ASB KiwiSaver Scheme Review
Our guide to ASB KiwiSaver looks at the fund choices, fees and options available to KiwiSaver members
Updated 12 October 2021
Summary of ASB KiwiSaver
- ASB KiwiSaver is New Zealand's second largest KiwiSaver scheme, with approximately 18% market share of the total KiwiSaver membership and $8+ billion under management. Close to 1 in 5 KiwiSaver members have chosen an ASB fund to invest in.
- ASB KiwiSaver offers five KiwiSaver funds, ranging from low-risk cash funds to high-risk growth funds. Other than the cash fund, none of the funds are actively managed - instead investments are made in indexes as defined by the fund's product disclosure statement. This keeps fees lower overall.
- There are two types of fees; $2.50 per month is charged for being a member of the ASB KiwiSaver scheme, and once you start contributing to your fund, there is an annual management fee of between 0.34% and 0.64% of your investment balance.
- There are no performance fees. Many KiwiSaver fund managers take a bite of any market-beating returns - ASB KiwiSaver does not.
- Switching between any ASB KiwiSaver fund is free. There are no joining fees or exit fees if you take your money to another fund.
Pros & Cons
PROS
CONS
PROS
- Five funds that offer a sliding scale of risk and return, clearly defined in investor statements
- Significantly lower fees across the board for similarly structured funds offered by ANZ and Westpac
- A significant range of underlying assets offering diversity in each fund; from cash, NZ government bonds and NZ corporate bonds to global equities, emerging market indicies and listed overseas property
- Top Growth fund performance after fees (among its peers) in the year to 30 June 2018
- Up to date balances instantly available via the ASB Internet Banking website and/or ASB app.
CONS
- No life/age program option, which moves your money into more conservative (i.e. less risky) funds as you get older as a way to protect your KiwiSaver balance.
- Funds can invest in tobacco, despite publishing a responsible investment policy
Read this First: Fees, Performance and Understanding What's Best For Your Situation
A lot of media attention focuses on KiwiSaver fees, but this is only one thing to consider when picking the most suitable provider and fund for your retirement needs. We believe that being comfortable with what you're investing in is the most important aspect of saving for your retirement, not the fee you'll pay.
Our Review
In this guide, we outline what the ASB KiwiSaver scheme is, what funds they offer to KiwiSaver members and how they're different to other funds, as well as looking at alternatives and the level of fees involved.
Please note: MoneyHub is not a Financial Adviser, and this guide has been published to explain the investment fundamentals and outline the pros and cons of ASB KiwiSaver as a KiwiSaver investment option.
This Guide covers:
A lot of media attention focuses on KiwiSaver fees, but this is only one thing to consider when picking the most suitable provider and fund for your retirement needs. We believe that being comfortable with what you're investing in is the most important aspect of saving for your retirement, not the fee you'll pay.
Our Review
In this guide, we outline what the ASB KiwiSaver scheme is, what funds they offer to KiwiSaver members and how they're different to other funds, as well as looking at alternatives and the level of fees involved.
Please note: MoneyHub is not a Financial Adviser, and this guide has been published to explain the investment fundamentals and outline the pros and cons of ASB KiwiSaver as a KiwiSaver investment option.
This Guide covers:
THE SPECS of the ASB KiwiSaver Funds, Fees and where your money is invested
- ASB Group Investments Ltd, a fund manager, is the manager of the five ASB KiwiSaver funds.
- Up-to-date fund performance data is available on the ASB KiwiSaver website.
- Each of the five funds has a unique risk factor (1 = lowest, 7 = highest) and an annual management fee, as well as distinct investment profiles:
1: ASB NZ Cash Fund
This fund invests mainly in cash such as term deposits, fixed interest deposits and on-call bank accounts with New Zealand-registered banks.
Investment Composition:
We say: The NZ Cash Fund is the most conservative fund, investing only in New Zealand banks similar to how you would invest savings. The aim of the fund is keep the money safe and out of the sharemarket where returns could be negative. This is ASB KiwiSaver's least aggressive fund, with 100% of your money being invested in New Zealand banks holding high credit ratings. This fund historically offers the lowest fees and gives the lowest return.
This fund invests mainly in cash such as term deposits, fixed interest deposits and on-call bank accounts with New Zealand-registered banks.
