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Is it time to review your KiwiSaver fund?

Q.      Last week you said that once your KiwiSaver balance gets over $10,000 you should review it to make sure you are in the right fund.  I have been in a default conservative fund for the past 5 years.  My account balance seems to go up every year so I have been happy with that.  How do I know if this is the right fund for me?  I earn $48k per annum and I’m 45 years old.


A.     Yes I do think you should review your KiwiSaver fund. 


The six default funds have served a useful purpose in that they have removed the onus of decision-making from most investors.  But all default funds are required by legislation to be conservative and that is not going to be the best option for everyone. 


To find out how your fund’s performance compares with its peers, I suggest you go to the Morningstar website and look up your fund in their latest quarterly survey to 31 December 2012.  Morningstar provides data on 16 providers (out of a total of 29) so not all funds will be found there but certainly the six default funds are prominently listed.  Note that all returns quoted are before tax. 


As all the default funds are conservative, would you expect their returns to be similar?  The AMP default fund delivered the worst result with a modest 4% per annum over the past 5 years while the OnePath default fund achieved the best result with 5.8% per annum over the same period.  That 1.8% difference will be quite significant if you extrapolate it out over many years.


The reason for the disparity in returns is that AMP has used a very different investment strategy to OnePath.  AMP has treated their default fund as a temporary fund, holding nearly 70% in cash, in the expectation that investors will shift their money to another (perhaps more appropriate) fund.  Because interest rates are low, this strategy has resulted in lower returns.


OnePath on the other hand has diversified the funds more widely, treating the fund as their standard conservative fund and investing in a broad range of growth and income producing assets, with a benchmark of 20% in cash.


But returns and strategy are only part of the review of your KiwiSaver fund.  You should look for a provider that communicates well with their investors.  You should also compare fees.  Then perhaps most importantly, you should invest according to your investment timeframe and risk profile.


As you still have 20 years to go before you can access your funds (let’s assume you are not going to apply for a First Home or hardship withdrawal), you should complete a risk profile to find out your tolerance to risk.  Try the ‘risk recommender’ at to find out if you are a low, medium or high risk investor.  If your answers indicate that you can tolerate a medium or high risk strategy, then you should definitely look at switching to a different KiwiSaver fund. 


I mentioned that there are currently 29 KiwiSaver providers.  Between them they offer over 100 different funds to investors.  How to choose?  Again, you can use reports from organisations like Morningstar to compare returns.  You can then go to the company websites and read up on their investment strategy. 

Some investors want socially responsible or ‘green’ investments, while others may be interested in a fund investing mainly in
New Zealand companies.


What about the so-called ‘life stages’ funds?  These are becoming more popular with KiwiSaver investors.  Your asset allocation is automatically adjusted as you get older, so that you have more growth assets such as shares while you are younger, and more fixed interest as you approach retirement.  It is a good ‘set and forget’ strategy for busy people.


As you can see, choosing a strategy that suits you is not a simple process, but it is worth doing as it could make a difference of thousands of dollars to the end result.  If you want help, talk to an authorised financial adviser.



Shelley Hanna is an Authorised Financial Adviser FSP12241.  Her disclosure statement is available on request and free of charge by calling 8703838.  The information contained in this article is of a general nature and is not intended to provide personalised advice.  If readers have any KiwiSaver questions they would like answered please go to or email


Published in the Hawkes Bay Today 26 February 2013