"As our analysis shows, investors in conservative options are now lagging those who have invested into a growth KiwiSaver fund, especially in dollar-weighted terms," said Chris Douglas, co-head of research for Morningstar Australasia.
Research by the firm comparing a median earner's return from investing in a conservative ASB fund with a growth ASB fund found a $2,681 difference in the amount of money a saver would have if they had invested in the growth fund since the launch of KiwiSaver in October 2007.
The growth fund returned a higher amount of money despite its average yearly return being lower than the conservative fund for the entire investment period.
Growth funds were hit hard by the global financial crisis in the first few years of KiwiSaver but because people had not saved much money it didn't have a big monetary impact.
People have then benefited from strong investment performances in recent years when their savings had built up.
"It's down to people having less money at the beginning and more money now," Douglas said.
Douglas admits that while growth funds have the potential to make higher gains they can also have years where they have higher negative returns.
But he said judging the risk came down to how long a person was going to invest for.
"If you are in your 30s and 40s you've got another 20 years until you reach retirement age, you have the luxury to withstand a 20 per cent fall in markets."
Performance report
• ASB KiwiSaver conservative (default) $26,072
• ASB KiwiSaver balanced $28,021
• ASB KiwiSaver growth $28,753
• Hypothetical result based on a person earning $800 a week contributing 3 per cent from their salary with 3% from their employer plus the $1,000 kickstart and the Govt contributions from 1 October 2007 to 31 December 2013.
