SBS Wealth KiwiSaver Scheme

Our guide to the SBS Wealth KiwiSaver Scheme reviews the fund choices, fees and options available to KiwiSaver members.

Updated 16 December 2024

Summary of the SBS Wealth KiwiSaver Scheme:

Funds: SBS Wealth KiwiSaver offers two core KiwiSaver funds: one is focused on income-producing assets (Income Fund), and the other is on growth assets (High Growth Fund). The scheme also offers an age-driven option that delivers the funds via 'life stages' (explained in further detail below). This means that as you get older, your KiwiSaver investment profile changes to protect the savings you have amassed. SBS Wealth KiwiSaver Scheme's Lifestages Auto automatically allocates increasing proportions of money into the Income Fund as you get older, and reduces it from the High Growth Fund.
Management and Fees: SBS Wealth takes a hands-on approach to managing the SBS Wealth KiwiSaver Scheme. The Scheme is actively and responsibly managed to create value for investors over the long term through a blend of concentrated direct shares and trusted active fund manager(s). The management fee is in line with other active KiwiSaver managers.
Underlying Investments: SBS Wealth Income Fund investments are predominantly low-risk cash, New Zealand and global bonds and term deposits. The majority of the term deposit investments are with SBS Bank. The bonds are with well-recognised fund managers, like Harbour Asset Management, Dimensional Fund Advisers and Blackrock. The SBS Wealth High Growth Fund allocates its money in sharemarkets around the world, with about ¾ invested globally and ¼ domestically. The sharemarket investments are a blend of a concentration of direct NZ, Australian and global shares, plus investments via underlying fund managers, including Dimensional Fund Advisers, Schroder, iShares thematic ETFs and Kernel. This gives investors exposure to global markets and key thematics, like technology, innovative healthcare, and decarbonisation.
The Importance of the High Growth Fund: The scheme's long-term growth, and thus returns, are primarily driven by the High Growth Fund. This Fund makes up all the allocation of the Lifestages Auto under 50 years old and the majority of the 50-59-year-olds allocation. If it beats other KiwiSaver growth-focused funds, the entire scheme is lifted, but the scheme is worse off if its returns are below average. The Income Fund, by comparison, only invests in fixed interest-bearing securities paying the same or similar returns that other KiwiSaver income-orientated funds invest in.
Fees: SBS Wealth KiwiSaver does not charge an annual membership fee for being part of the scheme. However, each fund charges between 0.87% and 1.15% p.a. in management and administration fees. There are no joining fees or exit fees if you transfer your money to another Scheme or switch funds transferring within the SBS Wealth KiwiSaver Scheme.
No Performance Fees: No performance fees are charged.
Ownership: The SBS Wealth KiwiSaver Scheme is issued and managed by SBS Wealth Limited, a wholly owned subsidiary of SBS Bank Group (the Invercargill-based New Zealand owned bank).

Our Review
In this guide, we outline what the SBS Wealth KiwiSaver scheme is, what funds it offers 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 SBS Wealth as a KiwiSaver investment option.

Our review covers:

Understand this first - what is a 'lifestage' fund?

Rather than having to choose between a conservative, balanced, moderate, growth or aggressive fund (the five main categories of funds on the market), lifestage funds give you an asset allocation that is age specific and self-adjusting.
Modern investment theory has it that the younger you are, the greater volatility you can afford to tolerate. This means that growth funds are favoured for younger savers, because, over time, the returns will beat any other investment type. Many would argue that is particularly the case with KiwiSaver because it is a retirement saving vehicle, and you could be in it for 30 to 40 years if you enrol when you first join the workforce or graduate.
While the composition of lifestage funds varies from provider to provider (and from fund to fund), in general terms the younger you are, the greater exposure you'll most likely have to equities (shares of companies listed on the stock exchange).
Lifestage funds are offered by Generate, SuperLife, Fisher Funds and the SBS Wealth KiwiSaver Scheme. Stuff.co.nz has an excellent historical article which profiles lifestage funds among KiwiSaver providers.
Source: Amanda Morrall, Interest.co.nz

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.
While we don't focus on the latest returns, we encourage readers to make their own comparisons using our KiwiSaver fund comparison tool.
Ultimately, deciding upon whether the SBS Wealth KiwiSaver Scheme is right for you will most likely come down to your interpretation of the fund performances in the medium term, their investment strategy and their fees.

