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. Milford would likely argue fees should be far less of a consideration and instead point to the past returns (although this is no indication of future performance) and the value for money the fees offer given the services of leading international investment managers.

​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. For example, if you are not willing to risk your money in the sharemarket, it wouldn't be in your interests to invest in a growth fund.
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Our Review 
In this guide, we outline what the Milford KiwiSaver Plan 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 Milford as a KiwiSaver investment option.
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This Guide covers:

• The Specs of MIlford KiwiSaver, Fees and Where Your Money Is Invested
• ​Milford KiwiSaver in the Media - What You Need To Know
• Who is Milford KiwiSaver Suited to?
• 8 Things To Know About Milford KiwiSaver
• Conclusion​

1: Conservative Fund
This fund invests 83% of its money into income assets (term deposits and fixed interest), and 17% in growth assets (equities and listed property).

• 5-year average annual return (after fees, pre-tax) to 30 June 2018: ~9.00%
• Annual management fee: 0.96%
• Risk factor: 2
• Suggested minimum investment period: 3 years 

Investment Composition targets
Income Assets

• Cash and Cash Equivalents: 6%
• NZ Fixed Interest: 36%
• International Fixed Interest: 41%

​Growth Assets

• Australasian Equities: 6%
• International Equities: 7%
• Listed Property: 4%
• Unlisted Property: 0%
• Commodities 0%
• Other 0%

We say: Milford's conservative fund sees active investment managers chasing the highest interest rates offered by banks and company bonds while ensuring what they invest in has suitable credit ratings. The conservative fund invests primarily in New Zealand assets - the top 3 recent holdings included a NZ dollar cash deposit with Australia's NAB Bank (6%),  a term deposit with Westpac (2%) and a bond with Investore Property (2%). 

The annual management fee of 0.96% is higher than most conservative funds operated by other KiwiSaver option. Nevertheless, Milford's active management structure incurs higher costs which need to be passed on to investors. 

2: Balanced Fund
This fund invests 60% of its money into growth assets (equities and listed property), keeping 40% in income assets such as fixed-term deposits.

• 5-year average annual return (after fees, pre-tax) to 30 June 2018: ~11.00%
• Annual management fee: 1.14%
• Performance fee range: The Balanced Fund does not directly charge a performance fee, but it invests in underlying Milford funds that do, such as the Global, Trans-Tasman and Dynamic Funds which are not KiwiSaver funds. As a point of reference, as of 30 June 2018, the average performance fee since the Balanced Fund's launched more than ten years ago is 0.27%. Regarding an investment, the historical performance fee calculates to be $27 on a $10,000 investment and only charged when the fund has made an above-market return.
• Risk factor: 3
• Suggested minimum investment period: 5 years 

Investment Composition targets
Income Assets

• Cash and Cash Equivalents: 9%
• NZ Fixed Interest: 11%
• International Fixed Interest: 20%

​Growth Assets

• Australasian Equities: 34%
• International Equities: 24%
• Listed Property: 6%
• Unlisted Property: 0%
• Commodities 0%
• Other 0%

We say: The Balanced Fund targets growth more than fixed-income based on its target asset class (60% vs 40%). The Milford investment managers are tasked with picking shares and other funds they foresee as increasing in value. The most recent fund report included holdings in:

1. The iShares MSCI Index Fund (3% - a fund which invests in large companies in the developed world, with significant holdings including Nestle, Novartis, Roche, Shell, Toyota and BP)
2. The Vanguard International Shares Select Exclusions Index Fund (2% - a fund which also invests in large companies with top holdings including Apple, Microsoft, Alphabet, Amazon and Facebook), Contact Energy (1%), Spark (1%), a2 Milk Company (1%)
3. A number of cash investments in bank

3: Active Growth Fund
This fund invests 80% of its money into growth assets (with a focus on Australasian equities) and 20% in income assets (term deposits and fixed interest).

• 5-year average annual return (after fees, pre-tax) to 30 June 2018: ~13.00%
• Annual management fee: 1.09%
• Performance fee range: 15% of any return above 10% p.a. The historical performance fee of the Active Growth Fund is 0.54% p.a.
• Risk factor: 4
• Expected annual return: 10% over the minimum investment period
• Suggested minimum investment period: 5 years 

Investment Composition targets
Income Assets

• Cash and Cash Equivalents: 15%
• NZ Fixed Interest: 2%
• International Fixed Interest: 3%

​Growth Assets

• Australasian Equities: 68%
• International Equities: 12%
• Listed Property: 0%

Performance Fee Explanation: Please see the Balanced Fund section above.

