Diversifying across multiple funds reduces risk by spreading assets across various strategies and asset classes. Even with the same provider, it can be beneficial. Regularly review fees, and seek guidance if needed for managing a diversified portfolio.
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“I have a KiwiSaver with Simplicity and started a high growth fund with them last year. Considering diversifying with InvestNow funds: Foundation Series – 60%, Pathfinder Water – 20%, Te Ahumairangi Equity – 20%. Reducing Simplicity contributions by 50%. Concerned about complexity and overlap for long-term investments. Am I over complicating things by using four different funds? Is there excessive overlap? I really just want to set and forget for 30 years.”
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Diversifying your investments across multiple funds can be a prudent strategy, as it helps reduce the risk associated with relying on a single investment vehicle. This approach spreads your assets across different asset classes and strategies, which can help you weather market fluctuations and achieve more stable long-term returns.
Moreover, diversification isn’t just about investing in various assets; it also involves risk mitigation. Even if you choose multiple funds from the same provider, it doesn’t always mean it’s an unnecessary risk, especially if that provider has a solid reputation and track record. This way, you can still benefit from the provider’s expertise while enjoying the advantages of diversification.
However, it’s crucial to keep an eye on fees to ensure that they don’t erode your returns significantly. Managing multiple funds can add complexity to fee assessment, as each fund may have its own fee structure. Therefore, periodically reviewing the fee structure and ensuring it aligns with the asset classes and your long-term goals is essential.
If you find the complexity of managing multiple funds daunting, seeking guidance from a financial advisor or using online tools can be invaluable. They can provide insights into your portfolio’s performance, help you rebalance when necessary, and keep your investment strategy on track to meet your 30-year financial goals.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances or contact National Capital.
