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How do we choose the most suitable KiwiSaver fund for you?

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With almost 30 different KiwiSaver providers and over 250 funds available between them, selecting the most suitable fund for you may feel overwhelming. But, taking time to pick the right fund to fit your personal situation and goals is crucial in optimising your investments in KiwiSaver.

A lot of Kiwis would look at a few different KiwiSaver funds and pick a fund with the highest past returns and lowest fees. But to make a better investment decision, we have to also look beyond the historical returns and current fees. Taking advice from friends and family may not be enough as it is important to consider different factors to be able to choose the most suitable KiwiSaver fund.

At National Capital, we have a robust and well defined KiwiSaver Investment Selection Process with 5 well-defined pillars we follow to ensure the most appropriate KiwiSaver provider and fund is being recommended to you. These pillars include Regulatory Oversight, Fees, Track Record, Asset Allocation, and Performance.

Regulatory Oversight

Before taking a look at the fees or past performance of a KiwiSaver fund, making sure that the fund manager is working in your best interests is an integral part of the process. We ensure that all the KiwiSaver scheme providers we recommend comply with the obligations under the KiwiSaver Act 2006. The Act states that participants involved in management must meet regulatory standards and act with members’ interests in mind. KiwiSaver is highly regulated and monitored by the FMA (Financial Markets Authority) to ensure that all KiwiSaver schemes comply with these obligations and act in accordance with their stated investment policy.

Fees

While fees should not be the most important factor when choosing a KiwiSaver fund, they do add up overtime. Because we don’t want you to pay a higher fee than you should, we take into consideration both fees and performance of each KiwiSaver fund to determine their expense ratio. From there, we filter out funds with below-median returns and above-median fees. In saying this, different services offered by these KiwiSaver providers may alter the fees they charge. For example, actively managed funds charge higher fees, on average, with the promise of better performance. Depending on your situation, the higher fees may be worth the extra returns or maybe a passively managed fund is better for you in the long-term.

Track Record

Before we recommend you a KiwiSaver provider, we ensure that this particular provider has an established history of success. It is important to look at the quantitative data for each fund that we recommend for the last five years to better understand its past performance. In some cases, if the provider’s KiwiSaver fund is less than five years old, we will look for other relevant data which could include the benchmark or index that passively managed KiwiSaver funds track.

Asset Allocation

As the asset allocation of KiwiSaver funds will determine what fund type they actually belong to, we actively research the proportions of asset types for each individual fund we recommend. This ensures that we are comparing apples to apples, regardless of what they say they are. With different KiwiSaver fund types available and varying proportions of growth assets in each, we look into what is appropriate for you based on your situation, financial position, volatility appetite, investment timeframe, goals, etc.

Performance

While past performance doesn’t necessarily define future performance, it does give us valuable information about the KiwiSaver fund. If the fund has been consistently achieving high return rates over a long period of time, we can then assume that this is based on the managements’ robust investment policies. We want to make sure your savings are growing and are invested into funds that have great historical performance relative to other funds within the same type of fund.

Let us help

During a volatile economic climate, seeking professional financial advice is more important than ever. On average, financial returns for Kiwis that get professional advice are 4% better than those who don’t, according to a research report commissioned by the Financial Services Council. National Capital specialises in KiwiSaver and Investment research and can help you build your personalised KiwiSaver investment strategy. Submit our KiwiSaver HealthCheck to get started on your journey.

If you have any questions, please do not hesitate to contact us, or alternatively you can take a look at our FAQ page.

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