The Specs of the SBS Wealth KiwiSaver Scheme Funds - Fees, Risks and Explaining Where Your Money is Invested

Two funds drive the entire scheme, the Income Fund and the High Growth Fund.
The SBS Wealth KiwiSaver Scheme gives you the option to invest via its age-based funds automatically using its Lifestages Auto funds. The age buckets are 0-49, 50-54, 55-59, 60-64 and 65+. The performance of these funds is driven mostly by the performance of the SBS Wealth KiwiSaver Scheme High Growth Fund and, to a lesser extent, the Income Fund. We review these funds in more detail below.
Up-to-date fund performance data is available on the SBS Wealth KiwiSaver Scheme website.
Each of the two core funds has a unique risk factor (1 = lowest, 7 = highest), which is driven by its distinct investments each fund makes.
Fees, returns, risks and the suggested investment timeframe differ between funds, as we outline below.

1: SBS Wealth KiwiSaver Scheme Income Fund
This fund invests solely in income assets of a short term nature such as bank deposits, floating rate notes and money market securities with New Zealand-registered and overseas banks.

Annual fee: 0.87%
Risk factor: 3
Investment Composition: Cash and cash equivalents (10%–40%), New Zealand fixed interest (10%–40%) and International fixed interest (30%–90%) hedged to NZD

Our view: The Income Fund is the most conservative SBS Wealth Kiwisaver Scheme fund, intending to provide stable returns over the short term, investing 100% of the fund into low-risk assets such as government and corporate bonds, and local term deposits. The Income Fund historically offers the lowest fees and reports the lowest historical return within the scheme.

2: SBS Wealth KiwiSaver Scheme High Growth Fund
This fund invests predominantly in growth assets, such as New Zealand and international shares. Smaller holdings are comprised of cash and term deposits. This fund is most suitable for long-term investors given SBS Wealth KiwiSaver's suggestion of a minimum 7-year investment timeframe.

Annual fee: 1.15%
Risk factor: 5
Investment Composition: Cash and cash equivalents (1%–10%), Australasian equities (10%–50%) and International equities (50%–90%), 50% hedged to NZD

Our view: The High Growth fund is the flagship long-term SBS Wealth KiwiSaver option, and drives the performance of the auto option funds (see below). As a standalone fund, it charges investors 1.15% p.a, putting the fees up there with other actively managed KiwiSaver schemes like Generate, Milford and Fisher Funds.

Funds 3-7: The Lifestages Auto Option

As outlined in the table below, the life cycle investment option offers a combination of the Income Fund and the High Growth Fund.
The exact ratio varies based on your age. The intention is to provide investors with an age-appropriate mix of the two core funds SBS Wealth KiwiSaver funds.
The life cycle age-based stages and their respective investment composition, risk indicator and fees are presented in the table below.

Age Range	Fund Name	Lifestages Income Fund %	Lifestages High Growth Fund %	Total annual fund charges (estimated)	Risk Indicator (1 to 7)
0-49	Lifestages Auto 0 - 49	0%	100%	1.15%	5
50-54	Lifestages Auto 50 - 54	20%	80%	1.10%	4
55-59	Lifestages Auto 55 - 59	40%	60%	1.04%	3
60-64	Lifestages Auto 60 - 64	60%	40%	0.98%	3
65+	Lifestages Auto 65+	75%	25%	0.95%	3

Information extracted from the SBS Wealth KiwiSaver Scheme Product Disclosure Statement (published 2 September 2024)

SBS Wealth KiwiSaver Auto Option Must-Know Facts

Just because you're in a SBS Wealth KiwiSaver Scheme fund does not mean you have to invest in the automatic life cycle investment funds
The lower the percentage of the High Growth Fund allocation, the lower the annual fee, and vice versa

Who is the SBS Wealth KiwiSaver Scheme Suited To?

Ultimately, our view is that the SBS Wealth KiwiSaver Scheme offers a middle-of-the-road KiwiSaver scheme, but better options can be found elsewhere.

