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KiwiSaver Comparison

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?

Our professional KiwiSaver advisers at National Capital have come up with this comprehensive guide on how to choose the best KiwiSaver fund and provider for your needs. So read on and hope it helps you get closer to your decision.

How do I choose the best KiwiSaver fund for me?

Note: The following information is general information and is not personalised advice. If you want personalised advice on which KiwiSaver fund is most appropriate for you, please submit the KiwiSaver HealthCheck.

Best performing KiwiSaver Provider/Scheme?

Best Performing KiwiSaver Funds as of December 2020

FUND TYPE
FUND NAME
5YR AVERAGE
Conservative
Milford
Conservative
5.1%
Moderate
Aon Russell Lifepoints
6.5%
Balanced
Milford Balanced
8.3%
Growth
Fisher Funds Growth
10.1%
Aggressive
Booster GearedGrowth
12.6%

*Past performance is not necessarily indicative of future performance.

*All returns are after fees and tax, updated 31st December 2020.

*Source: National Capital Research Dec 2020

Is your KiwiSaver fund missing from the list?

We’re here to help find the best KiwiSaver fund for you. Let’s start by providing you with a comparison report of your existing fund.

It's important to check the health of your KiwiSaver fund and understand its position within the market. Submit the form below to view a simple graphic report of your fund.

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How do I choose the best fund for me?

Most of us start our search looking for the Best Performing KiwiSaver Provider or Scheme. But is that the right place to start? 

Every provider has different types of KiwiSaver funds within their scheme. So while one provider might have the best performing Growth fund, it could be another KiwiSaver provider 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 you choose a KiwiSaver provider.

Before we start comparing performance of KiwiSaver funds

Once they know the type (or types) of fund they need to be invested in, Kiwis then move to compare past performance of KiwiSaver funds. 

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 the performance of KiwiSaver funds, 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. 

Should you consider past year performance?

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 of different KiwiSaver funds 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 fund?

Investors should not go and constantly scour for the best performing fund, switching 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 KiwiSaver.

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.

The Woes of Magellan Investors...

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.

Why Investors Who Look For The Best Performing Investments Underperform The Market?

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.

Dalbar

Investor Psychology 

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 cause they were chasing short term returns. All they needed to do was stay invested long term.

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.

Capital Not Available/Capital Needed For Other Purposes

This generally occurs because of a lack of financial planning. When investing in a fund, one should make sure that they:

  1. Have enough money to invest in that fund
  2. Will not need to use their investment money in the case of a financial emergency

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.

So how does this relate to choosing a KiwiSaver fund?

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 KiwiSaver fund and comparing returns to other KiwiSaver funds in the market is a good step. But you need to do much more. 

  1. At National Capital, we help our clients plan their KiwiSaver investments correctly.  We do this by determining their Volatility Capacity, Volatility Tolerance and the actual Returns Required to fulfil their goals.

  2. We research the KiwiSaver funds we are recommending to make sure they are managed well. Our research on the KiwiSaver funds we recommend covers:
     
    • Culture of the company running the fund. Are they focusing on the investor or only growing the business?

    • Volatility dependent performance: How is the performance compared not only to other funds, but how much risk is the fund taking to achieve that performance.

    • Fees: Are the fees reasonable and how do they compare to similar funds?

    • Portfolio: What is the asset split, which countries are the funds invested in. How much of the funds are invested in New Zealand, and what are the liquid assets that the fund has?

    • People: Who are the people running the fund and how long have they been in that role. Do they have the experience and skills required to manage the fund, and does their remuneration align them with the interests of the investors?

    • Investment Processes: What are the governance processes of the fund, what is their brokerage execution policy and how much portfolio turnover do they have?

Using all this information we then recommend the appropriate fund for our clients. 

This is a lot, what will you charge me?

No. Our KiwiSaver advice is absolutely free of charge to you. There are two reasons for this:

  1. We get paid our fees by the KiwiSaver Schemes to provide this service, similar to how the Mortgage Adviser is paid by the banks. This covers our costs. We work with multiple KiwiSaver providers so that we can choose the best fund for you.

