Imagine you have taken a personal finance quiz on the internet and it tells you that you should invest in a “growth fund”. So does that mean you can pick any growth fund to invest into, because all of them will be the same? Not exactly.
While there are guidelines, there is no single specific allocation for what a “growth fund” or a “balanced fund” should look like. As a result, the types of funds vary considerably in the way they allocate your KiwiSaver money and this is why we believe that it is not the best idea to simply pick a fund because of its name.
About the data being used
We have collected some historical data from a variety of providers in order to illustrate what we mean. The data was collected from National Capital’s website on the 25th of November and is primarily based on target asset allocations. This indicates how a fund aims to allocate their assets but not necessarily how they are currently being allocated. Data is rounded to the nearest 0.5%.
We also want to make clear that this post is not intended to say that one fund provider is better than another fund provider. The data we have used here is simply to make comparisons.
Funds with the word “growth” in them
|
Name of Fund |
Type of Fund |
Growth Assets |
Income Assets |
Cash |
|
Fisher Funds Two KiwiSaver Scheme Growth Fund |
Growth |
75.0% |
15.0% |
10.0% |
|
Mercer KiwiSaver Scheme - Mercer Growth Fund |
Growth |
75.0% |
21.0% |
4.0% |
|
Aon KiwiSaver Scheme Russell Lifepoints Growth Fund |
Growth |
75.0% |
25.0% |
0.0% |
|
Milford KiwiSaver Plan - Milford KiwiSaver Active Growth Fund |
Growth |
78.0% |
16.0% |
6.0% |
|
Fisher Funds KiwiSaver Scheme Growth Fund |
Growth |
80.0% |
15.0% |
5.0% |
|
Superlife KiwiSaver Scheme Superlife Growth |
Growth |
80.0% |
19.0% |
1.0% |
|
Generate KiwiSaver Scheme Growth Fund |
Growth |
82.5% |
12.5% |
5.0% |
|
Booster KiwiSaver Scheme Asset Class Growth Fund |
Growth |
90.0% |
9.0% |
1.0% |
|
Superlife KiwiSaver Scheme US Large Growth Fund |
Equity |
99.0% |
0.0% |
1.0% |
We can see from the dataset that there is a variety of target asset allocations for funds with the word “growth” in them. For example, Fisher Funds Two aims to have 75 percent of its growth fund invested into growth assets, while Superlife’s KiwiSaver Scheme US Large Growth Fund intends to have almost 100 percent in growth assets! Some funds choose to put a small percentage of investors money in cash and cash equivalents, while for others almost none.
We want to point out that Superlife’s US Large Growth Fund is actually an equity fund. The word “growth”’ actually refers to the types of companies this fund invests into. In this case, the name of the fund refers to “growth companies”. These are companies that have shown the potential to grow faster than what is normal for their industry or the economy. Therefore, it is important to not just go by the name “growth” in the title when deciding which KiwiSaver fund to invest into.
If you compare what growth funds target as their asset allocation compared to what they actually invest in, you can get some interesting numbers too. For example, Amanah’s growth fund, which aims to invest 80 percent, had only 59.4 percent of their assets in growth assets as of their last quarterly update. If we were to go off what Amanah was actually investing into, this fund would be considered a balanced fund.
There is one clear take away from all of this: just because a fund calls itself a “growth fund”, it does not necessarily mean it is right for you.
Balanced funds
|
Name of Fund |
Type of Fund |
Growth Assets |
Income Assets |
Cash |
|
ANZ KiwiSaver Scheme Balanced Fund |
Balanced |
50% |
40.00% |
10.0% |
|
Mercer KiwiSaver Scheme - Mercer Balanced Fund |
Balanced |
55.0% |
35.0% |
10.0% |
|
Fisher Funds KiwiSaver Scheme Balanced Strategy |
Balanced |
56.5% |
32.0% |
11.5% |
|
Fisher Funds Two KiwiSaver Scheme Balanced Fund |
Balanced |
57.0% |
37.0% |
6.0% |
|
Superlife KiwiSaver Scheme Superlife Balanced |
Balanced |
60.0% |
39.0% |
1.0% |
|
Aon KiwiSaver Scheme Russell Lifepoints Balanced Fund |
Balanced |
60.0% |
40.0% |
0.0% |
|
Booster KiwiSaver Scheme Balanced Fund |
Balanced |
60.0% |
35.0% |
5.0% |
|
Milford KiwiSaver Plan - Milford KiwiSaver Balanced Fund |
Balanced |
61.0% |
31.0% |
8.0% |
|
AMP KiwiSaver Scheme - AMP Responsible Investment Balanced Fund |
Balanced |
65.0% |
25.0% |
10.0% |
There is again some considerable variation between the target asset allocations of different balanced funds. ANZ aims to invest half of your funds into growth assets, while AMP’s KiwiSaver scheme aims to invest almost two-thirds.
