"It's best not to focus too much on how an option has performed in the past." Photo / Thinkstock
I am considering changing my KiwiSaver provider, or at least taking a look at how it stacks up against some of the other offers.
A week or so back there was an article in the Herald about the Morningstar survey so I went and had a look at their report.
I might
not be reading it right but I couldn't find either the fund that I was currently in or the fund I was considering transferring to.
Does this survey just cover a handful of providers and why is this?
I also have to admit I'm not a particularly experienced investor - KiwiSaver is really the sum total outside my house and bank deposits - so I really feel a bit of a fraud even attempting to decipher a survey.
What should I be looking for?
I asked Chris Douglas, co-head of fund research, Morningstar Australasia, about your query.
This is his response: "It's great to hear that you're actively taking a closer look at your KiwiSaver provider to understand how they fare relative to others.
"We developed the Morningstar KiwiSaver Survey to give savers quality, timely information from a trusted, independent source.
"The survey contains 128 KiwiSaver schemes, ranging from the large, low-cost providers to the smaller, differentiated (and therefore typically more expensive) options. The survey's free for scheme providers to participate in, and we make it available for free on our website.
"Scheme providers aren't obliged to participate and a small number have chosen not to make themselves available for the same scrutiny as their competitors.
"These are however the minority, as the survey covers approximately 85 per cent of total KiwiSaver assets.
"We're continuously in touch with the small number of providers not in the survey, and the new disclosure regulations will in future enable us to include their results from publicly available information.
"When it comes to assessing the suitability of a KiwiSaver option, it's best not to focus too much on how an option has performed in the past.
"The key things to look for are the appropriateness of the asset allocation - the mix of asset classes - for your age, your risk profile, your time to retirement, the extent of the scheme provider's disclosure and transparency, and of course take note of the fees you'll have to pay."
There is also a new kid on the funds comparison block courtesy of the Commission for Financial Literacy and Retirement Income and its independent money guide website www.sorted.org.nz.
David Kneebone, executive director of the Commission for Financial Literacy and Retirement Income explains the basics of KiwiSaver fund comparison and the new Sorted tool: "Knowing which KiwiSaver fund you're in, making sure it's the right one for your situation and being able to see how it compares with other funds are all important factors that will boost your KiwiSaver investor knowledge.
"Sorted has just launched an excellent new tool to help you navigate through the vast amounts of information that's out there about KiwiSaver funds.
"It compares KiwiSaver funds using data that each provider is now required by law to disclose.
"The KiwiSaver fund finder takes you through a quick process that matches the level of risk you're comfortable with against a type of fund.
"These have been grouped into five types - defensive, conservative, balanced, growth or aggressive.
"Once you know the type of fund that suits your situation, you can compare the funds by the fees they charge and past performance, as well as the services each provider offers.
"It's simple to switch funds (you just need to advise the new provider) but make sure you're changing for the right reasons.
"While it can be tempting to focus on past returns, the fees you pay can make a big difference to the overall amount you'll save and you'll want a provider that gives you access to the kind of services you like.
"The KiwiSaver fund finder takes the hard work out of comparing providers and is a quick way to make a more informed decision about which fund is right for you."
The new KiwiSaver fund finder is available at www.sorted.org.nz/fundfinder.
Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.
To have your KiwiSaver questions answered by the Herald's panel of industry players email Helen Twose, helentwose@gmail.com.</i>