How to Choose the Best KiwiSaver Fund | Complete Guide 2025
Choosing the right KiwiSaver fund is one of the most important financial decisions you'll make. With over 200 funds available from more than 30 providers, the choice can feel overwhelming. This comprehensive guide walks you through every factor you need to consider to find the perfect KiwiSaver fund for your unique situation, retirement timeline, and financial goals.
With over $100 billion invested across New Zealand's KiwiSaver schemes, making the right choice can mean the difference between tens of thousands of dollars in your retirement fund. The average New Zealander will contribute to KiwiSaver for 30-40 years, making this a decision that compounds over time. A fund with just 1% higher fees or 1% lower returns can cost you over $100,000 by retirement.
The good news? Once you understand the key factors—risk tolerance, fund types, fees, performance, and your personal timeline—choosing the right KiwiSaver becomes straightforward. This guide will equip you with everything you need to make an informed decision.
Step 1: Assess Your Risk Tolerance
Risk tolerance is your ability and willingness to accept investment volatility in exchange for potentially higher returns. It's the foundation of choosing the right fund type.
Understanding Investment Risk
In KiwiSaver, risk and potential return are directly related. Higher-risk funds (growth funds) invest more heavily in shares and property, which can fluctuate dramatically in value but typically deliver higher returns over the long term. Lower-risk funds (conservative funds) focus on bonds and cash, offering stability but lower growth potential.
Conservative Investor
Prioritizes capital preservation, uncomfortable with market volatility, near retirement
Balanced Investor
Accepts moderate fluctuations for steady growth, 10-20 years until retirement
Growth Investor
Comfortable with volatility, focuses on long-term gains, 20+ years until retirement
Key Questions to Ask Yourself:
- •How would you feel if your KiwiSaver balance dropped 20% in a market downturn?
- •Can you afford to wait years for your investments to recover from a market crash?
- •Are you investing for 20+ years, or do you need access sooner (e.g., first home)?
- •Do you have other investments or savings to fall back on?
Step 2: Understanding KiwiSaver Fund Types
KiwiSaver funds are generally categorized into four main types based on their asset allocation. Understanding these categories is crucial to matching a fund with your risk tolerance and goals.
Conservative Funds
Low RiskAsset Mix: Typically 80-100% in cash and bonds, 0-20% in shares and property
Best For:
- • People within 5 years of retirement
- • Risk-averse investors
- • Those saving for a first home within 3-5 years
- • Retirees who keep funds invested
Characteristics:
- • Lower long-term returns (3-5% p.a.)
- • Minimal volatility
- • Capital preservation focus
- • Steady, predictable growth
Example Return: A $50,000 balance might grow to $57,500 after 3 years (assuming 5% p.a. return)
Balanced Funds
Medium RiskAsset Mix: Typically 40-60% in shares and property, 40-60% in bonds and cash
Best For:
- • People 10-20 years from retirement
- • Moderate risk tolerance
- • Those seeking balanced growth
- • Investors who want diversification
Characteristics:
- • Moderate returns (5-7% p.a.)
- • Moderate volatility
- • Growth with some stability
- • Most popular fund type
Example Return: A $50,000 balance might grow to $63,000 after 3 years (assuming 8% p.a. return)
Growth Funds
High RiskAsset Mix: Typically 70-100% in shares and property, 0-30% in bonds and cash
Best For:
- • People 20+ years from retirement
- • High risk tolerance
- • Young investors (under 40)
- • Long-term wealth accumulation
Characteristics:
- • Higher long-term returns (7-10% p.a.)
- • High volatility
- • Maximum growth potential
- • Can experience significant drops
Example Return: A $50,000 balance might grow to $66,500 after 3 years (assuming 10% p.a. return)
Aggressive Funds
Very High RiskAsset Mix: 100% in shares, often with higher exposure to international and emerging markets
Best For:
- • Very young investors (under 30)
- • Very high risk tolerance
- • 30+ years until retirement
- • Maximum growth focus
Characteristics:
- • Highest potential returns (8-12% p.a.)
