At $55 billion, KiwiSaver is about the size of a third of all shares listed on the NZX. That is big enough to hide a multitude of 'assets'. Like the dark web, you need to dig deeper than the Fund Updates and use forensic expertise to decipher what funds hold, but if you look, this is what you will find. Each KiwiSaver manager is required to calculate an asset liquidity ratio quarterly. The main test of whether an asset is liquid is whether it can be sold in 10 working days at close to its stated value. Illiquid assets are any investment that cannot be sold within that period and private assets, such as unlisted property or private equity. Based on our analysis, as at March 2019 Fisher Funds Two KiwiSaver Growth Fund was an investor in unlisted property, holding 6.62% or $27.8 million. The problem with unlisted property is that there is no arm’s length daily price at which investors can transact. Investors entering and exiting funds which hold illiquid assets are therefor

The old saying “a little knowledge is a dangerous thing” applies to most things in life, but particularly so when it comes to investment matters. I am intrigued to see that one KiwiSaver provider is currently running a promotional campaign to “Wake up your KiwiSaver”. The promotion rightly highlights the critical importance of the asset allocation decision (i.e. how much of your fund is allocated to growth assets, such as shares) on your likely capital balance at retirement. This point is particularly relevant for those who did not actively select a KiwiSaver fund when they joined and were allocated a Default Fund. Under the current rules the Default providers must hold the majority of their investments in cash and fixed interest. One concern that I do have about this call to action, is that any increased exposure to shares will increase the probability that a KiwiSaver member will experience a short-term loss. It has been shown that 1 , on average, investors are twice as fearful