We say: The Active Growth fund is Milford's most aggressive KiwiSaver option, with 80% of the fund targeted at growth assets, with 20% allocated to income assets. In a recent fund update, the fund had investments in:

1. The iShares MSCI Index Fund (4% - a fund which invests in large companies in the developed world, with significant holdings including Nestle, Novartis, Roche, Shell, Toyota and BP)
2. Contact Energy (2%)
3. Spark (2%)
4. a2 Milk Company (2%)
5. Delegat's wine (1%)
6. A number of cash investments in Australasian banks

​The Active Growth fund's average 5-year 13% p.a. return indicates the competency of Milford's managers in actively buying and selling investments in an effort to outperform global markets.

What Others Are Saying - Milford KiwiSaver in the Media

"It is most appropriate to evaluate performance of a KiwiSaver scheme by studying its long-term returns. Milford Active Growth KiwiSaver tops the performance across all multisector categories over 10 years".
- Morningstar KiwiSaver rankings, June 2018

"The active KiwiSaver schemes like Summer, Milford, Fisher Funds, Booster and Generate charge relatively high fees, and aim to earn them by using fund manager skill to beat the market. Their fund managers research companies, and markets, and try to earn high returns by picking winners, and avoiding losers".
- Rob Stock, Stuff.co.nz, April 2018

"Milford Asset Management's growth KiwiSaver fund topped the growth category delivering $20,395 in net benefits to investors over the past five years" in a 2017 survey by SuperRatings, an Australian research firm.
- KiwiSaver's biggest money earners, Tamsyn Parker, NZ Herald, November 2017

Milford's funds continue to perform solidly year on year, and with a strong media and public relations presence, Milford has positioned itself as a KiwiSaver option for those looking for solid returns. Milford's managers have a track record of delivering results that have previously outperformed markets, ultimately returning significant value to investors.
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Standout Features:

1. Three core funds, each clear in their investment strategy.
2. Milford has been around well before KiwiSaver launched and has a solid reputation among historical investors, as well as KiwiSaver investors.
3. In a sample of five Growth funds (see table below) managed by Milford, Fisher Funds, Generate, ANZ and Simplicity, Milford returned the highest pre-tax growth in the year to 30 June 2018.
4. It's free to change funds; the monthly membership fee means you can move between funds as often as you like.

​Be aware:

1. The more aggressive funds and are not suitable for short-term investments. 
2. There is no age-based investment option, meaning there is only a choice of three funds and no option to gradually move money into more conservative investments as members get older. 
3. Fees are slightly higher than standard bank and index-following KiwiSaver funds - this is due to the costs associated with an actively managed fund, such as the cost of brokerage when an investment manager buys and sells investments.
4. 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. 
5. While many global sharemarkets are now at record highs, this is no guarantee of future earnings.

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The Bottom Line

• Milford is transparent in its investment strategy and has a proven record of outperforming the majority of KiwiSaver growth funds.
• Its investment approach is both responsible and environmentally-leaning, and the investment managers avoid investing in exotic asset classes; your money will not buy shares in anything that creates negative social or environmental effects, or be risky in nature. 
• The Milford fees are higher than bank-managed KiwiSaver options, and once you are in the growth-orientated funds, you're likely to be in it for the long-term.
• Depending on your KiwiSaver balance, other funds on other platforms can have cheaper management fees, but these are unlikely to be actively managed. We have presented a comparison in the table below.
• For example, the fee difference between the Simplicity Growth Fund (0.31%) and Milford Active Growth Fund (1.09%) for a $40,000 balance is $312 a year, or ~$8,000 over 25 years. In saying this, these two funds incomparable given Simplicity uses index fund investing, and Milford is actively managed. The difference in the fund value based on the contributions could be far more than $8,000 over this period. In any case, it is 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.
• Milford KiwiSaver does not charge any joining fees or exit fees, and you can transfer between funds for free as many times as you want. 
• Regarding risk, each fund has a risk number (1 = lowest, 7 = highest), and in the case of Milford, the funds have been assessed between 1 to 4.

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