Clive Fernandes
Auckland, August 29, 2023
Amidst the changing investment landscape, an increasing number of KiwiSaver providers in New Zealand are introducing High Growth Funds.
This shift comes as investors seek higher potential returns through a more assertive investment approach, reflecting a broader transformation in investor sentiment and a growing appetite for volatility among KiwiSaver members.
Two recent entrants to this trend are ANZ Bank and Simplicity, who have unveiled new High Growth KiwiSaver funds to offer investors more alternatives.
The Rise of High Growth Funds
Since its establishment in 2007, KiwiSaver has emerged as a crucial voluntary retirement savings scheme, empowering New Zealanders to secure their financial futures.
Initially offering a spectrum of profiles, from Conservative to Growth, KiwiSaver recently witnessed a surge in the launch of high-growth funds by various providers.
The providers are making changes that match what investors want as investors look for ways to earn more money potentially. This shows a move away from traditional methods and highlights a change towards a more confident way of investing.
The introduction of ANZ and Simplicity KiwiSavers’ recent High Growth KiwiSaver funds underscores the evolving landscape. The providers’ move aligns with the changing sentiments of investors actively seeking avenues for higher potential returns. It acknowledges the increasing desire among KiwiSaver members to explore more assertive investment opportunities.
The ANZ High Growth Fund
ANZ KiwiSaver recently unveiled the ANZ High Growth fund, a strategic initiative underscored by its minimal allocation of just 5% to cash and its deliberate exclusion of fixed-interest components. The fund emphasises higher volatility for potentially higher returns.
Managed by ANZ Investments’ Fiona Mackenzie, the Fund aims for superior long-term returns, despite the likelihood of heightened short to medium-term volatility. It employs a calibrated asset-allocated strategy that diversifies across various growth asset categories. Its asset allocation strategy diversifies across different growth asset categories, including 10.5% allocated to listed property and 3.5% to listed infrastructure. Notably, a significant 63% is allocated to international markets.
As the ANZ High Growth fund becomes available through ANZ Investments’ KiwiSaver and Investment Funds platforms, it will offer an avenue for growth-focused individuals and those seeking diversified investment options to participate in a growth-oriented strategy.
Concurrently, ANZ Investments’ has reduced fees on select funds to offer competitive and attractive investment opportunities.
Other Providers
Several entities within New Zealand currently provide high-growth funds, including Milford Generate, Booster and Mercer. These funds mainly focus on growth assets, particularly equities, to achieve long-term capital appreciation.
When choosing a KiwiSaver fund, it is advisable to thoroughly assess the specifics of each fund and seek guidance from a financial advisor.
Evaluating Suitability and Navigating Investments
Contrary to common perception, high-growth funds do not directly translate to high risk.
While they mean higher potential volatility, volatility does not equal risk.
The relationship between volatility and risk is defined by the investor’s time frame and comfort with the ups and downs of the market.
Successful high-growth fund investment requires long-term thinking and goal alignment.
It involves aligning the investment with financial aspirations and learning to navigate market fluctuations. This is where financial advisers such as National Capital can offer expert guidance in transforming a potential complex endeavour into a navigable pathway to prosperity.
The rise of high-growth funds within KiwiSaver shows changing times.
As investors seek higher potential returns, KiwiSaver providers such as ANZ and Simplicity are responding by introducing high-growth funds. These funds offer a more assertive investment approach, with a considerable portion of the portfolio dedicated to equities.
However, successful investment in high-growth funds requires goal alignment and navigating market fluctuations.
Financial advisers such as National Capital can offer expert guidance in this regard. As more KiwiSaver providers launch high-growth funds, it will be interesting to see how this trend evolves and shapes the future of retirement savings in New Zealand.
Clive Fernandes is an Authorised Financial Adviser and the director of National Capital, a financial advisory firm that provides personalised investment advice, with a primary focus on KiwiSaver.
Disclaimer: The above article is not intended to be personalised advice. It is general and may not be relevant to an individual’s circumstances. Before making any investment, insurance or other financial decisions, you should consult a professional financial adviser. A copy of Clive Fernandes’ disclosure statement is available on request and free of charge.
References:
https://www.ssa.gov/policy/docs/ssb/v67n4/v67n4p113.html#:~:text=Introduction,offered%20by%20private%2Dsector%20providers.
https://news.anz.com/new-zealand/posts/2023/08/high-growth-fund
https://www.moneyhub.co.nz/moderate-vs-balanced-vs-growth-funds.html
https://www.thehappysaver.com/blog/will-i-be-changing-my-kiwisaver-from-growth-to-high-growth
https://www.nationalcapital.co.nz/types-of-kiwisaver-funds-video
https://www.nationalcapital.co.nz/blog/simplicity-kiwisaver-launches-two-new-funds-including-an-aggressive-fund
https://www.nationalcapital.co.nz/blog/anz-kiwisaver-news
https://www.goodreturns.co.nz/article/976522060/new-fund-week.html
https://www.nationalcapital.co.nz/best-performing-kiwisaver-funds
https://www.blackrock.com/au/individual/products/314104/blackrock-high-growth-multi-index-fund
https://www.nationalcapital.co.nz/kiwisaver/booster-kiwisaver-scheme
