Kiwis love a first and two of the Generate KiwiSaver Scheme funds just came first…again!

We are proud to share we’ve achieved more chart-topping long-term results for our members for the fourth quarter in a row. 

Generate KiwiSaver Scheme’s three original funds, the Focused Growth, Growth and Moderate fund, have all placed in the top two of their respective categories for 10-year performance in the latest Morningstar Survey. 


 

🏅Generate KiwiSaver Moderate Fund ranked 1st in the NZ Multi Sector Moderate Category*

🏅Generate KiwiSaver Focused Growth Fund ranked 1st in the NZ Multi Sector Aggressive Category*

🏅Generate KiwiSaver Growth Fund ranked 2nd in the NZ Multi Sector Growth Category*

See our latest KiwiSaver fund performance here.

The Generate KiwiSaver Moderate Fund has consistently held the top spot in its category for the past four quarters. This fantastic achievement is driven by the work of our expert investment team who actively manage our funds. 

When looking at your KiwiSaver account, we recommend taking a long-term view – as KiwiSaver is a long-term investment. However, it’s also good to remember that past performance isn’t a guarantee of future results.

Read more about why long-term performance is better than short-term performance

Over time your returns can really pile up, thanks to the power of compounding returns. By the time you're ready to retire or withdraw for your first home, these small choices could mean the difference of tens of thousands of dollars. We're here, committed to maximising those potential gains and making your KiwiSaver savings journey as rewarding as possible.

Download the full Morningstar KiwiSaver Report here.

Your choices on investment options: Managed Funds vs. Term Deposits

People often ask us what's the smartest way to invest or grow their savings (other than using a KiwiSaver account). Unfortunately, there's no one-size-fits-all answer, and we usually say there's no absolute 'best' way—it depends on your savings goals and how long you want to invest. 

We get it, that might not be the answer you're hoping for, so we wanted to break it down a bit, starting with two popular options: managed funds and term deposits. 

They each have their own perks and things to think about, and can both be good options depending on what kind of returns you’re after and how much risk you're comfortable with.

Managed Funds:

With a Generate Managed fund, your money is pooled with all the other money in the fund and invested by our team of expert fund managers in local and international markets. Here's a breakdown of the key advantages:

• Professional Management: Generate Managed Funds make investing simple and easy. You get all the benefits of a professionally managed investment portfolio, as our team of qualified, expert fund managers actively manage your investment for you.

• Potential for Higher Returns: While returns are not guaranteed and can vary, managed funds have the potential to deliver higher returns over the long term, especially when invested in a growth fund type.

• Ease of withdrawal: You are free to access your money whenever it suits you. There is a $500 minimum for lump-sum withdrawals, or you can choose to make regular withdrawals either weekly, fortnightly, or monthly, of at least $100.  

• Diversification: Generate Managed funds spread investments across a variety of assets, reducing the risk associated with having all their eggs in one basket. Spreading investments around helps reduce the impact if some assets don't do well.

Key considerations

It’s important to remember that a Managed Fund is an investment, and all investments involve risk and can go up and down in value, as a result of many external factors that investors cannot change e.g global wars or political changes. To make sure your investment aligns with your risk tolerance and investment goals, talk to a Generate Adviser before investing.

Generate Manged Funds are also designed to be long-term investments and may not be suitable for short-term investors.

Term Deposits: 

Term deposits, on the other hand, represent a more conservative approach to investing. When an investor puts money into a term deposit, they are essentially lending it to a bank or financial institution for a fixed period at a predetermined interest rate. Here are the key features:

• Capital Preservation: Term deposits are considered low-risk investments. The capital is typically secure, and investors receive the principal along with interest at the end of the agreed-upon term.

• Fixed Returns: Term deposits have a fixed return, which is agreed at the start of the term and paid at the end of the term. The return is generally lower than Managed Funds as the investment is lower risk.

