Ethical investors ponder link between US war in Iran and KiwiSaver
Sunday, 12 April 2026
ANALYSIS: When Russia invaded Ukraine in February 2022, media agonised about KiwiSaver investments that were linked to Putin’s government.
Some KiwiSaver schemes sold investments in Kremlin-linked banks.
Then, when Israel launched a war of destruction on Palestine after the October 7, 2023, massacre of at least 1195 Israelis and 79 foreign nationals by Hamas terrorists, more agonising followed.
Protests hit the streets outside ASB bank branches, with protesters accusing ASB of investing in companies whose products and services were being used in the Israeli campaign.
But the Gaza war didn’t change KiwiSaver in the way the Ukraine war did, arguably because of widespread disgust at the October 7 killing and rape of civilians.
Yet when the United States launched attacks on Iran, including killing almost 200 girls in a school on February 28, there was deafening KiwiSaver silence.
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But there are some rumblings of concern from some KiwiSaver investors, even if the lastest twist in the saga has seen the US and Iran agree to a two-week “ceasefire”, primarily aimed at getting oil through the Strait of Hormuz.
Barry Coates, founder of the Mindful Money charity which helps people work out which KiwiSaver fund matches their personal moral values, says he’s been asked by several investors why US government bonds haven’t been added to its list of investments that do not meet responsible investment standards - alongside Israeli government bonds.
His answer is not a direct one, but the vast importance of the US to pension funds around the world, including KiwiSaver, makes a direct answer difficult.
“We point out that there are ways for people to avoid investing in US companies and US government bonds,” Coates says.
This way is through single sector KiwiSaver funds like Australasian equity funds, which do not contain US shares or government bonds.
US companies and bonds dominate KiwiSaver
To exclude US investments means foregoing the kind of broad diversification long-term savers are generally advised to seek.
While Russia and Israel played only a small role in KiwiSaver portfolios, making them relatively easy to avoid, and easy for self-styled responsible investors to avoid, the US plays a massive one.
“Our world financial system is so dominated by the US, and most industries are so heavily reliant on the US, that invariably when you have a diversified fund, you’re having a dominantly US fund,” Coates says.
It raises, he says, the uncomfortable question that diversification leads some investors into a place they are “uncomfortable” with.
Figures from the end of 2025 from funds research group Morningstar indicate “international shares in companies outside of New Zealand and Australia made up 44% of KiwiSaver assets.
Close to half of all global equities by market capitalisation are in the US, and on top of that, US government bonds are a staple of KiwiSaver funds.
The US Digital-Military-Industrial Complex
There’s an even more profound issue.
The US is dominant in the technology companies so beloved of fund managers, and which have delivered some of the biggest returns for investors.
Nvidia, Apple, Alphabet, Microsoft and Amazon are the largest sharemarket-listed companies in the world.
Ethical investment experts have long sold the idea that people who want to invest responsibly can do so without having to suffer a lower return, and ethical funds tend to be heavy on tech stocks, so excluding tech stocks is a big ask.
However, there are very close links between US technology companies, and the US and Israeli military, through what is now being termed “the US Digital-Military-Industrial Complex”.
Big tech companies were now key players in both the US and China in this complex with their services not only crucial in the development, operation and targeting weapons systems, but also in surveillance, and in propaganda efforts in “building political consensus and influencing public opinion” at home and abroad for wars, Italian academics Andrea Coveri, Claudio Cozza, and Dario Guarascio said in a paper last year.
This was blurring the boundaries between the state and the corporation, they said.
Revolutionary Guard’s company hitlist
Last week, Iran’s Revolutionary Guard listed US companies it said were legitimate targets because they were complicit in attacks on Iran.
They included Nvidia, Apple, Microsoft, Alphabet (Google), Cisco, HP, Intel, Oracle, IBM, Dell, Palantir, JPMorgan, Tesla, Boeing, and GE, all but one of which are staples in KiwiSaver growth funds.
Some of those names are on ethical investing avoid lists, and in a United Nations’ report on companies enabling Israel’s Gaza war effort, and its surveillance of Palestinians.
“We’ve got around half of those on our website as companies people might want to avoid,” Coates says.
They were on Mindful Money’s list because of their usage or link to weapons, and surveillance, and state control, he says.