  2. Our mission is to help 1 million Kiwis become financially secure. Our company was formed on the three Māori principles of pūataata (transparency), tikanga(the correct way) and taurikura (prosperity), and we believe by helping Kiwis achieve financial security via KiwiSaver, we can best achieve our mission.

Watch the 2 min video of our KiwiSaver advice process to know more.

What next?

If you would like us to create a KiwiSaver plan for you, and select the appropriate fund based on that plan, please submit our KiwiSaver 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. 

Free KiwiSaver Recommendations

I would like to do my own KiwiSaver research

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 they 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 who has underperformed for the past 10 years or feel more at ease with a 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 drops.

Comparison Factor 1 - KiwiSaver Fees

KiwiSaver fees are an important consideration while comparing KiwiSaver funds. By law, KiwiSaver 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 on fees when choosing a KiwiSaver provider, look deeper. 

Compare Apples to Apples

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. 

What fees am I paying?

KiwiSaver fees are normally broken up into two parts.

  1. Percentage Management Fee: In most cases, this is presented as a percentage of your KiwiSaver balance. This way your fee increases incrementally along with your balance, which helps keep things fair. Management Fees range from 0.3% to 2% of your KiwiSaver balance. The variance in this figure is primarily due to the different types of KiwiSaver funds. 

  2. Fixed Membership Fee: In addition to the Management fee, most KiwiSaver providers also charge an Annual Membership or Administration Fee. Membership fees in KiwiSaver range from $0 to $60 a year, and on average $32. 

Providers can change their fees over time, so it's a good idea to keep monitoring your KiwiSaver provider's fee structure. 

Should I just choose the fund with the lowest fees?

No. Fees are only a small component of what determines how much you will finally be able to grow your KiwiSaver balance to. There have been studies performed which 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 KiwiSaver funds net returns after fees. 

Read More: Should I just choose a KiwiSaver fund with the lowest fees?

Comparison Factor 2 - Active OR Passive - Which is better?

What's the difference?

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 KiwiSaver 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. 

Are passive funds really that passive?

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.

Which is better?

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.

Do I have to choose?

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 fund is best for you.

Read More: Active vs Passive KiwiSaver funds - which is better?

What is an index fund and how does it work?

Comparison Factor 3 - Evaluation of Ethical Funds

Now that we have discussed performance, fees, returns and services, is that all? Not really! But this part is optional and quite personal. 

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 

  • Fossil fuels
  • Nuclear power production
  • Whaling 
  • Military weapons manufacturing
  • Civilian firearms production
  • Tobacco production
  • Alcohol production
  • Gambling operations
  • Adult entertainment
  • Genetically modified organisms

Some KiwiSaver 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 KiwiSaver 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?

Comparison Factor 4 - Bank KiwiSaver Scheme vs NZ Owned

What's the difference?

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. 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.

Big-bank-KiwiSaver

(Source: Morningstar KiwiSaver Survey December Quarter 2020)

We then have New Zealand owned KiwiSaver schemes that are not run by a bank. Some of them are non-for-profit, some actively managed and some are niche, offered only to certain people such as the NZ Defence Force Scheme.

Which is better?

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 KiwiSaver 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, KiwiSaver 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 KiwiSaver 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 sign up to their own banks 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. 

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 KiwiSaver 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 sign up 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?

Read More: Should I be in a Bank KiwiSaver scheme or an NZ owned KiwiSaver scheme?

Comparison Factor 5 - Asset Allocation of different KiwiSaver Funds.

What is asset allocation?

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 KiwiSaver scheme invests into. So, below is a breakdown of these three different types of assets:

  • Growth assets include highly volatile, but high-return investments. These include shares, property and infrastructure.

  • Income assets include assets such as corporate bonds and government bonds. They are considered less volatile investments compared to growth assets. However, they are not considered as safe as cash and cash equivalent assets. 

  • Cash and cash equivalent assets are the least volatile type of asset, but give the least amount of returns. These include investments like floating rate notes and term deposits.

Asset allocation varies greatly between funds. 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 KiwiSaver 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.

‘Growth’ Funds

 

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%

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.

