A KiwiSaver balanced fund sits in the middle of the risk spectrum: more growth potential than a conservative fund, smaller swings than a growth fund. It is also the fund type default members are placed in. Here’s what a balanced fund holds and how it behaves.
What Is a Balanced Fund?
A balanced fund holds a mix of growth assets (shares, property) and income assets (bonds, cash), with no fixed split: Generate’s Balanced Fund, for example, targets 60% growth assets and SuperLife’s Default Fund 55%. The goal is to capture meaningful investment growth while limiting the severity of market downturns.
Typical balanced fund asset allocation:
| Asset class | Approximate allocation |
|---|---|
| NZ and international shares | 35–55% |
| Property and infrastructure | 5–10% |
| NZ and international bonds | 30–45% |
| Cash | 5–10% |
The exact mix varies by provider. Some providers label similar funds as “moderate” or “moderate-balanced” — check the actual asset allocation, not just the name.
Returns and Volatility
With roughly half its money in shares and half in bonds and cash, a balanced fund’s behaviour is a blend of the two:
- In a share market fall, the bond and cash half cushions the fall: a balanced fund has typically fallen by less than a growth fund and by more than a conservative one (how KiwiSaver balances behave in a downturn).
- Over long periods, balanced funds have historically returned approximately 5–7% a year before fees and tax. Past returns do not guarantee future performance.
- Over long horizons, the difference in return between a balanced and a growth fund compounds, so it grows with the number of years invested. The other side of that trade-off is the smaller falls along the way.
The KiwiSaver fee comparison by fund type lists providers’ current balanced fund fees. Labels vary: some providers’ “balanced” funds hold more shares than others’, so the growth-asset share in the product disclosure statement is the figure to compare.
The Default Fund Type
Since December 2021, members who are enrolled automatically and don’t choose a provider are allocated to a government-appointed default provider’s balanced default fund (unless their employer has a chosen scheme); before then, default funds were conservative. The KiwiSaver default fund guide covers the default providers and what changed.
How the Time Horizon Changes the Picture
Whether a balanced fund’s smaller swings are worth its lower long-run return depends on when the money will be needed: a fall matters more the closer it comes to a withdrawal. Risk by time horizon sets out how conservative, balanced and growth funds compare as that horizon shortens.
Switching to or From a Balanced Fund
Moving into or out of a balanced fund is a request to your current provider, normally made online, and a move between funds inside KiwiSaver creates no tax bill. Taking your savings elsewhere is a separate transfer between providers; the steps for changing fund are set out separately.
Summary
| Feature | Balanced fund |
|---|---|
| Risk level | Medium |
| Typical return (long-run, before fees and tax) | 5–7% p.a. |
| Asset mix | A mix of growth and income assets, often more growth (no fixed split) |
| Default fund type | Yes (since December 2021) |