- Average annual return (pre-tax) since fund launch (2008): ~3%
- Annual fee: 0.34%
- Risk factor: 1
- Expected annual return: 0.375% above the 90 day bank bill index (before management fees)
Investment Composition:
- Cash and cash equivalents 100%
We say: The NZ Cash Fund is the most conservative fund, investing only in New Zealand banks similar to how you would invest savings. The aim of the fund is keep the money safe and out of the sharemarket where returns could be negative. This is ASB KiwiSaver's least aggressive fund, with 100% of your money being invested in New Zealand banks holding high credit ratings. This fund historically offers the lowest fees and gives the lowest return.
2: ASB Conservative Fund
This fund invests mainly in cash and cash equivalents, with a smaller exposure to growth assets (equities and listed property). If you have been enrolled into the ASB Default KiwiSaver Scheme, you’ll be put in the Conservative Fund. The Conservative Fund is intended as a temporary ‘parking space’ and may not be right for your investment needs.
Investment Composition target:
We say: The ASB Conservative Fund is the second least aggressive fund, investing 80% of its money in income assets, such as New Zealand and international fixed interest with financial institutions and governments holding high credit ratings (for example, New Zealand, Australia, USA etc). There is a 20% exposure to growth assets, covering Australasia and established economies such as the UK, USA and Japan. The fund offers investors the prospect of a higher return when compared to the ASB NZ Cash fund, with a small 0.05% fee increase.
This fund invests mainly in cash and cash equivalents, with a smaller exposure to growth assets (equities and listed property). If you have been enrolled into the ASB Default KiwiSaver Scheme, you’ll be put in the Conservative Fund. The Conservative Fund is intended as a temporary ‘parking space’ and may not be right for your investment needs.
- Average annual return (pre-tax) since fund launch (2007): ~5.00%
- Annual fee: 0.39%
- Risk factor: 2
- Expected annual return: 0.50% above the 90 day bank bill index (before management fees)
Investment Composition target:
- Cash and cash equivalents: 15%
- New Zealand Fixed interest: 22%
- International Fixed Interest: 43%
- Australasian Equities: 9%
- Global Equities: 11%
We say: The ASB Conservative Fund is the second least aggressive fund, investing 80% of its money in income assets, such as New Zealand and international fixed interest with financial institutions and governments holding high credit ratings (for example, New Zealand, Australia, USA etc). There is a 20% exposure to growth assets, covering Australasia and established economies such as the UK, USA and Japan. The fund offers investors the prospect of a higher return when compared to the ASB NZ Cash fund, with a small 0.05% fee increase.
3: ASB Moderate Fund
This fund invests 60% in income assets (cash and cash equivalents and fixed interest), and 40% in growth assets (equities and listed property).
Investment Composition target:
We say: The ASB Moderate Fund aims for moderate returns, but stays relatively risk-free by allocating 60% of the fund to safe, income-producing assets such as bank deposits and government bonds. 40% of the fund is invested in shares in global companies by way of index funds, with a 2% exposure to global property assets.
This fund invests 60% in income assets (cash and cash equivalents and fixed interest), and 40% in growth assets (equities and listed property).
- Average annual return (pre-tax) since fund launch (2007): ~5.50%
- Annual fee: 0.57%
- Risk factor: 3
- Expected annual return: 1.00% above the 90 day bank bill index (before management fees)
Investment Composition target:
- Cash and cash equivalents: 9%
- NZ Government and Corporate Bonds: 21%
- Global Government Bonds: 30%
- Listed Property: 2%
- Australasian Equities: 19%
- Global Equities: 19%
We say: The ASB Moderate Fund aims for moderate returns, but stays relatively risk-free by allocating 60% of the fund to safe, income-producing assets such as bank deposits and government bonds. 40% of the fund is invested in shares in global companies by way of index funds, with a 2% exposure to global property assets.
4: ASB Balanced Fund
This fund invests 40% of its money in income assets (cash and cash equivalents and fixed interest) and 60% in growth assets (equities and listed property).
Investment Composition target:
We say: The ASB Balanced Fund is not entirely 'balanced' in terms of income vs growth investments, with 60% (rather than the normal 50%) of money being allocated to growth assets. The fund places weight on global government bonds (21%) and global sharemarkets (55%), meaning returns day to day will be up and down, but overall the fund expects positive returns in the long-term. The ASB suggests the minimum term of investment is six years.
This fund invests 40% of its money in income assets (cash and cash equivalents and fixed interest) and 60% in growth assets (equities and listed property).
