KiwiSaver Fund Types Explained: Conservative vs Growth
Ever wondered why your KiwiSaver balance swings wildly one year and barely budges the next? It's all down to the KiwiSaver fund type you've chosen – and getting it right can make a huge difference to...
Ever wondered why your KiwiSaver balance swings wildly one year and barely budges the next? It's all down to the KiwiSaver fund type you've chosen – and getting it right can make a huge difference to your retirement nest egg.
With over 2.8 million Kiwis in KiwiSaver as of 2026, picking the best fund isn't just about chasing top returns; it's about matching your risk tolerance, age, and goals to the right mix of investments.KiwiSaver fund types range from super-safe cash options to high-octane aggressive funds, each with its own blend of growth assets like shares and property versus stable income assets like bonds and cash. In this guide, we'll break down the key types, compare conservative versus growth funds head-to-head, and give you practical steps to switch if needed – all tailored for New Zealanders saving for that first home, retirement, or family security.
Understanding KiwiSaver Fund Types
KiwiSaver providers like Milford, Generate, and SuperLife offer between five and six main KiwiSaver fund types, categorised by their risk profile on a scale of 1 to 7 (1 being lowest risk). These categories are defined by the Financial Markets Authority (FMA) and Sorted.org.nz based on the percentage of growth assets (shares, property) versus income assets (cash, bonds).[5][3] More growth assets mean higher potential long-term returns but bigger short-term ups and downs.
Here's the standard breakdown:
- Cash Fund (Risk 1/7): 100% in bank deposits – ultra-safe but low returns around 2-3% annually.
- Defensive/Conservative (Risk 2-3/7): 0-34.9% growth assets, mostly bonds and cash for stability.[3][5]
- Moderate/Balanced (Risk 4/7): 35-62.9% growth assets, a middle-ground mix.[3]
- Growth (Risk 5/7): 63-89.9% growth assets, heavy on shares for stronger growth.[3]
- Aggressive/High Growth (Risk 6-7/7): 90-100% growth assets, maximum potential but volatile.[3][2]
- Default Funds: Automatically assigned balanced mixes for new members under 65.[5]
By late 2024, growth and aggressive funds held about 50% of total KiwiSaver assets, balanced around 30%, and conservative less than 20% – showing Kiwis are increasingly comfortable with risk for better returns.[3]
Why Fund Types Matter for Your Savings
Your fund type dictates how your contributions (at least 3% of pay, plus employer and government top-ups) grow. Low-risk funds protect capital during market dips like the 2022 global downturn, while growth funds have historically outperformed over 10+ years. For example, Milford Active Growth delivered a 10.12% five-year average return to 2026, compared to Pathfinder Conservative's 3.65%.[2]
Providers like SuperLife and Koura let you mix funds – say 50% balanced and 25% each conservative and growth – for a custom profile.[1]
Conservative KiwiSaver Funds: Safety First
If market volatility keeps you up at night, conservative KiwiSaver funds are your best mate. These funds prioritise capital preservation with 10-34.9% in growth assets and the rest in low-risk bonds, term deposits, and cash.[3][5] They're ideal if you're nearing retirement, saving for a first home deposit soon, or simply hate seeing red numbers.
Pros and Cons of Conservative Funds
- Pros: Predictable returns (3-5% long-term), low fees often under 0.5%, and minimal losses in downturns. Great for risk-averse Kiwis or those over 60.[5]
- Cons: Inflation (around 2-3% in 2026) can erode real returns, potentially leaving you short for retirement. Five-year averages hover at 3.65% for top performers like Pathfinder.[2]
Top Conservative Fund Examples in 2026
| Fund | Provider | 5-Year Avg Return |
|---|---|---|
| Pathfinder Conservative | Pathfinder | 3.65% |
| Conservative options | ANZ, Westpac | ~3-4% |
"Conservative funds offer lower, but more predictable returns and are best if you want to access your money in the next few years." – Financial Markets Authority.[5]
Growth KiwiSaver Funds: Chasing Higher Returns
On the flip side, growth KiwiSaver funds (risk 5/7) invest 63-89.9% in shares and property worldwide, aiming for 7-10%+ annual returns over the long haul.[3] They're popular with younger Kiwis (under 45) who have time to ride out market bumps, as shares historically beat inflation hands-down.