'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%

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.

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.

'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%

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 deciding which KiwiSaver provider to choose to invest your hard earned money with. The differences between funds can be seen in the way providers invest KiwiSaver money. 

Each provider will have their own unique methods they use to invest your money. This is because different KiwiSaver 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.

Let's compare

We would 'run out of space' if we covered all 30 KiwiSaver providers below. So instead, we will compare and contrast just three KiwiSaver schemes. This will show the wide range of methods that KiwiSaver schemes can use to invest your funds.

The great thing about National Capital is that if you want more information about a specific KiwiSaver 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 of different KiwiSaver providers, here are the three providers we will discuss: 

  1. Milford Asset Management
  2. JUNO, and 
  3. Simplicity

 

  1. Milford

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.

  1. JUNO

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: 

  1. Identify
  2. Research 
  3. Construct, and 
  4. Review

The identify stage involves looking for assets which 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.

  1. Simplicity

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.

Read More: Investment processes of KiwiSaver providers - how does yours compare?

Comparison Factor 7 - Who are the people managing your KiwiSaver money?

The people

With over 7 billion people on Earth, each unique, there is bound to be variety in the people managing your 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 fund while selecting one.

There is another thing that is also important to note. You may think the employees at your KiwiSaver provider 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 KiwiSaver schemes that hire their own portfolio managers versus schemes that use external managers.

Funds with portfolio managers

Some KiwiSaver schemes 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 KiwiSaver money. They do a variety of activities such as research and analysis to do exactly this.

Examples of KiwiSaver providers who list their portfolio managers on their websites are:

  1. Milford Asset Management
  2. Fisher Funds Two, and
  3. KiwiWealth

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.

Funds using external fund managers

Other KiwiSaver schemes use external fund managers or underlying investment managers to take care of your KiwiSaver 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 KiwiSaver funds. These managers were:

  1. Nikko Asset Management New Zealand Limited 
  2. AMP Investment Management (N.Z.) Limited 
  3. Harbour Asset Management Limited
  4. Vanguard Investments Australia Limited
  5. Castle Point Funds Management Limited, and
  6. Mint Asset Management Limited 

Now one may ask, “Why would a KiwiSaver provider give my KiwiSaver money to someone else to invest?”

The reason is that different KiwiSaver schemes have different ideologies and beliefs. As a result, some KiwiSaver providers 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?

Who are the providers managing your KiwiSaver money?

Comparison Factor 8 - Your own personal requirements

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. So here are two different personal factors someone should keep in mind when choosing the most appropriate KiwiSaver investment strategy.

 

  1. Other investments outside KiwiSaver

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 money. 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 that they get on their KiwiSaver funds.

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.

 

  1. Religious considerations

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 KiwiSaver scheme 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 KiwiSaver 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?

Employer chosen KiwiSaver Scheme

What are they?

Some employers have arrangements in place with a particular provider to default all their employees into a particular scheme. This means, when you join 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 KiwiSaver 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 KiwiSaver provider 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.

Our Advice

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.

Read More: Joining your employer chosen KiwiSaver scheme - a mistake?

Employment Restricted KiwiSaver Schemes

What are they?

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 KiwiSaver scheme offers incentives, does not mean you should automatically join them. Only by research can you find out which KiwiSaver provider is best for you.

This section will break down the three current employment restricted KiwiSaver schemes out there.

New Zealand Defence Force KiwiSaver Scheme (For NZDF Members)

The New Zealand Defence Force’s (NZDF) KiwiSaver Scheme is open for past and present NZDF members, as well as their immediate family. It is run by Mercer.

The NZDF KiwiSaver Scheme offers some incentives for joining. 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.

Supereasy KiwiSaver Scheme (For Local Government Workers)

The Supereasy KiwiSaver 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. 

Medical Assurance Society (MAS) KiwiSaver Scheme (For Professional Services Workers)

The Medical Assurance Society (MAS) KiwiSaver Scheme is for professional services 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 KiwiSaver Scheme has around 14,000 members and around $750 million under management. Therefore, they are the largest restricted KiwiSaver 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

What is build-your-own?

