A KiwiSaver fund giving New Zealanders the option to invest in cryptocurrency has made almost 60 percent in 12 months.
The Kōura carbon neutral cryptocurrency fund invests in Bitcoin, with investors able to allocate up to 10 percent of their KiwiSaver towards it.
According to data from the financial services firm Morningstar, the fund - which had a market share of 0.1 percent - returned 59.9 percent in the 12 months to June.
However, Kōura describes the scheme as only suited to "investors with a long-term investment horizon and those that are willing to withstand a significant amount of volatility".
Kōura said it believed a small allocation of a highly volatile asset, such a crypto, could support a KiwiSaver portfolio with a long-term objective.
"But Crypto is not for everyone given its highly volatile nature - if this fund had existed over a 2- or 3-year history the performance would be very negative - and it is important to point out still has an uncertain future, therefore, it is not appropriate for all KiwiSaver members."
Kōura said before people invested some of their KiwiSaver in a crypto fund, it was important people had "a clear understanding of the associated risks".
Examples of those risks included high volatility, lack of regulation, product displacement, cyber security and lack of market adoption.
"Importantly, you need to remember that the more you allocate to our carbon neutral cryptocurrency fund the riskier your KiwiSaver will be," Kōura said.
For investors willing to take on that additional risk, Kōura said an allocation of between 3 and 4 percent of growth assets to Bitcoin would be sufficient.
"With Kōura, if you tell us that you would like to invest in cryptocurrencies, we will suggest you allocate 3 percent of your growth assets to the Kōura carbon neutral cryptocurrency fund," it explained.
After an awful run last year, Bitcoin has recently made a comeback - jumping by about 55 percent in 2023.
It's now trading at US$25,881 - although that is still well down from its $69,000 peak in 2021.
