisations have one set of criteria for choosing which KiwiSaver scheme is best. That does not mean you’ll agree with their criteria.
If for example, you are an ethical person who only invests in investments that align with these beliefs, you may not find it useful that some award-giving organisations don’t factor ethics in as much as you’d like.
Using the research compiled by our research team, our KiwiSaver HealthCheck takes into account the other factors you should take into account to find the best fund for you.
Read More: KiwiSaver awards – do they really matter?
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.
Many people think the task of changing KiwiSaver companies is daunting. But in reality with the right guidance, it’s a fairly simple process. In the past this meant lengthy forms and paperwork to verify your identity and address. However these days most providers have moved the KiwiSaver sign up and transfer process completely online.
1. Find your PIR: The PIR is your Prescribed Investor Rate. It is the tax rate that your investments will be taxed at. It’s important to get this right since if you pay tax at a lower rate than you should, the IRD will come after you for the balance!
National Capital has developed a PIR calculator to help Kiwis find their PIR.
2. IRD Number: You will need your IRD number for joining KiwiSaver. If you can’t find your IRD number it’s a good idea to check the following places:
If you still cannot find it, get in touch with Inland Revenue.
3. Which Fund: During the signup process you will be asked which Fund of the new provider you want to join. This is the most important decision you will need to make, so ensure you have the answer before you start the KiwiSaver sign up process.
4. Proof of Address & Proof of Identity: The way you do this will vary depending on whether you choose to do the change KiwiSaver process using an offline or online form. If you are completing the process using paper or PDF forms the provider will require you to send in attested documents verifying your identity and address. The requirements vary among providers.
However, as mentioned before most providers have an online signup process, and they can verify your identity digitally as part of that process. Address proof normally includes you entering in your name and address which is compared to a series of databases to confirm that they match. Proof of Identity is performed by getting you to put in the details of your driver’s license to ensure you are who you say you are! Some may even get you to take a selfie which is then digitally matched with your license.
5. Now you wait: Once you submit a request to join a particular fund, it can take up to 10 working days for the IRD to direct new contributions to your new provider and your existing one should transfer all your funds to your new provider.
While changing KiwiSaver is a fairly simple process, if you require help there are always options like using National Capital to help you.
Make a Video appointment with Ilma Mani, our Financial Adviser and sort out your KiwiSaver.
Ilma Mani is a Financial Adviser with a Bachelor of Business majoring in Finance. She has helped hundreds of Kiwi’s sort out their KiwiSaver accounts. Click the button below to set a 30-minute video call appointment with her.