- Average annual return (pre-tax) since fund launch (2007): ~6.00%
- Annual fee: 0.61%
- Risk factor: 3
- Expected annual return: 1.50% above the 90 day bank bill index (before management fees)
Investment Composition target:
- Cash and cash equivalents: 4%
- New Zealand Fixed interest: 15%
- Global Government Bonds: 21%
- Listed Property: 5%
- Australasian Equities: 29%
- Global Equities and Emerging Markets: 26%
We say: The ASB Balanced Fund is not entirely 'balanced' in terms of income vs growth investments, with 60% (rather than the normal 50%) of money being allocated to growth assets. The fund places weight on global government bonds (21%) and global sharemarkets (55%), meaning returns day to day will be up and down, but overall the fund expects positive returns in the long-term. The ASB suggests the minimum term of investment is six years.
5: ASB Growth Fund
This fund invests 80% of its money in growth assets (equities and listed property), with 20% exposure to income assets (cash and cash equivalents and fixed interest).
Investment Composition target:
We say: The ASB Growth Fund is the most aggressive ASB KiwiSaver fund, with 80% of money allocated to international growth assets and property. Only 1% of the fund is invested in cash, with 19% chasing high-interest fixed interest and bonds from government and companies with a good credit rating. Because of the investment profile, the value of the fund will go up and down on a daily basis. The Growth Fund is a long-term fund, with the ASB suggesting 11 years as the minimum investment period.
This fund invests 80% of its money in growth assets (equities and listed property), with 20% exposure to income assets (cash and cash equivalents and fixed interest).
- Average annual return (pre-tax) since fund launch (2007): ~6.00%
- Annual fee: 0.64%
- Risk factor: 4
- Expected annual return: 2.00% above the 90 day bank bill index (before management fees)
Investment Composition target:
- Cash and cash equivalents: 1%
- New Zealand Fixed interest: 6.50%
- Global Government Bonds: 12.50%
- Listed Property: 7.50%
- Australasian Equities: 40%
- Global Equities and Emerging Markets: 32.50%
We say: The ASB Growth Fund is the most aggressive ASB KiwiSaver fund, with 80% of money allocated to international growth assets and property. Only 1% of the fund is invested in cash, with 19% chasing high-interest fixed interest and bonds from government and companies with a good credit rating. Because of the investment profile, the value of the fund will go up and down on a daily basis. The Growth Fund is a long-term fund, with the ASB suggesting 11 years as the minimum investment period.
ASB KiwiSaver - WHAT YOU NEED TO KNOW
Claims made by ASB KiwiSaver
"We're experts at managing and investing your savings, so you can enjoy a better future"
AND
"Over 450,000 New Zealanders trust us with their KiwiSaver savings"
Is it true?
"Low fees means more of your money stays invested"
Is it true?
"We're experts at managing and investing your savings, so you can enjoy a better future"
AND
"Over 450,000 New Zealanders trust us with their KiwiSaver savings"
Is it true?
- The claim of being 'experts' is subjective, due to the fact that the actual management of individual assets (other than cash investments) is outsourced to third parties.
- In terms of size, the ASB runs the second largest KiwiSaver scheme by both member total and funds under management.
"Low fees means more of your money stays invested"
Is it true?
- Yes, relative to the likes of similar schemes such as AMP, ANZ and Westpac.
What Others Are Saying - ASB KiwiSaver in the Media
"ASB's growth fund still had investments in two companies with "tobacco" in the name" suggesting that their responsible investment commitment is not completely free of 'unethical' assets.
- Diana Clement, NZ Herald, August 2018
"The difference (in return) between an ANZ balanced fund and ASB balanced fund is going to be minimal over time" which suggests that the ANZ and ASB have similar fund structures.
- Jenée Tibshraeny, Interest.co.nz, August 2018
"ASB (is the second largest KiwiSaver scheme with investments of) $8.9 billion, followed by Westpac with $5.77 billion. Between ANZ, ASB, Westpac and BNZ, the four big banks manage nearly two-thirds of the money invested in KiwiSaver.".
- Tamsyn Parker, NZ Herald, July 2018
"ANZ and ASB earned the biggest fee hauls of the bank KiwiSaver schemes in 2017" which is a result of the massive size of the ASB KiwiSaver scheme, holding around $9+ billion in assets.
- Rob Stock, Stuff.co.nz, August 2018
"ASB's growth fund still had investments in two companies with "tobacco" in the name" suggesting that their responsible investment commitment is not completely free of 'unethical' assets.
- Diana Clement, NZ Herald, August 2018
"The difference (in return) between an ANZ balanced fund and ASB balanced fund is going to be minimal over time" which suggests that the ANZ and ASB have similar fund structures.