The reason why this matters is that because of the varying asset allocations of different fund providers, you can still end up choosing the wrong fund for your situation.
Suppose you are looking for a balanced fund with less volatility. In this case, you might be best off investing in the ANZ KiwiSaver Scheme Balanced Fund. However, if you did not look at the different asset allocations of different KiwiSaver types of funds, then you might end up investing in AMP’s Responsible Investment Balanced Fund. Because of the variation in asset allocation between these funds, these two KiwiSaver balanced funds are best for two different sets of people, despite them both being balanced funds.
As a result, it is not enough to simply tell someone to “invest in a balanced fund” because there is significant variety between each fund. So, in order to understand which balanced fund might be best for you, you would have to dig into the specifics of each. This is where National Capital’s free financial advisory service can help.
Conservative funds
|
Name of Fund |
Type of Fund |
Growth Assets |
Income Assets |
Cash |
|
Milford KiwiSaver Plan - Milford KiwiSaver Conservative Fund |
Conservative |
18.0% |
76.0% |
6.0% |
|
Mercer KiwiSaver Scheme - Mercer Conservative Fund |
Conservative |
20.0% |
50.0% |
30.0% |
|
Aon KiwiSaver Scheme Russell Lifepoints Conservative Fund |
Conservative |
20.0% |
80.0% |
0.0% |
|
Booster KiwiSaver Scheme Default Saver Fund |
Conservative |
20.0% |
50.0% |
30.0% |
|
Fisher Funds KiwiSaver Scheme Conservative Fund |
Conservative |
27.5% |
53.0% |
19.5% |
|
Fisher Funds Two KiwiSaver Scheme Conservative Fund |
Conservative |
27.5% |
53.0% |
19.5% |
|
Superlife KiwiSaver Scheme Superlife Conservative |
Conservative |
30.0% |
69.0% |
1.0% |
|
Generate KiwiSaver Scheme Conservative Fund |
Conservative |
32.5% |
62.5% |
5.0% |
Unlike the other funds we’ve covered so far, conservative funds aim to have a minority of their assets invested into growth funds. But there is still variety in the way your money is invested.
Looking at cash assets for example, Mercer’s conservative fund aims to invest 30 percent of your money into cash and cash-equivalent assets. However, the Aon Scheme Russell Lifepoints Conservative Fund does not intend to invest any of your money into cash and cash-equivalent assets.
Ethical funds
|
Name of Fund |
Type of Fund |
Growth Assets |
Income Assets |
Cash |
|
Booster KiwiSaver Scheme Socially Responsible Investment Moderate Fund |
Ethical |
35.0% |
45.0% |
20.0% |
|
Booster KiwiSaver Scheme Socially Responsible Investment Balanced Fund |
Ethical |
55.0% |
40.0% |
5.0% |
|
Superlife KiwiSaver Scheme Ethica |
Ethical |
60.0% |
39.0% |
1.0% |
|
Pathfinder Ethical Growth Fund |
Ethical |
75.0% |
22.0% |
3.0% |
|
Pathfinder Global Responsibility Fund |
Ethical |
91.0% |
0.0% |
9.0% |
|
Booster KiwiSaver Scheme Socially Responsible Investment High Growth Fund |
Ethical |
98.0% |
0.0% |
2.0% |
To top it all off, let us have a look at funds that brand themselves as ethical.
As one can see from this list, looking for an ethical fund alone is not the wisest way to invest. This is because there is even more variety in the way that providers allocate their funds. At National Capital, we believe it is better to choose a type of fund first and then make sure it is ethical.
Some providers of ethical KiwiSaver funds go into a lot more detail regarding what they invest in than others. This information can be found online through the KiwiSaver provider’s website. Whatever your situation, it is important to make sure any decision about which fund to invest in is informed by research.
Where can I find out more about different asset allocations of different KiwiSaver funds?
If you wanted to find more information about a particular KiwiSaver fund, you could consider searching for information online.
However, we believe that analysing these funds in detail is a task that is best left to the experts. By doing this, you can save valuable time trying to understand all the different types of funds.
National Capital offers a free financial advice service that helps you determine the most appropriate asset allocation for your circumstances. Because of the extensive research we have done, National Capital can competently cater for your specific situation. Additionally, you will get the privilege to chat to a real person about any questions that you may have.
So what are you waiting for? Click the link below and fill out our KiwiSaver HealthCheck to get started.
