Fisher’s KiwiSaver FUM sliggish after Kiwi Wealth purchase

Fisher Funds chalked up very sluggish growth in its KiwiSaver funds under management (FUM) through the first quarter of owning Kiwi Wealth but the wholesale side of its business is growing at double-digit rates.

The latest MJW survey showed Fisher's wholesale FUM grew 14.6% to $18.36 billion between the September and December quarters of 2023.

MJW's Ben Trollip says his company's data covers all the wholesale funds its clients invest in, so the total may not include all Fisher's wholesale funds, but it does include the vast bulk of its wholesale FUM.

Not all Fisher's wholesale vehicles showed growth in the quarter – its NZ fixed interest fund, for example eased from $2.75 billion on Sept 30 to $2.73 billion – but others grew at a fast clip, including the international select equities fund which near doubled to $3.2 billion.

Fisher's KiwiSaver FUM grew just 0.38% in the year ended March 2023 – the year-earlier comparison is the sum of Kiwi Wealth's funds and Fisher's.

Among the top 10 KiwiSaver managers, that was the most sluggish growth with the exception of AMP, whose KiwiSaver FUM shrank by 0.63% to $5.8 billion.

At $14.42 billion, Fisher was the third-largest KiwiSaver manager, behind ANZ with $18.71 billion and ASB with $14.47 billion.

Growth does tend to be slower the larger a manager gets – ANZ's growth in the year was 1.03% and ASB's was 3.33%, while fourth-largest player, Westpac grew FUM at a 2.9% pace.

Milford Asset Management was the fastest growing of the top 10, increasing FUM by 17.3% to $5.65 billion.

Milford's wholesale FUM, as measured by MJW, grew 5.1% in the December quarter to $8.67 billion.

Fisher's investment style has always been a “buy and hold” strategy while Kiwi Wealth, which was started by Gareth Morgan and later sold to the Kiwibank group, was run on the belief that because most of the assets most New Zealanders own are concentrated in NZ, the KiwiSaver strategy should be to invest offshore to provide diversification.

Which is somewhat ironic since most of Kiwi Wealth's clients probably were also Kiwibank customers and had chosen to go “local” in choosing their bank.

“Swings and roundabouts” on investment returns

The results shown in MJW's survey show very much a “swings and roundabouts” returns from Fisher's own funds and the Kiwi Wealth funds.

For example, the Fisher growth fund was the second-best performer in the December quarter out of 15 funds with a 7.3% return while the Kiwi Wealth fund was fifth best performer with a 7.1% return.

The Fisher fund was 11th out of 15 funds over three years with a 3.2% annual return but third out of 13 funds over 10 years with an 8.2% annual return while the Kiwi Wealth fund was second over three years with a 5.2% annual return and seventh over 10 years with an 8% annual return.

Fisher didn't answer the question directly about how its Kiwi Wealth customers were feeling about the change in strategy, but did say both the Fisher and Kiwi Wealth funds had been run together since March 2023.

“The performance of each fund has been right near the top of the pack, driven by strong outperformance in our active equities strategies,” Fisher said.

“Fisher Funds has been very pleased with the returns generated for Kiwi Wealth clients since taking over the ownership, both on an absolute and relative-to-competitor basis,” it said.

“Given both Fisher Funds and Kiwi Wealth funds are now all invested into the same assets by the same investment team, any recent differences in performance between the two brands can be attributed to modest differences in strategic asset allocation of the funds.”

Fisher noted that growth funds are long-term investments and do experience short-term volatility.

“We are focused on delivering long-term results for our clients and we believe our active investment philosophy and approach will continue to do this.”

Fisher bought Kiwi Wealth for $310 million in November last year.