5 Types of KiwiSaver Funds and What They Mean

5 Types of KiwiSaver Funds and What They Mean

Unless you’ve been taking an active interest in where your KiwiSaver money is being invested, there’s a good chance you’re in a fund that you never chose.

If you were automatically enrolled through a new job and never changed anything, your money will be sitting in a default fund, which is a balanced option selected on your behalf. That might not be a problem, but most people never look closely enough to find out.

Your fund type determines how your money is invested and how quickly it can grow. A fund that’s too conservative could cost you tens of thousands of dollars over a working lifetime. But a fund that’s too aggressive when you’re about to buy a home could mean you need to withdraw your money at the worst possible moment.

This guide explains the five KiwiSaver fund types, what each one actually does with your money and how to work out which is best for you.

Growth Assets vs Income Assets

Before looking at the five fund types, it helps to understand the two categories of investment that make up every KiwiSaver fund.

Growth assets are typically shares and property. They have more potential to increase in value over the medium to long term, but they come with more risk. If you invest in growth assets, your balance will go up and down more frequently and more sharply. Over longer periods, growth assets have historically delivered stronger returns than income assets, but there are no guarantees in any given year.

Income assets are usually cash and bonds. They’re more stable as they earn a regular amount of interest and are less likely to lose value in the short term. The trade-off is that they grow more slowly over time.

Every KiwiSaver fund has a mix of both growth and income assets. The proportion of growth assets in a fund is what determines its risk level and its category. A fund with 80% growth assets will behave very differently from one with 20%.

The most important thing to understand about KiwiSaver fund types is that the more growth assets your fund has, the higher the potential return over the long term, but the more your balance will fluctuate along the way.

The Five KiwiSaver Fund Types

KiwiSaver funds are grouped into five categories based on their proportion of growth assets. Here’s what each one looks like and who it’s designed for.

Defensive Funds

Growth assets: Less than 10%

Defensive funds are the lowest-risk option. Almost all your money is held in income assets like cash and bonds. Your balance is unlikely to drop significantly, but it won’t grow much. There’s also a real risk that returns won’t keep pace with inflation over time, meaning your money could lose purchasing power, even as the number goes up.

This might suit you if: You’re planning to withdraw your KiwiSaver within the next year and want to protect what you’ve already saved. For most people with a longer timeline, a defensive fund won’t work hard enough.

Conservative Funds

Growth assets: 10–35%

Conservative funds hold a small share of growth assets alongside a larger share of cash and bonds. You’ll see some movement in your balance (small ups and downs) but nothing dramatic. Returns over the long term tend to be moderate.

This might suit you if: You have a low tolerance for seeing your balance drop, or you’re planning to withdraw within the next two to three years. If you have other higher-risk investments outside KiwiSaver, a conservative fund can provide a stable counterbalance.

Balanced Funds

Growth assets: 35–65%

Balanced funds sit in the middle. They hold a roughly even split between growth and income assets, which means there’s more potential for returns than conservative funds, but also more volatility. Your balance will move noticeably in both directions, particularly during market downturns, although it will also recover when markets rise.

This is where default KiwiSaver funds sit. If you were auto-enrolled and never made an active choice, you’re probably in a balanced fund. That’s not necessarily wrong, but it’s worth checking whether it matches your goals and timeline.

This might suit you if: You’re comfortable with moderate fluctuations and you’re planning to withdraw in roughly four to six years.

Growth Funds

Growth assets: 65–90%

A KiwiSaver growth fund holds a large majority of its money in shares and property, with a smaller portion in cash and bonds. Over the long term, growth funds have the potential to deliver significantly higher returns than conservative or balanced options, but they come with significantly more volatility too. During market downturns, your balance can drop noticeably, and it may take months or even years to recover.

This might suit you if: You’re comfortable riding out short-term drops without panicking, and you don’t plan to withdraw for at least seven to nine years. If you’re in your 20s or 30s and saving for retirement, a growth fund gives your money room to compound.

Aggressive Funds

Growth assets: 90% or more

Aggressive funds put almost everything into growth assets. They offer the strongest potential for long-term growth, but also the largest and most frequent swings in balance. In a bad year, you could see your balance drop by 20% or more, and you need to be prepared to leave it alone and wait for the recovery.

This might suit you if: You have a high tolerance for volatility and a timeline of 10+ years before you plan to withdraw. Aggressive funds are not for everyone, and they’re typically best suited to people who understand investment risk and won’t be tempted to switch funds during a downturn.

A Note on the Ranges

There are no strict industry-wide rules for how KiwiSaver providers categorise their funds. One provider’s “balanced” fund might hold 40% growth assets, while another’s might hold 60%.

The category name gives you a general guide, but it’s always worth checking the actual growth asset percentage of your specific fund. This is one of the details BetterSaver considers when making a personalised recommendation.

How to Choose the Right Fund

Your fund type affects how your money is invested and how much it can grow over time. The right choice depends on your timeline, your goals, your comfort with risk and your values.

For a broader overview of how the whole scheme works (including contributions, employer matching, and the government contribution), see our guide on how KiwiSaver works.

What If You’re in the Wrong Fund?

If you’ve never actively chosen a KiwiSaver fund, or if your circumstances have changed since you last looked, there’s a real chance your current fund isn’t the best fit.

But switching funds is straightforward. You can change your fund type within your existing provider, or move to a different provider entirely. There’s no fee for switching, and your money simply transfers across.

For a broader overview of how the whole scheme works, including contributions, employer matching, and the government contribution, read our guide to how KiwiSaver works.

Frequently Asked Questions

What are the different types of KiwiSaver funds?

There are five types: defensive, conservative, balanced, growth and aggressive. They’re categorised by the proportion of growth assets (shares and property) they hold, which determines their risk level and potential return. Defensive funds hold the least growth assets at under 10% and aggressive funds hold the most at 90%+.

What KiwiSaver fund should I be in?

This is one of the most common questions people ask. The answer depends on your goals, your timeline, your comfort with risk and your values. Someone decades from retirement with a high risk tolerance might suit a growth or aggressive fund. Someone planning to buy a first home in three years might be better in a conservative fund. BetterSaver’s fund finder quiz gives you a personalised recommendation based on your specific situation.

Is a KiwiSaver growth fund better than a balanced fund?

Not necessarily. It depends on your circumstances. A KiwiSaver growth fund has more potential for long-term returns, but also more volatility. If you have a long timeline and can handle short-term drops, a growth fund may work well. If you need your money sooner or prefer more stability, a balanced fund could be the better choice.

Can I change my KiwiSaver fund type?

Yes. You can switch fund types within your current provider or move to a different provider at any time. There’s no fee for switching. The important thing is to make sure the fund you’re moving to actually matches your goals and timeline, not just last year’s performance.

What is a default KiwiSaver fund?

If you were automatically enrolled in KiwiSaver and didn’t choose a provider or fund, you were placed in a default fund. Default funds are balanced in their investment approach and meet certain responsible investment standards set by the Financial Markets Authority. They’re a reasonable starting point, but they may not be the best fit for your specific situation.

How much of my KiwiSaver should be in growth assets?

There’s no single right answer. It depends on your timeline and risk tolerance. As a general principle, the longer you have until you plan to withdraw, the more growth assets your fund can afford to hold. But the right percentage also depends on how you’d handle seeing your balance drop during a market downturn.

Next Steps

Your KiwiSaver fund type shapes how your money grows over time. The difference between the right fund and the wrong one can add up to tens of thousands of dollars over a working lifetime.

If you’re not sure whether your current fund is the right fit, take our free five-minute fund finder quiz to get a personalised recommendation based on what actually matters to you.