KiwiSaver gets nod from well-heeled investors

Well over half of private New Zealand investors will be KiwiSavers by June, according to results from the recent ING Investor Dashboard Sentiment survey.

As of March, 49 per cent of high net worth New Zealand investors had joined, and a further 22 per cent said they intended to join.

This figure is up from 15 per cent who indicated they intended to join last quarter.

This popularity of KiwiSaver is consistent with a FundSource report released yesterday, showing that KiwiSaver net funds under management, which reached $2.27 billion in March 2009, now represent about 15 per cent of the total FundSource reported retail net funds under management, currently standing at $15.31 billion.

"Lowering the minimum contribution rate to 2 per cent may well regenerate interest from those who previously saw the 4 per cent contribution level as a barrier," said ING's David Boyle.

However, FundSource also reported that the majority of people enrolled in KiwiSaver have their contributions allocated to conservative funds, purely because most people are in default schemes which automatically select conservative funds.

The ING KiwiSaver (default scheme) numbers are consistent with this, with 96 per cent of investors in the conservative fund.

"Conservative funds may well be the best option for the older KiwiSaver and for the naturally cautious investor, especially during times of market turmoil", added Boyle.

"However, over the average duration of lifetime savings of 20 years, conservative funds have not historically delivered the best returns available.

"Ultimately, conservative funds may not provide the level of savings people would require to live well in retirement."

* The ING Investor Dashboard survey measures and tracks investor sentiment each quarter from 13 Asia Pacific markets including China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Japan, Australia and New Zealand.
The Q1 2009 survey involved online interviews with a total of 1,347 investors. The respondents are aged 30 years and above, and have disposable assets or investments of US$100,000 and above.
The Survey is conducted by independent research firm Research International.