John Berry from ethical KiwiSaver provider Pathfinder, has excluded tech companies IBM and Amazon from its funds for their war-linked activities, which were highlighted in the UN report.
Pathfinder continued to hold Microsoft shares, but was monitoring it.
Berry says it was once easy to work out which companies were weapons’ makers, and exclude them from KiwiSaver funds.
Increasingly, the lines are now blurred.
Dean Hegarty, from the Responsible Investment Association of Australasia, says people might use an AI tool to find a pancake recipe, unaware that the AI company contracts to the US Military, and its AI is used to is used by the US military to operate weapons systems.
“Are these really the companies that people these days want to invest in?” Coates asks.
KiwiSaver fund managers think many are.
ANZ’s growth fund, the largest of all KiwiSaver funds, has investments in all but three of those companies, and four were in its top 20 investments.
Pathfinder’s KiwiSaver Growth Fund counts Nvidia, Apple, Microsoft, and Alphabet (Google) in its top 10 holdings.
The top 10 holdings of the Sharia compliant AE KiwiSaver scheme, which is designed to serve New Zealand’s Muslims, contained three of the companies on the Republican Guard’s hitlist: Nvidia, JPMorgan, and Alphabet.
Investing and the concept of ‘just war’
Opinion polling around the world appears to show many people are in a moral quandary around the US war on Iran.
This stems from the conflict between acknowledging the Iranian regime’s actions - including repression, proxy network activity, and nuclear ambitions - and the immense humanitarian cost, legal ambiguity, global economic impact, and regional instability caused by military intervention.
At the heart of the quandary is the idea of a “just” war.
Berry says the concept of just war is war with a “just cause” like self-defence or protection, entered into as a last resort after diplomacy fails, and is carried on proportionately.
But who decides what is just?
Tamer Morris, senior lecturer in international law at the University of Sydney, summed it up like this: “For the US and some of its allies, this is a binary moral equation: Iran is bad, we are good. But this argument can also be made from Iran’s perspective: Israel and the US are bad. Therefore, we need nuclear weapons to protect ourselves.”
And, he said: “Once states are permitted to act on their own sense of morality and justice, the international system goes down an extremely dangerous road.”
When it comes to KiwiSaver investors, there will be varying views, Berry says.
“Everyone will form their own view on whether a war was just,” he says.
Investing in a ‘war economy’
“We are mindful of not wanting to fund a war economy at all,” says Berry
And that raises the issue of whether investing in US government bonds could be considered ethical.
Around 15% of KiwiSaver money is invested in international bonds, and the world’s biggest issuer of bonds is the US government.
The US government issues bonds to help fund the country’s huge budget deficit, caused in part by its massive spending on its military.
Pension funds, like KiwiSaver funds, often buy these bonds as long-term, stable investments to diversify their risk of investing in more volatile company shares.
It’s a question, however, that responsible investors side-step.
Pathfinder does not invest in US government debt, but that’s not an ethical decision.
“We don't have to face that because we only invest in green bonds,” Berry says.
RIAA runs a badging scheme for KiwiSaver funds which want to prove to investors they are “responsible”.
But while there are some hard exclusions, like investing in companies that make or supply “controversial” weapons like landmines, cluster munitions, or nukes, the badging is largely about KiwiSaver providers proving they have a responsible investment framework, and are “true to label”.
As Hegarty puts it. Some investors may consider something unethical, while others consider it is ethical.
It is not RIAA’s job to tell them whether they are correct.
And, RIAA does not require KiwiSaver schemes that want to use its badging to exclude investments from any individual country, including Russia and Israel.
However, there was one upside to a global events like wars for KiwiSaver. They focused KiwiSavers on where they had their money invested, and whether that matched their hopes for the world.
Achieving moral purity through KiwiSaver
Hegarty thinks people should try to align their KiwiSaver choices with what he called “the world they want to be living in”.
But it is an increasingly complex, interconnected world, and he feels investors should focus on having their money do positive things, while helping them build wealth for retirement.
That could involve choosing funds to avoid certain industries they want no truck with, or supporting industries striving to bring in a more sustainable future.
But he feels absolute moral purity in KiwiSaver investing is not possible.
He ends his interview with The Post recalling the Serenity Prayer of American theologian Reinhold Niebuhr: “God, grant me the serenity to accept the things I cannot change, The courage to change the things I can, And the wisdom to know the difference.”