How to choose the right KiwiSaver fund

By MAS Team

Whether you're joining KiwiSaver for the first time or looking to change your strategy, choosing the right KiwiSaver fund can help you balance your financial goals with a level of risk you're comfortable with. 

But there are a few different types of funds to choose from and it can be hard to know which one is right for you. Here's a breakdown of some of the main things to bear in mind when you're trying to make this decision. 

Woman using a calculator at a desk next to piggy bank

Types of KiwiSaver funds

There are different categories of KiwiSaver funds to choose from, including defensive, conservative, balanced, growth and aggressive. Each has a different mix of investments and therefore risk and return characteristics. These range from the Conservative Fund's low-risk but also lowest potential long term return profile, through to the Aggressive Fund's highest risk but also highest potential long term return profile. 

Growth vs. income assets

KiwiSaver is an investment, and your provider will invest your money on your behalf with the aim of growing your account balance. There are two general categories of assets your KiwiSaver investment can be allocated to:

Growth assets

Growth assets include shares and property that have a higher chance of growing over the medium to long term, but whose value can move sharply (both up and down) in the short term. 

Income assets

Income assets include things like cash and bonds, which have fewer ups and downs in the short term than growth assets, but have generally lower returns than growth assets. 

High risk funds, like growth or aggressive funds, that have higher potential long-term returns are made up of more growth assets, while lower risk funds are weighted towards income assets and therefore have lower potential long-term results. 

Don't rely on past performance

It might seem like a good idea to search 'best performing KiwiSaver fund' and move all your money into whatever comes up. But there are some pitfalls to this plan, and just because a fund has performed well in the past, it doesn't mean it will continue to do so. 

Choosing the right KiwiSaver fund for you involves thinking about what you want to use your KiwiSaver balance for, how much you'll need for your first home purchase or retirement, and when you are likely to withdraw your funds. It also involves weighing up other non-financial factors like the KiwiSaver provider's investment philosophy, particularly when it comes to responsible investing

What's your risk appetite?

To choose a KiwiSaver fund, you'll need to figure out your 'risk appetite', which is how much you're prepared to watch your money fluctuate over time. 

A higher risk fund generally means greater returns in the long run, but with a few more ups and downs along the way. If you're comfortable weathering market downfalls and seeing your balance drop occasionally, and you don't need to access your money in the next few years, high risk funds generally earn higher returns in the long term. 

To help you choose a KiwiSaver fund that suits your financial goals, check out our investment risk profiler

When will you be withdrawing from your KiwiSaver account?

When are you likely to need your KiwiSaver investments to help fund a first-home purchase or your retirement? This question is one of the main factors that determine which KiwiSaver fund you should be investing in. 

If you're in a higher-risk fund, and you're hoping to use your KiwiSaver account soon – either to retire or get on the property ladder – a market slump could make a serious mess of your plans. If you're in this position, an option might be to shift your investments into a more conservative fund to help reduce the impact on your account balance in the event of a significant market fall. 

Alternatively, if 65 is still a long way off for you and you're not planning on making a first home withdrawal, then choosing a growth fund and setting a reminder to review your strategy every five years or so could be the plan for you. 

Happy couple moving house sitting talking drinking a hot drink next to moving boxes

Understanding default funds

When you first join KiwiSaver through your employer, and you do not make an active choice of your KiwiSaver scheme provider, you'll be put in a default KiwiSaver scheme and in their default fund, which will be a balanced fund. 

These default funds are intended to help get your savings started while you figure out the best fund for the future of your KiwiSaver account. Unfortunately, many people in default funds delay making a decision to move their savings from a default fund to one better suited to their financial goals – or they simply forget they're in a default fund at all. 

So don't set and forget with your fund. You may decide that the default fund you're put in is the right one for you long term – but it's important to consider your options. And while you're deciding on your fund, it's also a good idea to think about how you want to contribute to your KiwiSaver account. 

MAS offers a free financial review for Members to make sure their finances suit their life stage and goals. Call 0800 800 627 to speak with your adviser.

Medical Funds Management Limited is the manager and issuer of the MAS KiwiSaver Scheme (the Scheme).

A copy of the Product Disclosure Statement (PDS) for the Scheme can be found here. 

This article provides information of a general nature only and is not intended to be financial advice. If you would like to talk to a MAS adviser, phone 0800 800 627 or email us

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