- Jenée Tibshraeny, Interest.co.nz, August 2018
"ASB (is the second largest KiwiSaver scheme with investments of) $8.9 billion, followed by Westpac with $5.77 billion. Between ANZ, ASB, Westpac and BNZ, the four big banks manage nearly two-thirds of the money invested in KiwiSaver.".
- Tamsyn Parker, NZ Herald, July 2018
"ANZ and ASB earned the biggest fee hauls of the bank KiwiSaver schemes in 2017" which is a result of the massive size of the ASB KiwiSaver scheme, holding around $9+ billion in assets.
- Rob Stock, Stuff.co.nz, August 2018
Who is ASB KiwiSaver Suited To?
ASB proclaims its experience and proven history when it comes to KiwiSaver, and if you're looking for aggressive funds with fees lower than other established banks, the Balanced or Growth funds may meet your expectations.
Standout Features:
Be aware:
Standout Features:
- Low fees when compared to ANZ, AMP and Westpac KiwiSaver schemes for similarly structured funds.
- In a sample of five Growth funds offered by ANZ, AMP, SuperLife, Simplicity and the ASB, the ASB returned the highest pre-tax growth in the year to 30 June 2018.
- It's free to change funds; the monthly membership fee means you can move between funds as often as you like.
Be aware:
- There is no life/age program option, which moves your money into more conservative (i.e. less risky) funds as you get older as a way to protect your KiwiSaver balance. This means you'll need to do it manually if you want to protect your KiwiSaver nest egg from market movements.
- As with any investment, markets go up and down. The Dotcom bubble in the early 2000s sank global sharemarkets, as did the 2008 Global Financial Crisis. While many global sharemarkets are now at record highs, this is no guarantee of future earnings.
- The default fund, the Conservative Fund, is probably not appropriate for most investors given its low exposure to shares and other growth investments.
- The scheme has pledged to be a responsible investor, but some funds continue to invest in tobacco products.
The Bottom Line
- Overall, ASB KiwiSaver charges individual fund fees well below the established banks who dominate the KiwiSaver market, specifically ANZ, Westpac and the BNZ.
- However, fund fees are still above low-fee competitors such as Simplicity which offers a fixed 0.31% annual fund management fee.
- Depending on your KiwiSaver balance, other funds on other platforms can have cheaper management fees, with an example presented in the table below.
- For example, the fee difference between the Simplicity Growth Fund (0.31%) and ASB Growth Fund (0.64%) for a $40,000 balance is 0.33% ($132 per year), or ~$3,300 over 25 years. In saying this, no two funds are directly comparable, so it's essential to shop around and compare fund objectives as well as fund fees if you're serious about having the biggest KiwiSaver nest-egg possible.
- As an illustrative point, we have presented the annual performance of five growth funds below, as well as a table of their annual fees.
- The are no joining fees, no exit fees, no performance fees and you can transfer between funds for free as many times as you want.
- Five of the six funds are passive funds, and follow and/or recreate a benchmark of a sharemarket index. This lowers the fees charged as there is no investment team trading in stocks and shares.
- In terms of risk, each fund has a risk number (1 = lowest, 7 = highest). Only the ASB Growth Fund is rated 4; the remainder of the funds are rated 2 or 3 (or 1 in the case of the ASB NZ Cash Fund), meaning that the funds are not following an aggressive growth strategy.
9 things to know about the ASB KiwiSaver scheme
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ASB KiwiSaver is New Zealand's second largest KiwiSaver schemeBigger does not always mean best, but there is no denying the scale of the ASB KiwiSaver scheme - the five funds account for 18%+ of the total KiwiSaver market. This is due to their long history as a KiwiSaver scheme, the size of the ASB as a bank and the number of New Zealand companies picking ASB KiwiSaver as their default KiwiSaver scheme. As a result, close to 1 in 5 New Zealanders have their KiwiSaver with ASB.
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No matter what your employer's default KiwiSaver provider or fund is, you are entitled to select an ASB KiwiSaver fundYour employer may offer another default KiwiSaver provider, but any KiwiSaver member has the right to pick any one of the 25+ providers and the fund they want. If you feel an ASB KiwiSaver fund is right for you, then you can either join (if you're new to KiwiSaver) or switch your existing fund to ASB.
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There is no minimum investment and it's easy to take contribution holidaysAs an ASB KiwiSaver member, you'll pay the $2.50 monthly membership fee. This gives you the freedom to invest as you like. And if you want to contribute to your fund at a level above your fixed salary contribution, you can do this by contacting the client services team.
