How KiwiSaver funds invest – asset classes and fund types explained

Every KiwiSaver fund, whatever its name, is built from the same handful of ingredients. What makes a conservative fund conservative and an aggressive fund aggressive isn’t magic – it’s simply the recipe: how much of each ingredient the fund holds. Once you understand the ingredients, fund types stop being jargon.

The four main asset classes

• Cash. Bank deposits and very short-term lending. The steadiest ingredient of all – it essentially can’t fall in dollar terms – but over long periods it usually grows the slowest, and after inflation it can even go backwards in buying power.
• Fixed interest (bonds). Loans to governments and companies that pay regular interest. Steadier than shares, with modest expected returns. Bond values do move – they can have weak years too – but the swings are usually far smaller than shares.
• Property and infrastructure. Listed property companies, and assets like airports, toll roads and power networks. These behave somewhere in between: they produce income like bonds, but their values rise and fall with markets like shares.
• Shares (equities). Part-ownership of companies, in New Zealand and around the world. The bumpiest ingredient year to year, and historically the strongest engine of long-term growth.

Cash and fixed interest are called income (or defensive) assets – their job is stability. Property and shares are called growth assets – their job is long-term growth. Every fund type is defined by its split between the two.

The recipe, fund type by fund type

The exact mix varies from fund to fund, but the typical growth-asset share for each type looks like this:

• Defensive – almost entirely income assets (roughly 0–10% growth assets). Built for money that must hold its value in the short term.
• Conservative – mostly cash and bonds, with a modest share slice (roughly 10–35% growth assets). Steady, but slow to grow.
• Moderate – a cautious middle step (roughly 35–50% growth assets). A little more growth than conservative, a little more movement too.
• Balanced – an even-handed mix (roughly 50–65% growth assets). Meaningful growth potential with meaningful stability alongside it.
• Growth – mostly shares and property (roughly 65–85% growth assets). More ups and downs, more long-term growth potential.
• Aggressive / high growth – almost all growth assets (roughly 85–100%). The bumpiest ride, aimed squarely at the long game.

Two funds with the same label can still differ – one provider’s “balanced” may hold more shares than another’s – which is why the fund’s own documents matter more than its name.

Why the mix matters more than almost anything

Over a long timeframe, the growth/income split drives most of the difference in what you end up with – more than the provider, more than small differences in fees, and far more than any single year’s returns. A higher growth share means bigger dips along the way and, historically, a bigger balance over decades. A higher income share means a smoother ride and slower growth. Neither is “better”: the right mix is the one that matches when you need the money and how you handle the dips.

Matching the mix to your investor type

Our fact find gives you an investor profile – conservative, balanced, growth or aggressive – based on your timeframe, goals and how you feel about risk. The profile maps directly onto these recipes: it’s shorthand for “the growth/income split that suits your situation”. If you’ve just completed the fact find, this page shows what your profile means in practice.

A few rules of thumb that fall straight out of the recipes:

• Money you need within a few years (a first-home deposit, spending money in retirement) belongs at the defensive end – a big dip at the wrong moment matters more than missed growth.
• Money with a decade or more to run can usually afford a growth-heavy mix – there’s time to recover from the inevitable weak years.
• Your mix should change as your life does – which is exactly why a regular review matters more than picking a “perfect” fund once.

Where to see a fund’s actual mix

Every fund publishes its target and actual asset mix in its fund update (a standardised quarterly document) and product disclosure statement. If you’d like help reading yours – or you’d like to know whether your current mix actually matches your profile – book a review and we’ll go through it together, no jargon, promise.