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% |
| Often Considered By | Those near retirement, first home buyers | Medium timeframe investors | Longer timeframe investors |
| 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.
Often Considered By:
- • Investors approaching or in retirement
- • First home buyers planning to access funds within 3-5 years
- • Those with lower risk tolerance
- • 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 various timeframes
Historical Performance (10-year average):
Top balanced funds: 7.5-8.5% p.a. | Average: 6.5-7.5% p.a.
Often Considered By:
- • Investors with medium-term timeframes (10-20 years)
- • Those seeking a balance of growth and stability
- • Moderate risk tolerance investors
- • A common choice for many KiwiSaver members
Growth Funds
High RiskGrowth funds aim to maximize long-term returns by investing heavily in shares and property. They experience higher volatility but have historically delivered higher 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
- • Higher growth potential
- • Can drop 20-30% in downturns
- • Historically higher long-term performance
Historical Performance (10-year average):
Top growth funds: 9.0-10.5% p.a. | Average: 8.0-9.0% p.a.
Often Considered By:
- • Investors with longer timeframes (20+ years)
- • Those comfortable with higher risk and volatility
- • Investors focused on long-term wealth accumulation
- • Those who can remain invested through market downturns
Age-Based Considerations
These are general guidelines only. Your individual circumstances, risk tolerance, and goals should be considered. For personalised advice, consult a licensed Financial Advice Provider.
Ages 18-35
Often consider: Growth Funds30-47 years to retirement. Longer timeframes may allow more time to recover from market fluctuations.
Ages 35-50
Often consider: Growth or Balanced15-30 years to retirement. Many investors maintain growth focus; some begin transitioning toward balanced.
Ages 50-60
Often consider: Balanced Funds5-15 years to retirement. Some investors shift toward balanced to reduce volatility while maintaining some growth potential.
Ages 60-65
Often consider: Balanced or Conservative0-5 years to retirement. Many investors consider capital protection as retirement approaches.
Ages 65+
Often consider: Conservative FundsIn retirement. Fund choice depends on whether you're withdrawing funds or keeping them invested longer-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.