5 Aug 2014

More KiwiSavers making own choices

9:37 am on 5 August 2014

KiwiSavers appear to be getting the message that default funds are not the ideal place to leave their nest eggs, with the amount going to default funds almost halving.

Research by FundSource, which is owned by stock exchange operator NZX, has found $66.9 million flowed into default funds in the June quarter, down from $141.7 million in the March quarter.

That was dwarfed by the $716.9m which flowed into other conservative, balanced and growth funds.

The annualised return from default funds since June 2009 has been 6.48 percent, while other conservative fund returns have averaged 6.66 percent over that period. However, balanced funds have averaged 9.23 percent annual returns and growth funds have returned 10.78 percent.

NZX head of exchange products Sam Stanley said the figures suggested KiwiSavers were becoming more sophisticated in their investment choices.

"It looks like, after seven years of the KiwiSaver initiative in New Zealand, that we are seeing a concentration ... people are actually rather than just going straight into default, have become probably a bit more sophisticated and are starting to opt out and make active decisions to join other schemes," he said.

"That's what it looks like the data is showing us, that we are seeing a decrease in the inflow into the default funds and an increase into other funds outside of default."

Another 54,000 people became KiwiSavers during the June quarter, taking the total to more than 2.3 million.