A KiwiSaver balanced fund sits in the middle of the risk spectrum — more growth potential than a conservative fund, but less volatility than a growth fund. It’s the new default for KiwiSaver members who haven’t made an active choice, and it suits a wide range of members. But it’s not right for everyone.
What Is a Balanced Fund?
A balanced fund splits its holdings roughly equally between growth assets (shares, property) and income assets (bonds, cash). 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.
Expected Returns
Balanced funds aim for moderate long-run returns with moderate volatility.
Approximate long-run returns (before fees and tax):
| Fund type | Historical long-run average (approx.) |
|---|---|
| Conservative | 3–5% p.a. |
| Balanced | 5–7% p.a. |
| Growth | 7–9% p.a. |
| Aggressive | 8–10%+ p.a. |
Past returns do not guarantee future performance.
In a poor year, a balanced fund might fall 8–15% compared to 15–25% for a growth fund, and 5–8% for a conservative fund. The recovery period is also shorter than for higher-risk funds.
Who Should Be in a Balanced Fund?
Balanced funds are appropriate for:
- Members 5–15 years from retirement — getting closer to withdrawal but not close enough to need capital preservation
- Members with moderate risk tolerance — comfortable with some volatility but not with the potential swings of a growth fund
- The 2021 default fund standard — all new KiwiSaver default fund allocations must be balanced; if you were auto-enrolled after 2021 and haven’t chosen, you’re likely in a balanced fund
- Members who’ve recently switched from growth — a balanced fund is a sensible intermediate step as you de-risk toward retirement
Who Might Consider a Different Fund?
- Under 40 with 25+ years to retirement — a growth or aggressive fund will likely outperform meaningfully over that horizon
- Over 62 with 3 years or less — a conservative fund may be more appropriate to protect against a market crash just before withdrawal
- Members with very low risk tolerance — if any loss of balance causes significant distress, a conservative fund may prevent panic-switching at the worst time
The New Default Fund
Since December 2021, new KiwiSaver members who are auto-enrolled and don’t choose a provider or fund are placed with one of nine government-selected default providers in a balanced fund. This replaced the previous system, where default funds were conservative — a significant improvement for young workers who would have spent decades in low-return funds.
If you joined KiwiSaver before 2021 and haven’t changed your fund, verify what you’re in — you may still be in an older conservative default.
Balanced Fund Fees — Provider Comparison
| Provider | Balanced fund | Approx. annual fee |
|---|---|---|
| Simplicity | Balanced | 0.31% + $30/yr |
| InvestNow Foundation Series | Balanced | ~0.35% |
| BNZ | Balanced | ~0.45% |
| ANZ | Balanced | ~0.60% |
| Westpac | Balanced | ~0.55% |
| ASB | Balanced | ~0.55% |
| Fisher Funds | Balanced | ~1.10% |
| Milford | Balanced | ~0.90% |
Fees change; verify with provider before switching.
Balanced vs Growth — The Long-Run Cost of Playing It Safe
The most common mistake with balanced funds is staying in one for too long when the investment horizon is still long.
Illustrative comparison — $200/month contribution, 30-year horizon:
| Fund type | Assumed return | Projected balance |
|---|---|---|
| Balanced | 6% p.a. | ~$194,000 |
| Growth | 8% p.a. | ~$272,000 |
| Difference | ~$78,000 |
Projections are illustrative and do not account for fees, tax, or employer contributions. Real-world results will differ.
For a 30-year-old, staying in a balanced fund rather than a growth fund is not “playing it safe” — it’s potentially sacrificing $50,000–$100,000 in retirement savings.
Is a Balanced Fund Right for You?
Ask yourself these questions:
- How many years until I plan to withdraw from KiwiSaver? If 15+, a growth fund is likely more suitable.
- How would I feel if my balance dropped 15% in a year? If extremely distressed, balanced or conservative may be more appropriate.
- Am I in the default balanced fund because I never chose? If so, actively choosing a fund — and provider — is worth 20 minutes of your time.
- What are my fees? Default balanced funds can have above-average fees. Switching to a low-cost provider in the same fund type saves money with no additional risk.
Switching to or From a Balanced Fund
Switching fund types within the same provider is free and simple:
- Log in to your provider’s app or website
- Go to fund selection / investment options
- Choose balanced (or another fund type)
- Confirm — processed within 2–5 business days
No tax event is triggered by switching. If you also want to switch provider, you can do both at once.
See the full guide: how to change your KiwiSaver fund type.
Summary
| Feature | Balanced fund |
|---|---|
| Risk level | Medium |
| Typical return (long-run) | 5–7% p.a. |
| Asset mix | ~50/50 growth and income |
| Best suited to | 5–15 years from retirement; moderate risk tolerance |
| Poor fit for | Young members with 20+ year horizon |
| Now the default | Yes (since 2021) |
| Typical NZ fee range | 0.31%–1.10% |