Build your own KiwiSaver Schemes are set up to provide investors the ability to control what they are invested in. Compared with most KiwiSaver 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.

Things to consider

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 fund, you can do this by creating your own portfolio anyway. Just requires greater self control not to touch it.

Read More: 'Build-your-own' KiwiSaver Scheme - Yay or Nah?

Award-winning KiwiSaver Schemes

Awards exist for many different industries. And the KiwiSaver industry is no exception.

With KiwiSaver awards, there is no one KiwiSaver 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 KiwiSaver providers based on certain criteria.

Criteria for KiwiSaver Organisations That Give Awards

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 KiwiSaver schemes. 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 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 award-winning KiwiSaver providers.

Looking at the different KiwiSaver 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 KiwiSaver scheme is “best” do not always come to a consensus as to which KiwiSaver provider that is. This is another reason to not rely solely on KiwiSaver 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 - KiwiSaver award-giving organisations have one set of criteria for choosing which KiwiSaver fund 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?


List of all KiwiSaver Providers & Funds

Amanah KiwiSaver Scheme AMA
Amanah KiwiSaver Scheme
Amanah 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 KiwiSaver Scheme Details AMP
AMP KiwiSaver Scheme Details
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 KiwiSaver Scheme ANZ
ANZ KiwiSaver Scheme
ANZ is one of the world's largest banks and their businesses serve more than 5 million customers. ANZ manages six funds under its OneAnswer KiwiSaver scheme and has total Assets Under Management (AUM) of more than $NZD 10 billion and 592,230 members.
Aon KiwiSaver Scheme AON
Aon KiwiSaver Scheme
Aon is a specialist superannuation division of Aon New Zealand, an insurance broker with over 30 years of industry experience. They currently administer a large portion of corporate superannuation and KiwiSaver schemes in New Zealand.
ASB KiwiSaver Scheme ASB
ASB KiwiSaver Scheme
The ASB KiwiSaver scheme has a total Assets Under Management (AUM) of over $10.5 billion and a total number of over 530,000 KiwiSaver members.
BNZ KiwiSaver Scheme BNZ
BNZ KiwiSaver Scheme
The BNZ KiwiSaver Scheme manages six funds. They have total KiwiSaver Assets Under Management (AUM) of over $NZ 2.7 billion and 178,146 KiwiSaver clients.
Booster KiwiSaver Scheme BOO
Booster KiwiSaver Scheme
Booster Investment Management Limited currently manages 16 KiwiSaver funds. They have total Assets Under Management (AUM) in their KiwiSaver scheme of over $1.85 Billion and 154,417 Kiwisaver members.
Pathfinder KiwiSaver Scheme PAT
Pathfinder KiwiSaver Scheme
Pathfinder manages seven funds under their KiwiSaver scheme, varying in levels of risk from the Cash Fund to the Shares Fund. As of March 2020, the total Assets Under Management (AUM) for Pathfinder is over $77 million.
Christian KiwiSaver Scheme CHR
Christian KiwiSaver Scheme
The Christian KiwiSaver Scheme has total KiwiSaver Assets Under Management (AUM) of over $NZ 54 million and 1,941 KiwiSaver clients.
Craigs KiwiSaver Scheme CRA
Craigs KiwiSaver Scheme
Craigs Investment Partners KiwiSaver has Assets Under Management (AUM) of over $NZ 290 million and 5,777 members.
Fisher Funds KiwiSaver Scheme FF
Fisher Funds KiwiSaver Scheme
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 $2.7 Billion and 140,667 members.
Fisher Funds Two KiwiSaver Scheme FFTWO
Fisher Funds Two KiwiSaver Scheme
Fisher Funds Two manages eleven funds under the KiwiSaver scheme and has an AUM of over NZ $2.28 Billion and 103,255 members.
Generate KiwiSaver Scheme GEN
Generate KiwiSaver Scheme
Generate is a New Zealand owned and operated KiwiSaver 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.
