KiwiSaver Tips 
You could look at:
- Past performance
- Fees
- Mortgage diversion
- Risk
- Asset class
- Investment style
- Ethical investing
Past Performance
It’s not recent or near future performance that matters. KiwiSaver is a long term multi-decade investment. You can get quite useful information from FundSource – a funds management research company. If you look at annualised return for New Zealand equities at FundSource you’ll see that the top fund has averaged 9.84% over the last 9 years. That’s pretty good and 9 years is quite a lengthy period on which to make a judgment.Some of the other fund returns make pretty shocking reading though!
Fees
Comparing fees is pretty difficult because there are a number of different types of fees, and, in many instances providers reserve the right to change fees. Typical fees include:- Admin fees (usually around $24 to $26 per year)
- Investing / management fees (around 1%ish per year)
- Trustees fees (less than 0.1% per year)
There are two good resources for comparing fees:
- ASFONZ (The Association of Superannuation Funds of New Zealand) has provided a pretty good fee charge comparison, and a breakdown of all the fee types (what a nightmare).
- And, Sorted offers a total fees charge comparison approach.
My opinion though, is that the fund performance selection criteria has a higher weighting of importance than fees.
Supports Mortgage Diversion
Mortgage diversion may be an important selection criteria for you. Only some scheme providers provide mortgage diversion. If you are taking a contributions holiday this becomes irrelevant and, you still need to make sure your contributions equate to $1,040 per year to get the ‘tax credit’. See my article on getting the best out of KiwiSaver.Risk
Most of the providers offer you the option of conservative, balanced or growth/agressive. Unless you are 64 and need to withdraw your money next year then there isn’t much point to conservative or balanced. Choose growth/aggresive. KiwiSaver is a long term investment, risk is mitigated by having a long term perspective.Asset Class
Over the long term the only asset class shown to consistently outperform other investments is the ownership of businesses – shares. This isn’t a leveraged investment so forget about property. Cash is only a good short term strategy and for those about to withdraw from KiwiSaver (i.e. you are nearly 65). Whilst a fund manager may decide to invest in cash deposits as a short term tactic, a fund dedicated to cash is just not a good long term strategy.Investment Style
You could choose a scheme because you know and understand the investment methodology of the fund manager.An example is Fisher Funds, they invest in mid-cap growth businesses with a track record of growth. They are transparent about the businesses they invest in so you know where your money is going.
Another example is Brook Assett Management, a contrarian fund manager who have managed to outperform even during the 2008 meltdown.
Ethical Investing
Also known as Socially Responsible Investing (SRI), this could be another criteria by which you select a fund. This can involve a screen against drinking, tobacco, gambling, animal testing, mining, nuclear, weapons or it could be investing in companies that make a positive contribution such as renewable energy companies.Examples of these schemes are:
- the Asteron Socially Responsible Investment Share Fund managed by Tyndall Investments,
- ABN Amro Craigs' KiwiSTART Balanced SRI Defined,
- ASB's First Choice KiwiSaver Global Sustainability Fund
- and finally the Koinonia Fund, a KiwiSaver scheme for Christians run by the New Zealand Anglican Church Pension Board.
