Choose an Investment Fund

The range of KiwiSaver investment funds available is large. Funds vary in terms of their investment risk, with higher risk funds potentially offering higher rates of return in the long term, but with greater probability of low or negative returns in the short term.

Generally speaking, the risk of a fund is driven by the proportion invested in equities (growth assets) versus debt securities (income assets). In the long term, equities can be expected to produce higher returns than debt securities, but with a much bumpier ride along the way.

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Some investment funds have a fixed mix of equities and debt with names like "conservative", "balanced" or "growth". Others, known as lifestyle funds, become progressively less risky by reducing the proportion of equity investments held over time.

How do you decide on the right level of risk for you? It depends on how long you expect it will be before you want to access the savings and how sensitive you are to the possibility of poor returns in any given year (all part of investing in equities). For help, have a look at the Investment Recommender at www.sorted.org.nz.

Once you've identified your risk profile, you're just about ready to select a scheme and investment fund. There's just one more thing you need to decide before you look at the options: passive versus active management.

In funds where the investments are passively managed, the people responsible for actually managing the money (the investment managers) invest it in such a way as to simply track the investment markets, whether they be markets for domestic or international equities, debt, real estate or whatever.
In funds where the investments are actively managed, the investment managers try to beat the markets, rather than just track them, by investing more in some stocks and bonds and less (or none) in others.

Passive management is the low cost option; active management is invariably more costly but offers the potential for additional return if the managers are successful. However, with active management also comes the risk of under-performance if the managers get their selections wrong. So, once you've decided on passive or active:

Choosing between passively managed funds (for any given risk profile) is mainly on the basis of total costs, as tracking markets is a pretty straightforward thing for managers to do; while
Choosing between actively managed funds mainly involves assessing the managers' ability to beat the markets, and at what level of risk, since the (higher) costs of actively managed funds don't vary too much from fund to fund.

Now you're ready to Compare KiwiSaver Investment Options!

This tool allows you to compare key information about the investment funds available in each of the active choice KiwiSaver schemes. It's important to remember that neither providers nor WSNZ guarantees future returns and that WSNZ does not endorse any particular KiwiSaver scheme or provider. We recommend you seek independent financial advice. See our disclaimer.

Because of the large number of investment funds available, we've divided them into three categories according to their investment risk (i.e. proportion of growth assets):

Conservative Funds in which growth assets are less than 40% of the portfolio.
Balanced Funds in which growth assets are between 40% and 70%.
Growth Funds in which growth assets are 70% or more of the fund.

Within each category, you can choose several investment funds to compare. For each investment fund, key information about the provider of the fund is shown, along with details of the investment arrangements of the fund covering six areas:

Risk strategy - the target proportion invested in growth assets.
Investment manager(s) - who is actually responsible for investing the assets of the fund?
Passive or active management - are the assets of the fund invested predominantly to track or beat the market?
Tactical asset allocation - does the manager of the fund seek to add value by ‘tilting' the portfolio's investments based on economic forecasts?
Currency hedging policy - are exposures to foreign currencies hedged and does the manager actively manage the level of hedging over time?
Costs - what are the estimated fees and expenses, expressed as an annual percentage of the assets of the fund?