Balanced Saver
While you appreciate that your accumulated savings will experience volatility (variation in the value of your overall capital), you wish to ensure that a moderate component is invested in those markets which have the greater expected rate of return, balanced by the presence of a more conservatively invested component. You understand that investment performance may vary in the shorter term (with valuations moving both up and down) in the process of seeking enhanced returns.
A Balanced portfolio may comprise 40% income assets (e.g. cash and fixed interest) and 60% growth assets (e.g. Australasian, global and property equities).
The following sample asset allocation, based on data sourced from Melville Jessup Weaver, an actuarial consultant to the Summer KiwiSaver scheme, can be used as a guide in constructing a Balanced portfolio.
| Asset type | Sample allocation % |
|---|---|
| New Zealand and Australian equities | 20.0% |
| New Zealand property equities | 5.0% |
| Global equities | 35.0% |
| Total growth assets | 60.0% |
| New Zealand fixed interest | 18.0% |
| Global fixed interest | 18.0% |
| Cash | 4.0% |
| Total income assets | 40.0% |
| Total portfolio | 100.0% |
Risk indicator
The Financial Markets Authority has provided guidance on indicators which can help describe investment risk. These indicators are based on annualised standard deviations, a mathematical measure of risk.
On a scale of 1 (least risky) to 7 (most risky), the investment risk of the asset sectors can be described as follows:
| Asset sector | Risk Indicator | |
|---|---|---|
| Cash | 1 | Very low volatility |
| Fixed interest (New Zealand) | 2 | Low volatility |
| Fixed interest (Global) | 3 | Low to medium volatility |
| New Zealand equities and New Zealand property equities | 4 | Medium to high volatility |
| Global equities | 5 | High volatility |
| Australian equities | 6 | Very high volatility |
