KiwiSaver mismatch a 'huge challenge' for advisers

The scheme continues to grow at a torrid pace according to the Reserve Bank's quarterly survey of managed funds, with total funds under management more than doubling from $5.6 billion in March 2010 to $11.3 billion in December 2011.

KiwiSaver is the only part of New Zealand's $67.5 billion managed fund industry that is growing, and it is rapidly catching up to other superannuation funds, which dipped slightly to $18.5 billion under management in the latest survey.

However, the KiwiSaver numbers also support concerns raised by the fund management industry and financial advisers about overly conservative asset allocation.

Of the $11.3 billion in KiwiSaver, $6.7 billion (60%) is invested in fixed interest products, $4.7 billion of which is invested in New Zealand including $1.1 billion (10% of total KiwiSaver money) in deposits.