SBS Wealth KiwiSaver has a history of high-fees producing average returns. While it has committed to introducing lower-fee funds, we're most uncomfortable with the Income Fund, SBS Wealth KiwiSaver Scheme's low-risk conservative fund, which commands ~0.87% p.a. in fees.

While lifestage funds are useful, we take the view that the fund offering could be better. Specifically, the historical returns struggle when compared to the bulk of similarly structured KiwiSaver funds.

In our view, it's an average offering, and better options are out there with specialist lifestage providers such as Generate, SuperLife and Fisher Funds.

Pros

Seven funds that offer a sliding scale of risk and return based on age, all that are clearly defined in investor statements.
Investments are globally diversified and include cash deposits, NZ government bonds and NZ corporate bonds, global sovereign bonds and corporate bonds, New Zealand and Australian shares and global equities.
Key focus on global investments, moreso than other KiwiSaver schemes. This means a greater emphasis on technology, financial services, and consumer discretionary companies.
Up to date fund performance and balances are available 24/7 via the SBS Wealth KiwiSaver Scheme website.

Cons

High fees matched with average returns. As an example, SuperLife's Age Steps charge around half as much as fees and have reported the similar (or better) results in recent years. However, this SuperLife is a passive fund manager.

Be aware:

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.

SBS Wealth KiwiSaver Scheme - Must-Know Facts

SBS Wealth may be an SBS Bank-product, but it's tiny in comparison to ASB, ANZ and AMP, and most other bank KiwiSaver schemes

Most SBS Wealth funds only launched in 2015, but since then the scheme has managed to amass around $650+ million of investments (as at 30 September 2024). We believe most members have come from direct marketing to SBS customers, as the marketing drive and general promotion to get new members is relatively quiet. SBS Wealth KiwiSaver has less than 1% of the total KiwiSaver funds under management, a fraction of ANZ's ~25%, as a point of comparison.

No matter what your employer's default KiwiSaver provider or fund is, you are entitled to select SBS Wealth as your KiwiSaver scheme

Your employer may offer another default KiwiSaver provider, but you are free to choose SBS Wealth as your provider if you feel it's right for you. You don't have to go into an aged-base auto option fund either.

Signing up to the SBS Wealth KiwiSaver Scheme is easy, but you’ll need to decide your fund first. The two options, Income or High Growth, are clearly defined, which makes the choice easier.

Generally, if you're looking for a safe investment with the lowest risk of seeing your original investment fall, an income fund could be a suitable option. But many investment professionals would suggest being in a growth fund for the long term. If you're looking for a higher return and are prepared to have your money in higher risk investments, the High Growth fund (or an Auto Option fund with a decent portion allocated to that fund), could both be suitable options.

There is no minimum investment, and it's easy to take contribution holidays

If you stop contributing for any reason, these fees will still be charged the management fee on your balance. If you want to contribute to your fund at a level above your fixed salary contribution, you can do this via the online banking or manually by contacting the client services team.

Dividends your fund receives are reinvested, meaning more cash is invested on your behalf

The SBS Wealth KiwiSaver Scheme High Growth fund invests in shares, some of which will pay dividends. Any fund which has a percentage investment in the SBS Wealth KiwiSaver High Growth fund will earn some level of 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.

The performance data is easy to follow, and updated regularly

Fund performance details are published on the SBS Wealth website monthly. As a member, you can also check a fund balance 24/7 by logging in to the website.

Our Conclusion

SBS Wealth charges you a premium for its services - the fees you will pay each year are double or triple what low-cost providers like Superlife and Simplicity charge, despite reporting consistently similar or lower returns.
With six of the seven 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.
With every fund offered, the higher the weighting of growth assets vs income assets, the higher the annual management fee. This is expected to be offset by the long-term performance of the fund.
Ultimately, our view is that the SBS Wealth KiwiSaver scheme (and its Lifestages funds) are adequate, but significantly better options can be found elsewhere despite the lower fees coming into effect.
Specifically, we don't see the High Growth Fund offering value for money, nor delivering market-leading returns or making the most of global market opportunities.
It is likely that, regardless of your KiwiSaver balance, funds in other KiwiSaver schemes may well charge lower management fees and show a history of better returns.

Do you have experience with the SBS Wealth KiwiSaver scheme that you would like to share with our readers? Email our research team who would be delighted to hear from you.