Quick help guide to investment jargon
This guide can help you to understand some commonly used words that are used to describe investments within a KiwiSaver Scheme
Getting friendly with investment jargon
This guide can help you to understand some commonly used words that are used to describe investments within a KiwiSaver Scheme)
Growth assets have the potential to deliver stronger returns over the long-term than income assets. In general, growth assets are expected to deliver returns in the form of capital growth (an increase in the value of an asset). As growth assets offer higher long-term return potential, they are regarded as higher risk because returns can be volatile, especially over shorter time periods.
Typical growth assets include shares and listed property.
Income assets have a lower return potential over the long-term than growth assets. Income assets generally deliver returns in the form of regular interest payments, or income. As income assets achieve lower return potential, they are regarded as lower risk, because the fluctuation in returns tend to be smaller, making returns more stable.
Typical income assets include bonds (fixed interest) and cash.
Managed fund risk indicator
Managed funds in New Zealand must have a standard risk indicator, which rates funds on a scale from 1 (low) to 7 (high). The scale reflects the potential return volatility of a fund.
Higher risk generally means higher potential returns in the long-term, but with greater fluctuations in value. Lower risk generally means lower potential returns, with more stability in value.
Find out more about these in the Aurora KiwiSaver Scheme Product Disclosure Statement.
Target investment mix
Each fund must have a long-term target investment mix, which is commonly referred to as the benchmark asset allocation. This describes the target weighting of a fund to growth assets and income assets. The target investment mix is what determines the managed fund indicator. It's another way of showing what the sources of potential return and risks are for a fund.
In the short-term, the actual investment mix may be different to the target investment mix, as price changes in assets can cause the weightings to move.
For further information about each Aurora fund's target investment mix, see the Statement of Investment Policy and Objectives (SIPO).
If you have any questions or concerns about the composition of your KiwiSaver investments, reach out to an Aurora Capital adviser who is here to help you understand your investments.
This information is provided in a general nature only and should not be construed as or relied on as financial advice. This is not a recommendation to invest in a particular financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any investment decisions.
Past performance is not a reliable indicator of future performance. The value of your investment may go up and down.