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Dividends your fund receives are reinvested, meaning more cash is invested on your behalfFour of the five ASB KiwiSaver funds invest in shares, and many will pay dividends. These cash payments represent the profits from companies returning it to the shareholders, i.e. you. When a company declares a dividend, your fund will receive money and it is re-invested into more shares, growing the value of your fund. Despite being a cash payment, and as is the case with ALL KiwiSaver funds, there is no option to take this money as cash until you turn 65.
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ASB KiwiSaver offers index-tracking funds; the only "active" management is in cash investmentEach ASB KiwiSaver fund invests in specific assets such as Australasian shares, global property or New Zealand term investments, but the assets are managed externally by 'underlying investment managers'. This means ASB entrusts your money with another fund manager, who invest in a specific index as guided by ASB. This is designed place the responsibility with giant overseas investment managers on your behalf and save money using their economies of scale.
For example, if your fund invests 5% of its money into emerging markets, BlackRock Investment Management, a large investment manager, is appointed the underlying investment manager. They are then tasked by the ASB to invest your money in the MSCI Emerging Markets Index. This is an index that covers more than 800 securities across large and mid-cap size segments and across style and sector segments in 24 emerging markets (everywhere from China to Mexico to South Africa). As the value of these shares goes up, your KiwiSaver balance grows. We've outlined the components of each of the five funds above to make it clear where your money is going. And remember, past fund performance is no guarantee of future results; what you ultimately invest in will be determined by your level of comfort with a fund. |
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​Signing up to ASB KiwiSaver isn't Complicated, but you’ll need to decide what fund to invest in firstSigning up to the ASB KiwiSaver scheme is fast and easy, but you’ll need to decide your fund first. Helpfully, the names of the five funds - cash, conservative, moderate, balanced and growth, are free of buzzwords or spin.
Generally, if you're looking for a safe investment with the lowest risk of seeing your original investment fall, a conservative fund could be a suitable option. If you're looking for a higher return and are prepared to have your money in higher risk investments which could fall in value, balanced and growth funds operate in this manner. If you're not sure of what to invest in and want to have a range of options to pick from, look at Sorted's FundFinder tool which includes the ASB KiwiSaver funds. |
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The Default ASB KiwiSaver fund may not be appropriate for youIf you have been enrolled into the ASB Default KiwiSaver Scheme, you will be put in the Conservative Fund. The Conservative invests 80% of its money into income assets such as term deposits and government bonds. If you are looking for a growth fund, this is probably not it.
If you are in this fund and would prefer a more aggressive fund with slightly higher fees and the possibility of better returns, you have the option to switch free of charge. You can switch to another ASB KiwiSaver fund or any other KiwiSaver fund operated by another scheme. You can also opt-out of KiwiSaver altogether if you do not wish to participate. |
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The performance data is easy to follow, and updated on a regular basisWith the five funds launching in 2007, there is 10+ years of performance data which is updated monthly here. Members can also log in to ASB FastNet internet banking and/or check the ASB Mobile Banking app.
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None of the funds invest specifically in New Zealand sharesFour of the five funds invest in shares, but none of these are specifically investing in New Zealand shares. There is a heavy focus on international markets, and in some cases emerging markets (such as China, Mexico, Brazil, India etc), which can be relatively more volatile than New Zealand-based investments.
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Our Conclusion​
- The ASB KiwiSaver scheme offers five funds almost identical to ANZ KiwiSaver, yet charges around half the management fees across the board. The lower fees do not appear to affect fund performance - as an example, the ASB Growth Fund out performed the ANZ Growth Fund in the 12 months to 30 June 2018.
- And despite a low fee base compared to ANZ, ASB charges above low-cost index options like Simplicity which reported the second-highest annual return for its Growth fund in the year to 30 June 2018 (after deductions for charges, but before tax).
- With four of the five funds, investors can get exposure to the New Zealand sharemarket, Australian sharemarket, emerging markets, local and global bonds, global property as well as New Zealand cash deposits.
- The higher the weighting of growth assets vs income assets increases , the higher annual management fee. This is expected to be offset by the long-term performance of the fund.
- The scheme dominates KiwiSaver, with 18%+ of total KiwiSaver money spread over the five ASB funds.
Do you have an experience with the ASB KiwiSaver scheme that you would like to share with our readers? Email our research team who would be delighted to hear from you.
