Nearly one in five KiwiSavers have no idea what type of fund their retirement nest egg is in, a new ASB survey says.

ASB says its latest KiwiSaver research also revealed investors were remaining "extremely conservative".

The survey showed that 17 per cent of investors were yet to review the KiwiSaver fund they were in and 19 per cent didn't know what type of fund they were with.

When automatically enrolled, KiwiSavers either enter into their employer's chosen scheme or a default scheme with AMP, ANZ, ASB, Booster, BNZ, Fisher Funds, Kiwi Wealth, Mercer or Westpac.


People who enter a default scheme have their KiwiSaver contributions go into a conservative fund – which tends to be less risky but offers lower returns than a more aggressive investment option.

ASB senior wealth economist Chris Tennent-Brown believed that investors who stay in a conservative fund could be "disappointed in the long run".

"It's surprising that a high number of investors regard term deposits as the investment likely to provide the greatest return, with many saying they would like to see term deposits available as an investment choice within KiwiSaver."

"We strongly encourage KiwiSavers to look at their timeframes and goals when choosing their investment fund. Unless an investor's timeframe is very short, we expect some exposure to sharemarkets will enhance their long-run returns," he said.

"A reasonable exposure to sharemarkets within a KiwiSaver fund is appropriate for investors with a decade or more until retirement.

"In contrast the default conservative funds typically have a low exposure to share markets, and accordingly, are expected to have lower long-run returns," Tennent-Brown said.

ASB said its survey suggested people don't understand how KiwiSaver works, which created uncertainty during big movements on the share markets.

World markets went on a rollercoaster ride during February after wage data from the US stoked beliefs that the Federal Reserve will lift interest rates.


That sparked a share market sell off – in New Zealand our NZX-50 Gross Index went from 8442 on January 31 to a low of 8039 on February 9.

It was back up at 8302 at market close on Friday.

Tennent-Brown said the volatility "highlighted the challenges for both investors and product providers" given that it made some KiwiSavers nervous.

"The fluctuations in the NZX are consistent with dips we have seen over the past decade, but it's important to factor in the large gains over the past year when considering the February declines. The lack of volatility and the staggering sharemarket gains of more than 20 per cent over 2017 are more unusual than the early February dip," he said.

Chris Douglas, director of manager research ratings at Morningstar Australasia, told the Herald earlier this month that KiwiSaver investors who had their money in more aggressive funds were going to see the potential for their balances to decline when global share markets dipped.

But those falls needed to be put into perspective.

For investors with a long timeframe, 30 to 40 years until retirement, it provides an opportunity to buy shares at a lower cost and benefit when they bounce back again, Douglas said.

He advised KiwiSavers to hold their nerve rather than try to change funds.