Investment Options

How to decide which investment direction is right for you
Investment direction overview
Details of investment allocation
Changing your investment direction

How to decide which investment direction is right for you

When you join KiwiSaver, like it or not, you become an investor. You may not have the time or the expertise to manage investments (that’s what we’re here for), but you do have to set guidelines so we can manage your savings appropriately for your needs and situation. We call it setting your “investment direction”— choosing an investment option that suits you.

What’s the difference between the investment options?

The proportion of shares in a portfolio generally determines how volatile your returns are likely to be. The higher the proportion of shares in your chosen “investment direction” the higher the long-term returns are likely to be, but also the more volatile (more ups and downs) those returns will be. The lower the proportion of shares the more stable your returns are likely to be, but those returns are also likely to be lower than a portfolio with a high proportion of shares.

At the moment, we have three different investment options for you to choose from (with a fourth option becoming available on 1 June 2012):

Conservative – invests mostly in term deposits and fixed interest investments, with a small portion (no more than 20%) in shares. A low volatility portfolio, which we would expect to produce steady, moderate returns.
Balanced – sits between the two. Can have up to 70% invested in shares. In terms of volatility, if Growth is a roller coaster, this is more of a see-saw.
Growth – can be up to 100% invested in shares. Not for the faint-hearted. This can produce great returns when share markets go up, and significant losses when share markets go down. And over time, you will experience both gains and losses.

And from 1 June 2012... We can offer you a new investment option - the CashPlus portfolio. This portfolio comprises cash and fixed interest investments – it has no shares. So returns are likely to be even less volatile than for our Conservative portfolio, but returns are also likely to be lower.

Like our other portfolios, CashPlus is actively managed by our in-house investment strategy team. Their job is to closely monitor markets and the economy and make appropriate changes to each portfolio’s investments.

CashPlus may suit those who need greater certainty with their savings, for example if you are in retirement or saving for a first home. CashPlus will be available from 1 June 2012.

Don't panic, it's not a life sentence!

You can change your investment direction if you want to.

So how do you decide?

What's your timeframe?

Generally, the shorter your investment timeframe the more conservative your investment direction should be. If you’re in the Growth portfolio you may have to accept a real loss when you withdraw if the markets are in a slump.
A rough guideline is:

Long-term: Growth
Medium term: Balanced
Shorter term: Conservative

What constitutes long, medium or short-term will vary from investor to investor, and there’s also your tolerance for volatility to consider.

What's your tolerance for volatility?

If you’re more than 10 years from withdrawing from KiwiSaver, but can’t handle the downs with the ups without losing sleep, it’s probably better for your health to invest in the Balanced or Conservative portfolios. You are likely to have to accept lower returns, for a less stressful KiwiSaver account.

Need more help?

Watch our videos where Gareth answers the questions:

Still not sure?

The Gareth Morgan KiwiSaver Scheme allows you to specify a blend of portfolios, and you can change your investment direction three times a year.

And if you need independent guidance, you can contact an Authorised Financial Adviser, or there is a very good online tool to help you decide on your investment risk tolerance on this page of the Sorted website.

Investment direction overview

This chart shows the maximum percentage of each portfolio option that we can hold in shares and bonds. We are not required to hold this percentage.

Investment direction	Shares	Cash/fixed interest
Conservative	Up to 20%	Balance
Balanced (default)	Up to 70%	Balance
Growth	Up to 100%	Balance

Details of investment allocations

The allocation of assets in the three Gareth Morgan KiwiSaver Scheme portfolios, at the end of each quarter since inception are set out in the graphs below:

Changing your investment direction

You can change your investment direction a maximum of three times each Scheme year (the 12 month period ending on 31 March each year).

Your interests in the investment portfolios will be rebalanced on a monthly basis in order to ensure that your investment is administered in accordance with the asset allocation ranges set out above. It is possible that your investment will be outside of these asset allocation ranges between the dates where the accounts are rebalanced.

How to change

Log in to your Gareth Morgan KiwiSaver Scheme member account and go to Your Personal Details page. You can change your investment direction there.

You can also request a change in writing, either by email, by mail or fax. Include your full name and IRD number. Our mailing address is P.O. Box 10068, Wellington, 6143. The fax number is 04 473 0643.