• Suitable for conservative investors: Setting up a term deposit is straightforward. Investors choose a term (e.g., 6 months, 1 year) and deposit amount, and the interest rate is determined accordingly.

Key considerations:

Term deposits are generally locked in once you’ve chosen to invest. This includes the interest rate – you will only get what you commit to and won’t benefit from any market increases after you’ve locked in your rate, and also the time period you choose to lock in for. If you need to withdraw your money before your term is over, you will likely be charged a fee.

Choosing the Right Fit

The decision between managed funds and term deposits ultimately depends on your  financial goals, risk tolerance, and investment horizon.

Consider a Generate Managed Fund if:

• You want your fund professionally managed by an award-winning team. 

• You’re a long-term investor looking for potential for higher returns.

• Having a diversified investment portfolio is important to you.

• You want the flexibility to withdraw when you want too.

Consider Term Deposits If:

• Capital preservation and a predictable return are your top priorities.

• You have a short-term investment horizon (less than 2 years) or need funds in the near future.

• You prefer a very low-risk, straightforward investment option

Both managed funds and term deposits have their pros and cons. We recommend talking to a Generate adviser before selecting a managed fund, to make sure your choices suit your savings goals, investment timeframe, and risk appetite.

Are you ready to step into a new phase of your investment journey? Click here to talk to a Generate adviser.

The benefit of a Dollar-Cost Averaging strategy when investing to your Managed Fund regularly.

Investing regularly is a powerful strategy for building your Managed Fund over time, and within this approach, Dollar-Cost Averaging (DCA) emerges as a beacon of stability and growth. For investors looking to navigate the often-unpredictable waves of the financial markets, understanding the benefits of Dollar-Cost Averaging can be a game-changer.

What is Dollar-Cost Averaging?

Dollar-cost averaging is an investment strategy where you regularly invest a fixed amount of money into the same investment at regular intervals, regardless of the asset’s price or market conditions. This approach is designed to reduce the impact of market volatility and smooth out the average purchase price of the investment.

How does dollar-cost averaging work with Generate Managed Funds?

When you put money into a Generate managed fund you buy units in the fund. The price of each unit can go up of down from day to day, as the equities that the fund is invested in respond to market conditions. For example, if the market is down, the unit cost may also decrease. This means you can buy more units at a cheaper price. When the market bounces back, all your units would benefit and increase in value.

The Benefits Unveiled:

1. You benefit from time in the market – rather than trying to time the market

Making regular contributions versus investing your entire contributions in one transaction reduces market timing risk. Market timing is notoriously challenging to do consistently and successfully, and so the goal of dollar-cost averaging is to avoid making a large investment at a poor time, such as just before a market decline. By investing regularly, investors enter the market immediately and benefit from added time in the market, rather than trying to wait for a less expensive entry point.

2. Peace of mind

Investors benefit from peace of mind knowing that if there was a sudden drop in market value, dollar-cost averaging will allow them to take advantage of purchasing units at a lower price.

3. Investing without emotion

Helps keep investing emotion-free because no decisions need to be made; you just invest a predetermined amount and ‘set and forget’.

4. Develop a systematic approach to investing

You can organise your budget and personal finances around an investment commitment, for example, contributing $250 per month.

5. Building your position overtime

Even in volatile markets, consistent investing in well managed funds creates wealth.

6. Benefiting from a falling market

During a falling market, making regular contributions means the average price paid per unit will be lower over time, while protecting investors from trying to time the least expensive entry point when making contributions. Trying to time the perfect entry point has proven to be incredibly hard. Investors who attempt to time the market often do so too early, resulting in further losses as markets continue to decline. Alternatively, they time it too late and miss a significant portion of the market rebound.

Dollar-Cost Averaging is a simple yet powerful strategy that empowers investors to navigate the complexities of the financial markets with confidence. Whether you are new to investing or a seasoned investor we recommend talking to an adviser around what Dollar-Cost Averaging can do for your Managed Fund.