Investment experts regularly talk about different investment strategies – conservative, balanced, growth, and so on. Within each of these are different types of investment options.
Growth investments are ideal for investors who are comfortable taking on a greater level of risk in exchange for potentially higher long-term returns. Let’s take a look at the types of growth funds available to Kiwi investors and some growth assets you can consider investing in.
There are various types of growth investments available to New Zealand investors.
What are growth funds?
When you invest your money in a managed fund, your money is allocated to different assets depending on the strategy you’ve chosen. Certain assets – like shares – are more risky but generally offer better long-term returns, while other assets – like bonds – are less risky but generally offer lower long-term returns.
Investing in a growth fund is more likely to get you higher returns over time.
Defensive and conservative funds do invest some of your money into growth assets, however the majority will generally be invested in lower risk, lower returning assets.
In contrast, growth funds typically invest a greater portion of your money into growth assets (more on these below). They often have higher fees, however this is mitigated by the fact that you are more likely to achieve higher returns over time. For this reason, growth funds can be a good option for younger investors (i.e. those with decades to go until retirement). You’ll see dips in value but ultimately if you ride these out you should see your investment grow significantly. Fund performance will differ year to year, but with more time on your hands, you’re better able to weather the ups and downs of the financial landscape.
If you’re not close to retirement, investing in high growth options could be a good strategy.Types of growth assets
Those who are risk averse will likely opt for savings accounts, term deposits or Government-issued investments like bonds. However, if you’re geared for growth, you’ll want to look at some different options to grow your nest egg.
Growth funds typically invest a majority of the fund in growth assets, such as:
- Public company shares: Shares in publicly listed companies are an accessible investment option for those willing to weather market fluctuations, in exchange for potentially higher returns.
- Publicly listed property companies: These are companies that own and often operate income-producing property, for example shopping centres or warehouses.
- Private equity: Investing in private companies is another way of potentially seeing your returns grow significantly in the long run. However, as with all types of growth assets, you’ll need to have a higher appetite for risk to go down this road.
Investing in private equity is one way of maximising your long-term returns.Invest in your future with Milford’s growth funds
Milford Asset Management is an award-winning, high-performing fund manager based in Auckland, operating a diverse range of managed funds, KiwiSaver funds and Wealth Management services for Kiwi investors. Whether you’re looking to boost your retirement savings by switching your KiwiSaver account, or you have cash you’d like to invest, we have growth options that will help you meet your goals.
Since its inception, our KiwiSaver Active Growth Fund – of which roughly 80 per cent is invested into growth assets – has seen a 13.2 per cent per annum return on investment (after fees and before tax). This fund invests mainly in Australasian equities, in addition to international equities and fixed interest securities.
Our Global Equity Fund typically invests 90 per cent of your money into growth assets, and focuses primarily on international equities. Other growth funds we offer our clients include the Milford Dynamic Fund, Milford Trans-Tasman Equity Fund, and the Milford Australian Absolute Growth Fund.
Ready to invest in your financial future? Find out more about Milford’s investment options, or reach out to our expert team of Authorised Financial Advisers to get professional advice on which funds are best for you.