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5.2 KiwiSaver asset allocation

In this section, we examine the overall allocation of assets in KiwiSaver by asset class and investment strategy over a five year period.

Asset classes

Figure 33 below shows the overall KiwiSaver asset allocation from December 2009.[65] The following general observations on KiwiSaver asset allocation can be made:

  • less cash and cash equivalents are currently held as an asset class
  • allocation to New Zealand’s domestic fixed income market has somewhat increased over time
  • more KiwiSaver funds are being invested into New Zealand corporate securities
  • more KiwiSaver assets are being invested overseas (both into equities and fixed income assets)
  • meanwhile, the proportion of asset allocation to New Zealand property and equity has been static.

The motivating factors for the overall asset allocation trends are many, such as underlying economic conditions, interest rates, relative asset prices, international central bank policies and any number of other reasons. Policies that affect KiwiSaver will also have an impact on the overall allocation of assets. Despite these numerous competing factors in asset allocation, it is still important to measure the exposure to asset classes as KiwiSaver policy could affect allocation.

Figure 33: Overall KiwiSaver asset allocation 2009 - 2014
Figure 33: Overall KiwiSaver asset allocation 2009 - 2014.
Source: Reserve Bank of New Zealand

It appears that KiwiSaver schemes in aggregate have a higher exposure to equities than most OECD countries. In OECD countries, both public and private pension schemes have a wide variation in asset allocation. Figure 34 below illustrates the variance and shows that in comparison to countries with similarly structured tier-three, privately provided and defined contribution pension schemes such as Australia and Chile, New Zealand's KiwiSaver has similar exposures to equity securities.

Figure 34: Pension fund asset allocation for selected investment categories in selected OECD countries 2013 (As a percentage of total investment)[66]
Figure 34: Pension fund asset allocation for selected investment categories in selected OECD countries 2013 (As a percentage of total investment).
Note: *The ‘Other' category includes loans, land and buildings, unallocated insurance contracts, hedge funds, private equity funds, structured products, other mutual funds (ie, not invested in cash, bills and bonds, or shares) and other investments.** KiwiSaver assets are grouped by using OECD's asset class categories.
Source: OECD, Reserve Bank of New Zealand and Treasury analysis

Notes

  • [65]Detailed data of overseas assets holdings in KiwiSaver only became publicly available from December 2009.
  • [66]New Zealand is not included in this dataset by OECD. The chart uses Reserve Bank of New Zealand managed funds survey KiwiSaver data and applies the OECD asset class definition. Some countries' pension asset allocation to growth assets are understated as land and property and private equity investment are counted as “other” assets.
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