One of the most common portfolio questions for NZ investors: how much should you keep in NZ shares vs global shares? It sounds simple — but there are legitimate arguments on both sides.
Most NZ investors should hold 10–30% NZ shares, 70–90% global shares. A small NZ home bias (above the ~0.2% global market-cap weight of NZ) is justified for currency, tax efficiency (imputation credits), and familiarity — but overweighting NZ means a concentrated, sector-skewed portfolio. The global index has outperformed the NZX 50 in NZD terms over most 10+ year periods.
Why NZ’s Global Market Weight Is Tiny
NZ’s share market represents approximately 0.1–0.2% of global market capitalisation. A purely market-cap-weighted global portfolio would hold about $200 of NZ shares for every $100,000 invested.
Most investors choose to hold more NZ than this — this is called home bias. The question is: how much home bias is rational?
The Case For NZ Shares (Home Bias)
1. Currency — no FX risk
NZ shares are priced in NZD. When you hold international shares, NZD/USD movements affect your returns. A rising NZD reduces your global returns; a falling NZD amplifies them. NZ shares remove this variable for your NZ-spending retirement.
2. Tax efficiency — imputation credits
NZ companies pay 28% corporate tax, and NZ shareholders receive imputation credits attached to dividends. These credits reduce or eliminate further personal tax on dividends. This makes NZX dividends more tax-efficient than equivalent overseas dividends for NZ resident investors.
3. NZX dividend yield is higher
The NZX 50’s gross dividend yield (~4–5%) is significantly higher than the S&P 500 (~1.5%) or MSCI World (~2%). For income-focused investors (retirees), a NZ shares allocation generates more regular income.
4. Familiarity
You understand NZ companies, NZ regulations, and NZ business conditions. This isn’t just psychological — it can make it easier to hold during downturns when you understand the underlying businesses.
The Case Against Overweighting NZ
1. Concentration risk
The NZX 50 has only 50 companies in one small country. A significant market event (earthquake, agricultural crisis, rate shock) can affect the NZX more than a globally diversified portfolio.
2. Sector bias
The NZX 50 is heavily weighted to utilities, infrastructure, and healthcare. There’s minimal technology exposure compared to a global index. This means your NZ allocation is a sector bet as much as a country bet.
3. Historical performance
Over the 10 years to 2025, the MSCI World (in NZD) has significantly outperformed the NZX 50 — primarily due to US tech growth and NZD weakness amplifying USD returns. This is historical, not guaranteed going forward, but it’s a meaningful data point.
4. Your property is already a NZ asset
Most NZ homeowners have their single largest asset (their home) in NZD and tied to the NZ economy. Adding heavy NZ share exposure doubles down on this NZ concentration. A global share portfolio provides genuine diversification away from the NZ economy.
Common Allocation Approaches
| Allocation | Profile | Rationale |
|---|---|---|
| 5–10% NZ / 90–95% global | Pure global investor | Maximum diversification, treat NZ property as NZ exposure |
| 20% NZ / 80% global | Common NZ approach | Small home bias, imputation credit benefit, manageable |
| 30% NZ / 70% global | Moderate home bias | Higher dividend yield, more NZ familiarity |
| 50% NZ / 50% global | Strong home bias | Acceptable for income-focused investors, some concentration risk |
| 100% NZ | NZ-only | Not recommended — too concentrated |
InvestNow Foundation Series default: Their one-fund “Balanced” and “Growth” options hold approximately 30% NZ assets (shares + bonds) and 70% global — a moderate home bias.
Simplicity Growth Fund: Approximately 30% NZ, 70% global.
Practical Implementation
All-in-one approach (no allocation decision needed)
Choose a single diversified fund that already handles the NZ/global split:
- Foundation Series Balanced or Growth (InvestNow) — ~30% NZ
- Simplicity Growth Fund — ~30% NZ
DIY two-fund approach
Explicitly set your own allocation:
- InvestNow Foundation Series International (80%) + Foundation Series NZ Shares (20%)
- Rebalance annually or redirect contributions to maintain the target split
Does the NZ Allocation Matter That Much?
At the portfolio level, a 10% vs 30% NZ allocation has a relatively small effect on total returns compared to:
- Your overall growth vs defensive split (80/20 vs 50/50 matters much more)
- Your fee level (0.10% vs 1.10% costs $44,000 over 20 years on $100k)
- Contribution consistency (investing $500/month vs $200/month is transformative)
Don’t stress over the NZ/global split — pick something reasonable (10–30% NZ) and focus on the bigger decisions.
Frequently Asked Questions
Should I include NZ shares given I already own a home? Your home is a large NZ asset (NZD, NZ economy exposure). If you own a home and want genuine diversification in your investment portfolio, a lower NZ share weighting (10–20%) makes sense. Your total NZ economic exposure is already substantial via your property.
Is there a “correct” NZ share allocation? No — it depends on your circumstances. 10–30% NZ shares is a reasonable range that captures some imputation credit benefit and home-currency advantages without excessive concentration.
What about Australian shares? ASX shares occupy a middle ground — similar timezone, familiar companies (some NZ operations), AUD currency (similar to NZD in long-run). A global index fund includes Australia as approximately 2–3% of the portfolio. You don’t need a separate Australian allocation unless you have a specific view.