Morningstar global head of manager selection, Grant Kennaway says its inaugural global study of portfolio construction shows there is no such thing as an average investor with the report highlighting shortfalls in KiwiSaver compared to other retirement schemes.

KiwiSaver is one of the country’s largest 100% Kiwi owned investment funds with more than 3 million Kiwi’s invested since its inception in 2007.

In comparison to the Australian and UK markets, the Kiwisaver retirement scheme may not guarantee Kiwi’s the ability to fully fund their retirements.

Unlike Australia and the UK, KiwiSaver is not a compulsory system and has a 3% default contribution rate as standard with account holders able to suspend contributions at will and the ability to allow people to withdraw from their Kiwisaver accounts to fund a house purchase.

These incentives do not have the same impact as its Australian superannuation system that encourages or mandates long term thinking and planning.

With the increasing dominance of defined contribution schemes like KiwSaver this means investors are familiar with equity market volatility and tend to build or be defaulted into more aggressive portfolios with higher equity weightings and lesser bond and cash exposure.

In contrast, markets with defined benefit schemes and in some cases those supported by a universal healthcare system and a comprehensive social security net show a reduced need for self-reliance and feature investors who are typically more conservative and take a lesser equity market risk in portfolios.

With real estate making up most of the non-financial asset wealth globally, it is the reason investors take on significant debt especially in high indebted markets like Australia, Canada, China, Hong Kong and New Zealand.

As New Zealand has a smaller equity market and a lack of home market investing compared to the rest of the world this reason is why so many Kiwi’s are happy to invest offshore rather than keep investments here.