- • Extreme volatility
- • No capital protection
- • Requires strong stomach for losses
Example Return: A $50,000 balance might grow to $69,000 after 3 years (assuming 11% p.a. return), but could also drop to $40,000 in a market crash
Quick Tip: Many providers offer default funds that automatically adjust your asset allocation as you age, shifting from growth to conservative. These "lifecycle" or "target date" funds can be excellent hands-off options. See detailed fund type comparison →
Step 3: Compare KiwiSaver Providers
Not all KiwiSaver providers are created equal. Even within the same fund type (e.g., balanced), returns and fees can vary significantly between providers.
What to Look for in a Provider
1Performance History
Look at 5-year and 10-year returns rather than short-term performance. Consistent returns over time matter more than occasional spikes. Compare funds within the same category (e.g., balanced vs. balanced) for fair assessment.
2Fund Manager Reputation
Established providers with experienced teams tend to deliver more consistent results. Research the fund manager's track record, investment philosophy, and team stability.
3Investment Approach
Some providers focus on passive index tracking (lower fees), while others use active management (higher fees but potentially higher returns). Understand whether the provider invests ethically, sustainably, or follows ESG (Environmental, Social, Governance) principles if that matters to you.
4Customer Service & Technology
Can you easily access your account information online or through an app? Is customer service responsive? Can you switch fund types easily? These practical factors matter for long-term satisfaction.
5Fund Size & Stability
Larger funds often benefit from economies of scale, potentially offering lower fees. However, smaller boutique providers can sometimes deliver superior personalized service and niche investment strategies.
Top Providers to Consider (2025):
- •Simplicity - Known for low fees and strong performance
- •Fisher Funds - Consistent long-term returns
- •Milford Asset Management - Active management expertise
- •ANZ - Largest provider, diverse fund options
- •Kernel - Low-cost index funds
- •Generate - Ethical and impact investing focus
Step 4: Understand the Importance of Fees
Fees are one of the most critical factors in choosing a KiwiSaver fund. Even small differences in fees compound dramatically over decades, potentially costing you tens of thousands of dollars.
Types of KiwiSaver Fees
Annual Management Fee
Charged as a percentage of your total balance (e.g., 0.5% or 1.2% per year). This is the main fee to compare between providers. Lower is generally better, but consider performance too.
Performance Fees
Some providers charge extra fees when the fund outperforms a benchmark. These can be worthwhile if the fund consistently delivers superior returns, but watch for high performance fee structures.
Administration Fees
Fixed annual fees (e.g., $30-$50 per year) that cover account administration. These matter more for smaller balances.
Other Costs
Trading costs, buy/sell spreads, and underlying investment costs are usually included in the total fee disclosure but can add up.
Fee Impact Example
Let's compare two balanced funds over 30 years with the same starting balance and contribution rate:
| Scenario | Annual Fee | Balance After 30 Years | Difference |
|---|---|---|---|
| Low Fee Fund | 0.5% | $487,000 | - |
| High Fee Fund | 1.5% | $398,000 | -$89,000 |
Assumptions: $20,000 starting balance, $5,000 annual contributions, 7% gross return before fees
The Fee vs Performance Balance:
While low fees are important, they shouldn't be your only consideration. A fund with 0.8% fees that consistently returns 8% is better than a fund with 0.3% fees that only returns 6%. Look at net returns (returns after fees) for the most accurate comparison. Use our fees calculator →
Step 5: Evaluate Performance Metrics
Past performance doesn't guarantee future results, but it provides valuable insights into how a fund has been managed and how it might perform going forward.
Key Performance Indicators
5-Year Average Return
The most commonly cited metric. Look for funds that consistently beat their category average over this timeframe. A balanced fund should target 5-8% annually.
10-Year Average Return
Even better indicator of long-term performance. Captures how the fund performed through different market cycles, including downturns and recoveries.
Volatility (Standard Deviation)
Measures how much returns fluctuate. Higher volatility means bigger swings up and down. Conservative funds should have low volatility; growth funds will have higher.