Juno KiwiSaver Scheme JNO
Juno KiwiSaver Scheme
JUNO KiwiSaver Scheme was launched by Pie Funds Management in 2018. Pie Funds is a boutique investment manager who has generated wealth for clients since 2007.
Kiwi Wealth KiwiSaver Scheme KW
Kiwi Wealth KiwiSaver Scheme
The Kiwi Wealth KiwiSaver Scheme manages six funds and has total KiwiSaver Assets Under Management (AUM) of over $NZ 4.4 billion and 216,616 KiwiSaver clients.
Kōura Wealth KiwiSaver Scheme Kōura
Kōura Wealth KiwiSaver Scheme
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.
Lifestages KiwiSaver Scheme LS
Lifestages KiwiSaver Scheme
The Lifestages KiwiSaver Scheme manages eight funds and has total KiwiSaver Assets Under Management (AUM) of over $366 million and 19,152 KiwiSaver clients.
Medical Assurance Society(MAS) KiwiSaver Scheme MAS
Medical Assurance Society(MAS) KiwiSaver Scheme
The Medical Assurance Society KiwiSaver Scheme has a total KiwiSaver Assets Under Management (AUM) of over $NZ 769 million and 15,117 KiwiSaver clients.
Mercer KiwiSaver Scheme MER
Mercer KiwiSaver Scheme
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 was over $2 Billion.
Milford KiwiSaver Plan MIL
Milford KiwiSaver Plan
The Milford KiwiSaver 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).
Nikko KiwiSaver Scheme NIK
Nikko KiwiSaver Scheme
The Nikko AM KiwiSaver Scheme manages six funds and has a total KiwiSaver Assets Under Management (AUM) of over $NZ 7.3 million and 77 KiwiSaver clients.
OneAnswer KiwiSaver Scheme OAK
OneAnswer KiwiSaver Scheme
The OneAnswer KiwiSaver Scheme is run by the ANZ bank. Most of its funds are very similar to those in the ANZ KiwiSaver Scheme.
Quaystreet KiwiSaver Scheme QS
Quaystreet KiwiSaver Scheme
The QuayStreet KiwiSaver Scheme manages ten funds and has total KiwiSaver Assets Under Management (AUM) of over $NZ 187 million and 2,611 KiwiSaver clients.
Simplicity KiwiSaver Scheme SIM
Simplicity KiwiSaver Scheme
The Simplicity Kiwisaver scheme has total Assets Under Management (AUM) of over $980 million and 34,062 KiwiSaver members.
Summer KiwiSaver Scheme SUM
Summer KiwiSaver Scheme
The Summer KiwiSaver Scheme manages nine funds and has total KiwiSaver Assets Under Management (AUM) of over $NZ 166 million and 4,356 KiwiSaver clients.
Superlife KiwiSaver Scheme SUP
Superlife KiwiSaver Scheme
The SuperLife KiwiSaver scheme has a total Assets Under Management (AUM) of over $890 million and 4,685 kiwisaver members (As at August 2019).
Westpac KiwiSaver Scheme WES
Westpac KiwiSaver Scheme
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.

How to switch from one Kiwisaver Provider to another

Many people think the task of changing KiwiSaver providers is daunting. But in reality with the right guidance, it's a fairly simple process. In the past changing KiwiSaver providers meant lengthy forms and paperwork to verify your identity and address. However these days most KiwiSaver providers have moved the signup and transfer process completely online.

Simple Steps

1. Find your PIR: The PIR is your Prescribed Investor Rate. It is the tax rate that your investments inside KiwiSaver 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 to signup to 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 signup process.

4. Proof of Address & Proof of Identity: The way you do this will vary depending on whether you choose to do the transfer process using an offline or online form. If you are completing the process using paper or PDF forms the KiwiSaver 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 KiwiSaver provider and your existing KiwiSaver provider should transfer all your funds to your new KiwiSaver provider. 

While changing KiwiSaver providers is a fairly simple process, if you require help there are always options like using National Capital to help you.

The right KiwiSaver fund will make a big difference to your KiwiSaver payout.

Spending 10 minutes to complete our KiwiSaver HealthCheck form may be the most important thing you can do for your KiwiSaver account right now.

FREE KIWISAVER RECOMMENDATIONS