Calls grow for KiwiSaver diversification as Bitcoin yields soar

Techday NZ

2 days ago

New research indicates that a lack of diversification in KiwiSaver portfolios may be limiting retirement prospects for thousands of New Zealanders, prompting renewed calls for advisers to expand their knowledge of emerging asset classes.
Analysis conducted by digital investment platform Swyftx shows that investing NZD $36,500 - equivalent to NZD $10 per day - in Bitcoin over the past ten years would today have grown to approximately NZD $2.8 million, representing a 76-fold return. In comparison, the same sum invested in an average balanced KiwiSaver fund would likely now be valued at NZD $65,000 to NZD $70,000.
Jason Titman, Chartered Accountant and Chief Executive Officer of Swyftx, stated that the new data highlights the need for contemporary retirement planning strategies and enhanced adviser education, especially as pension funds worldwide begin to integrate digital assets into their long-term models. "Digital assets are now a mainstream component of diversified investment portfolios internationally, yet New Zealand advisers are lagging in both adoption and education. "If you'd invested just $10 per day in Bitcoin over the past 10 years, you'd have spent $36,500 and accumulated roughly 14.5 BTC. Today, that would be worth around $2.8 million, a 76x return. That kind of performance deserves consideration, even as a small part of a retirement portfolio."
Titman contrasted the Bitcoin returns to the typical balanced KiwiSaver fund, which he said had returned around 6% to 7% per annum over the past decade. This would have turned a NZD $36,500 investment into approximately NZD $65,000 to NZD $70,000 today.
Titman noted that digital asset adoption among high-net-worth families has been more rapid, suggesting this group recognises the potential benefits of digital assets as part of long-term investment strategies. "It's a clear example of the opportunity cost facing retirement savers when portfolios remain too narrow. "Diversification into digital assets, even at a small allocation, could dramatically shift long-term outcomes for many Kiwis," he says.
Official figures from the Financial Markets Authority show that KiwiSaver balances rose by 19.3% in the last year, taking the average member balance to NZD $33,514. Despite this, only two of the existing KiwiSaver schemes currently offer any exposure to digital assets.
Titman pointed to international trends, such as reported moves in the United States to broaden permitted 401(k) retirement plan investments to include digital assets, as evidence that the retirement market is evolving. While these changes have provoked mixed reactions within traditional finance circles, Titman feels they indicate a global reassessment of retirement fund structures and the returns expected by investors. "Regardless of political stance, what we're seeing globally is recognition that younger generations want more control, choice and exposure to higher-performing asset classes. The question is whether New Zealand's system will evolve fast enough to meet that demand," he says.
He emphasised that the aim is not to take excessive risks with retirement savings, but to modernise portfolio construction. "We're not talking about putting someone's retirement on the line. We're talking about disciplined allocation, say 3% to 5%, to a high-growth, emerging asset class that has already demonstrated long-term return potential. It's about optimising performance, not taking unnecessary risk," he says.
According to Titman, increased investment in digital assets could also have wider economic benefits, potentially supporting local market development, job creation, and expanding the tax base. "It's a sector that is expanding, and investor engagement with it is already occurring outside of traditional channels," says Titman.
Swyftx's research also examined the effect of early and consistent exposure to digital assets for long-term savers. Titman believed that such allocations can have significant cumulative effects over decades. "If a young investor allocated just 5% of their KiwiSaver contributions into Bitcoin when they enter the workforce, the compounding impact over decades, particularly with historically high long-term returns, could significantly accelerate the path to retirement for some individuals. "While not all investors would become millionaires, the data suggests that financial outcomes could improve substantially when higher-growth assets are appropriately integrated," he says.
Titman identified a significant need to upskill the adviser community on emerging assets and said Swyftx has developed a digital asset education platform for financial advisers, including portfolio construction guidance and international case studies.
Swyftx's user data indicates that 72% of its more than 300,000 New Zealand clients on its Easy Crypto platform are aged between 25 and 45. This demographic is consistent with the core KiwiSaver participant group, and many are already investing in digital assets outside of KiwiSaver.
With KiwiSaver entering its 17th year, Titman argued that a broader discussion is needed around modernising the system for future generations. "We know that the current financial education gap in New Zealand is significant, however, when advisers are equipped with evidence-based tools and global context, they're far more confident having conversations about diversification that includes digital assets. "Adoption from retail investors is already moving rapidly. Our research shows over 700,000 Kiwis or 14% are engaging with digital assets independently, which points to a need for the sector to catch up, particularly as more of these investors expect personalised, forward-thinking retirement advice. "Better-informed advisers are better placed to help their clients navigate emerging options. The role of the adviser is not to speculate, but to build robust, evidence-based portfolios that reflect clients' long-term goals," he says.