Balanced funds have traditionally combined equities, fixed income and sometimes a cash component to provide safety as well as income and moderate growth.

But James Ring, of Quay St Asset Management, said it was worth asking whether the traditional balanced fund structure would look the same in future as it had until now.

"Is it going to work over the next five years?”

He said very buoyant equity markets combined with low interest rates meant it was time to consider whether there should be something else in the traditional balanced fund mix.

An obvious option was alternative assets, he said, or an investment such as gold.

“Fifty years ago that was a big part of a lot of particularly high-net-worth investors’ portfolios,” he said.

“Markets will determine whether it has to happen. Everyone is sitting there with yields on the floor and equities have had a correction recently but they’re still at very high levels. In most markets interest rates are at historical lows. It’s tricky. The world has to grow at the end of the day for equity markets to perform and it’s not growing very fast.”

John Berry of Pathfinder Asset Management agreed investors should think about the role of alternative investments in portfolios. He said it was not something New Zealanders thought about as much as those overseas.

At the moment, AMP, Mercer and Nikko are the only major managers with significant allocations to alternatives in their balanced funds. Nikko has the most, at 20%, followed by mercer at 115 and AMP at 4%.

Castle Point has the most traditional allocation – 21% cash, 39% New Zealand shares and 40% global shares.