Pros and Cons of Growth Funds
- Pros: Higher long-term growth – Milford Active Growth at 10.12% over five years. Suits retirement savers with 10+ years ahead.[2][5]
- Cons: Short-term volatility; balances can drop 20-30% in bad years like 2022. Not for the faint-hearted.[1]
Top Growth Fund Examples in 2026
| Fund | Provider | 5-Year Avg Return |
|---|---|---|
| Milford Active Growth | Milford | 10.12% |
| Aggressive | Milford | 10.07% |
| Growth options | Generate, Fisher Funds | 9-11% |
Conservative vs Growth: Head-to-Head Comparison
Choosing between conservative and growth boils down to your timeline and stomach for risk. Here's a side-by-side:
| Aspect | Conservative | Growth |
|---|---|---|
| Risk Profile | 2-3/7 | 5/7 |
| Growth Assets | 10-34.9% | 63-89.9% |
| 5-Year Return (Avg) | 3-5% | 9-11% |
| Best For | Near-retirees, first home in 5 years | Long-term retirement (10+ years) |
| Volatility | Low (stable balance) | High (big swings) |
Conservative suits if you're risk-averse; growth if you're in for the long game. Balanced funds split the difference at 35-62.9% growth assets.[3]
How to Choose the Right KiwiSaver Fund Type for You
Start with Sorted.org.nz's free KiwiSaver calculator or FMA's risk profiler.[10][5] Consider:
- Age and Timeline: Under 45? Go growth. Over 55? Lean conservative.[1]
- Risk Tolerance: Can you handle a 20% drop? Test with a practice portfolio on SuperLife.[6]
- Goals: First home? Conservative or balanced. Retirement? Growth.[9]
- Fees: Aim under 0.75%; passive like Simplicity are cheapest.[4]
- Ethical Options: Pathfinder or Generate for ESG focus.[2][4]
Review annually – life changes like kids or job loss might shift your needs. Use IRD's KiwiSaver dashboard to track.[9]
Switching KiwiSaver Funds or Providers
It's free and easy to switch funds within your scheme or transfer providers (takes 2-4 weeks). Contact your provider or use IRD.govt.nz for forms. No tax penalties, and your balance keeps growing during transfer.[9] In 2026, popular switches are to low-fee growth funds like Milford or ethical ones like Pathfinder.[2][4]
FAQ: Common KiwiSaver Fund Type Questions
Q: What's the difference between balanced and growth funds?
A: Balanced has 35-62.9% growth assets for moderate risk; growth jumps to 63-89.9% for higher returns but more volatility.[3]
Q: Are aggressive funds worth the risk?
A: Yes for long-term if you can stomach dips – they've led returns at 10%+ over five years, but expect short-term losses.[2][5]
Q: Can I change my fund type anytime?
A: Absolutely, anytime for free within your provider. Transfers between providers are also free but take time.[9]
Q: Which fund type is best for first home buyers?
A: Conservative or balanced to protect your deposit from market falls.[5]
Q: How do fees affect conservative vs growth funds?
A: Growth funds often have slightly higher fees (0.5-1%) due to active management, but low-cost index options like Simplicity keep them competitive.[4]
Q: What's a default fund?
A: A balanced mix auto-assigned to new members; you can switch anytime.[5]
Take Control of Your KiwiSaver Today
Don't leave your retirement to chance – log into your KiwiSaver account, check your current fund type, and compare returns on Sorted.org.nz or MoneyHub.co.nz. If you're in a conservative fund but years from retiring, consider switching to growth for that extra boost. Chat with a Sorted adviser or use IRD's tools for free guidance. Small tweaks now could add hundreds of thousands to your balance by 65. Start today – your future self will thank you.