Sharpe Ratio
Risk-adjusted return metric. Higher is better. It shows how much return you're getting for the risk you're taking. A Sharpe ratio above 1.0 is considered good.
Maximum Drawdown
The largest peak-to-trough decline the fund has experienced. Shows worst-case scenario performance during market crashes. Important for understanding downside risk.
Category Ranking
Where the fund ranks among peers (1st quartile, 2nd quartile, etc.). Consistent top-quartile performance over 5-10 years is a strong signal of quality management.
Where to Find Performance Data:
- •Provider websites (check fund updates and quarterly reports)
- •Sorted.org.nz (independent government resource)
- •Morningstar (professional fund ratings)
- •KiwiSaver Comparison tool (compare all funds side-by-side)
Step 6: Apply Age-Based Strategies
Your age and retirement timeline are among the most important factors in choosing a fund type. Here's a general framework:
Growth or Aggressive Funds
With 30-40+ years until retirement, you can afford to ride out market volatility. Maximize long-term growth potential with high equity exposure. Short-term losses are less concerning when you have decades to recover.
Growth or Balanced Funds
Still have 15-30 years to retirement. Continue growth focus but consider shifting toward balanced funds in your 40s to reduce volatility as retirement approaches. This is prime wealth-accumulation years.
Balanced Funds
With 5-15 years until retirement, balanced funds offer a good middle ground. You still need growth to combat inflation but can't afford major losses right before retirement. Consider gradually shifting toward conservative.
Balanced or Conservative Funds
Start shifting toward capital preservation. A market crash just before retirement can be devastating. Conservative or balanced funds protect your savings while still providing modest growth.
Conservative Funds
If you're withdrawing funds, conservative funds minimize the risk of losses. If you're keeping funds invested for legacy purposes, you might maintain a balanced allocation depending on your goals and risk tolerance.
Important Exception - First Home Buyers:
If you plan to use your KiwiSaver for a first home within 3-5 years, consider a conservative or balanced fund regardless of your age. You can't afford major losses right before your withdrawal. After buying your home, you can switch back to a growth fund. Learn more →
Making Your Final Decision
Your KiwiSaver Selection Checklist
Frequently Asked Questions
Can I switch KiwiSaver providers after I've chosen one?
Yes, absolutely. You can switch providers at any time, and there's no limit to how many times you can switch. Most switches are completed within 1-2 weeks. There are no penalties for switching, though some providers charge exit fees (check before switching). See our switching guide →
Should I choose the same provider as my bank?
Not necessarily. While bank-owned KiwiSaver schemes can be convenient, they're not always the best performing or lowest cost. Banks like ANZ, ASB, BNZ, and Westpac offer solid options, but independent providers like Simplicity, Milford, and Fisher Funds often outperform on fees or returns. Choose based on performance and fees, not just convenience.
What's the difference between active and passive fund management?
Passive funds track market indices (like the NZX 50 or S&P 500) with minimal intervention, resulting in lower fees (typically 0.2-0.6%). Active funds employ professional managers who try to beat the market through strategic buying and selling, charging higher fees (typically 0.8-1.5%). Research shows passive funds often outperform active funds over long periods once fees are accounted for.
How often should I review my KiwiSaver choice?
Review your KiwiSaver at least annually, ideally around your birthday or the start of each year. Also review after major life events: getting married, having children, buying a home, changing jobs, or within 5 years of retirement. Regular reviews ensure your fund still aligns with your goals and circumstances.
Is it worth switching for a 0.2% fee difference?
Yes, small fee differences compound significantly over time. A 0.2% fee difference on a $50,000 balance costs you $100 per year, but over 30 years with ongoing contributions, this could mean $15,000-$20,000 less in your retirement fund. Always consider switching if you can reduce fees while maintaining or improving performance.
Ready to Find Your Perfect KiwiSaver Fund?
Use our comprehensive comparison tools to evaluate all KiwiSaver providers side-by-side and make an informed decision.
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