KiwiSaver fund types explained, from defensive to aggressive
Every KiwiSaver fund sits somewhere on a spectrum from defensive to aggressive. The label describes how much of the fund is invested in growth assets such as shares and property, and that single setting drives most of the difference in how your balance behaves.
The five fund categories
KiwiSaver funds are commonly grouped by their share of growth assets. Defensive funds hold roughly 0 to 10 percent growth assets, conservative funds roughly 10 to 35 percent, balanced funds roughly 35 to 63 percent, growth funds roughly 63 to 90 percent, and aggressive funds roughly 90 to 100 percent. The rest sits in income assets such as bonds and cash.
What growth assets do to your balance
Growth assets like shares and listed property have historically delivered higher returns over long periods, but they move around far more along the way. A fund with more growth assets will usually show bigger rises and bigger falls from month to month. Income assets are steadier, but over long periods they have generally grown less.
Why your timeframe matters most
The longer it is until you need the money, the more time your balance has to recover from market falls. That is why the time until you buy a first home or retire is usually the starting point when weighing up a fund category, alongside how comfortable you are watching your balance move.
Defaults are balanced funds
If you never chose a fund, you were likely placed in a default fund. Since December 2021, default KiwiSaver funds have been balanced funds. A default setting is a reasonable starting point, but it is not a decision made for your goals, your timeframe, or your comfort with risk.
This article is general information, not personalised financial advice. If you would like help understanding which category fits your situation, book a consultation with a Renver adviser.