KEY POINTS:
The high numbers of KiwiSavers being auto-enrolled into default funds is skewing the numbers of people appearing to take a conservative approach to investing in the scheme, say major providers.
AMP Capital head of strategy Leo Krippner put the level of investment at the low-risk end at around 55 per cent with balanced schemes attracting 30 per cent and growth or higher-risk funds being selected by around 15 per cent of investors.
BT funds management chief operating officer Fiona Oliver said there was likely to be a tilt towards conservative funds because of the process rather than active decision-making.
But she believed it was a matter of time before the wrinkle was ironed out. "The industry will use it as a chance to talk to people and convert them to the right fund. I don't think anybody has had the capacity yet."
Tower investments chief executive Sam Stubbs agreed that it was the auto-enrolment process which had driven the high numbers in default schemes but for those that had chosen a scheme the swing was more towards the middle or balanced portfolios.
"I think it is in the nature of Kiwis to want to diversify and balance risk."
Stubbs said it also reflected a reluctance to invest in shares.
For those in default funds, Stubbs said it could take some time before they shifted into self-selected schemes but Tower research showed that once people had more than $30,000 in their portfolios, they were more likely to pay attention to the investments.
Mercer New Zealand head Bernie O'Brien said many of those in the default schemes had simply made no decision because they did not understand the options.
"For some, conservative is the right choice; for others it could be that it sounds like the right choice ... or they may believe the trustee or the Government thinks conservative is the best option."
