KiwiSaver: The difference between funds

You hear a lot about fund types and making sure you’re in the right one. But what’s the difference between them? We’ve broken it down for you.

What types of funds are there?

Funds can vary between providers, but usually there are three main types:

Growth – Growth funds aim to provide you with capital growth – really making your money work hard for returns. If you’re in a higher-risk growth fund, usually with more shares, your money is more likely to move up and down with the highs and lows of the share market. This means you might see dramatic changes in your balance. A growth fund might suit you if you’re investing for 10 years or more.

Balanced – Balanced funds aim for steady capital growth. The investment style is what the name says – a balanced approach. A balanced fund might suit you if you’re investing for more than five years.

Conservative – Conservative funds aim to preserve your money, are less risky than aggressive or growth funds, and you’ll generally see fewer dramatic ups and downs. A conservative fund might suit you if you’re investing for under five years, for example, if you’re close to taking out your KiwiSaver money for your first home, or retirement. While Conservative funds are less risky, this means that returns over the long term are likely to be lower than for a balanced or growth fund.

How to pick the right fund

To find the right fund for you, first think about how long your money will be invested for: a short time like a year or two, around five years, or 10 years or more, giving you lots of time to recover from any dips.

Then, think about how comfortable you are with investing. A growth fund might suit your investment time frame, but if you’re nervous about the ups and downs in your balance, you might want to pick a fund that has fewer ups and downs.

Or, with time you might get used to seeing your balance go up and down and become more comfortable with these blips.

Your KiwiSaver investment isn’t something that should make you feel worried or nervous. It’s not worth losing sleep over! It can help ease any worries to be sure you’re in the right fund type to suit your investment time frame.

Published 18 October 2019

Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. You can read our Product Disclosure Statement here. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with an independent financial adviser. All content is correct at time of publication date.