Most KiwiSaver funds were in the red over the second quarter as the markets had their first pullback after four positive quarters of strong results according to the Morningstar quarterly KiwiSaver Performance Survey.

Morningstar says the pullback was due to the global recovery being put on hold in May after uncertainties as a result of some European countries’ overhanging debt, a slowdown in China, and disappointing economic data across the globe.

As a result the New Zealand sharemarket lagged most global counterparts during the second quarter and the NZX50 Index was down 9.05%, while Australia was down 15.62% for the June quarter, and global sharemarkets fell 7.96% in aggregate.

This meant only a few KiwiSaver funds remained in the black over the second quarter, and it was the cash and fixed

Income heavy options which tended to do the best.

This meant that the default options largely led the way.

 

Mercer and ING were the top performers among the default providers and the only options to post positive returns.

 

Morningstar says Mercer has been the dominant performer across the default providers, easily outpacing the pack over the one and two-year periods.  

 

ING and Mercer also posted admirable results when compared to all KiwiSaver funds.

 

Mornignstar says other fund managers that deserve mention for table-topping results over the June quarter were Aon Russell, Mercer, and Grosvenor, which were among the best performers in the risk-conscious Conservative and Moderate categories.

 

Aon Russell also performed well in the Balanced, Growth, and Aggressive categories alongside Tyndall and Tower.

 

Looking out over two years is of course a better indicator of a fund manager’s performance record. Over this period, AMP, Aon Russell, AXA, and Mercer did well in the Conservative and Moderate categories.

 

In the more growth (equities-heavy) categories Fisher Funds Growth, ING, and Mercer were the KiwiSaver options with the best results.

 

Mornignstar says the second quarter again demonstrated the perils of performance-chasing, as many of the top performers over the past year were among the bottom-dwellers when markets fell.

 

But the performance gap among KiwiSaver funds is opening up. In the Moderate and Balanced categories, for example, the difference between the best and worst performers over a two-year period was 7.34% and 4.79%.

 

Morningstar says the next quarterly report will be the three-year anniversary of KiwiSaver and while it’s still early days, given the upheaval in markets over this period, it will be a very interesting time to look at medium-term results.

 

As for Assets under management, ING and ASB were the dominant players at 30 June 2010, with just over 40% of KiwiSaver assets between them. Below this pair was a tight group hovering above 5% – the default providers and Westpac are in this mix. Gareth Morgan is also in this group, with 5.60% of market share, while the rest of the providers fight it out for the remaining 10% of the pie.

 

KiwiSaver assets on the Morningstar database have grown from just $954.10 million at 30 June 2008 to $5.77

billion at 30 June 2010.

 

Morningstar says this is a phenomenal growth rate for the New Zealand funds management industry.