Conservative vs Balanced vs Growth KiwiSaver Funds
Choosing between conservative, balanced, and growth funds is one of the most important KiwiSaver decisions you'll make. This comprehensive comparison breaks down the differences in risk, returns, asset allocation, and suitability so you can make an informed choice based on your age, goals, and risk tolerance.
Quick Comparison Overview
| Factor | Conservative | Balanced | Growth |
|---|---|---|---|
| Risk Level | Low | Medium | High |
| Typical Returns | 4-6% p.a. | 6-8% p.a. | 8-10% p.a. |
| Shares/Property | 0-30% | 40-60% | 70-100% |
| Bonds/Cash | 70-100% | 40-60% | 0-30% |
| Best For | Age 60+, first home buyers | Age 40-60, moderate risk | Age 18-45, long timeline |
| Volatility | Very low | Moderate | High |
| Time Horizon | <5 years | 5-15 years | 15+ years |
Detailed Fund Type Breakdown
Conservative Funds
Low RiskConservative funds prioritize capital preservation over growth. They invest primarily in fixed-income assets like bonds and term deposits, with minimal exposure to shares.
Typical Asset Allocation:
- • 70-80% Bonds (government and corporate)
- • 10-20% Cash and term deposits
- • 0-15% Shares (mainly NZ dividends)
- • 0-10% Property
Key Characteristics:
- • Minimal fluctuation in value
- • Regular income from bond interest
- • Lower long-term growth
- • Capital protection focus
Historical Performance (10-year average):
Top conservative funds: 4.5-5.5% p.a. | Average: 4.0-4.5% p.a.
Best Suited For:
- ✓ People within 5 years of retirement (60-65+)
- ✓ First home buyers needing funds within 3-5 years
- ✓ Risk-averse investors who can't tolerate volatility
- ✓ Retirees keeping funds invested post-65
Balanced Funds
Medium RiskBalanced funds aim for moderate growth while managing risk through diversified asset allocation. They're the most popular fund type, offering a middle ground between safety and growth.
Typical Asset Allocation:
- • 40-50% Shares (NZ and international)
- • 30-40% Bonds
- • 10-15% Property and infrastructure
- • 5-10% Cash
Key Characteristics:
- • Moderate volatility
- • Balanced growth and stability
- • Diversified risk exposure
- • Suitable for most timeframes
Historical Performance (10-year average):
Top balanced funds: 7.5-8.5% p.a. | Average: 6.5-7.5% p.a.
Best Suited For:
- ✓ People aged 40-60 with 10-20 years to retirement
- ✓ Moderate risk tolerance investors
- ✓ Those wanting growth with some stability
- ✓ Default choice for many KiwiSaver members
Growth Funds
High RiskGrowth funds maximize long-term returns by investing heavily in shares and property. They experience higher volatility but historically deliver superior returns over extended periods.
Typical Asset Allocation:
- • 70-85% Shares (global and NZ)
- • 10-20% Property and alternatives
- • 5-15% Bonds
- • 0-5% Cash
Key Characteristics:
- • High volatility
- • Maximum growth potential
- • Can drop 20-30% in downturns
- • Best long-term performance
Historical Performance (10-year average):
Top growth funds: 9.0-10.5% p.a. | Average: 8.0-9.0% p.a.
Best Suited For:
- ✓ Young investors (18-45) with 20+ years to retirement
- ✓ High risk tolerance individuals
- ✓ Those who can ride out market volatility
- ✓ Maximum wealth accumulation focus
Age-Based Recommendations
Ages 18-35
→ Growth Funds30-47 years to retirement. Maximize returns with high equity exposure. You have time to recover from market downturns.
Ages 35-50
→ Growth or Balanced15-30 years to retirement. Continue growth focus but consider balanced in your late 40s as you approach retirement.
Ages 50-60
→ Balanced Funds5-15 years to retirement. Shift toward balanced to reduce volatility while maintaining growth potential.
Ages 60-65
→ Balanced or Conservative0-5 years to retirement. Protect capital by shifting to conservative funds as retirement approaches.
Ages 65+
→ Conservative FundsIn retirement. Minimize risk with conservative funds if withdrawing. Keep balanced if leaving invested long-term.
When and How to Switch Fund Types
You can switch between fund types at any time within your current provider, usually online and for free. Most providers process switches within 1-3 business days.
Good Reasons to Switch:
- ✓ Your age/retirement timeline has changed significantly
- ✓ Approaching retirement (shift to conservative)
- ✓ Bought first home and can return to growth
- ✓ Risk tolerance has changed
- ✓ Major life event (marriage, kids, inheritance)
Bad Reasons to Switch:
- ✗ Reacting to short-term market volatility
- ✗ Panic selling after market drops
- ✗ Chasing last year's best performer
- ✗ Switching frequently without strategy
Compare Funds Within Your Chosen Type
Now that you know which fund type suits you, compare providers to find the best returns and lowest fees.