Growth funds report strong returns

None of the KiwiSaver funds monitored by Morningstar have experienced negative returns over any of the one-, three- or five-year monitoring periods, which co-head of fund research Chris Douglas says has come as a pleasant surprise.

Morningstar yesterday released its KiwiSaver Performance Survey to March 31.

Douglas said the first quarter of the year had been a busy one for KiwiSaver providers, with several closing funds to new investment and BNZ joining the market.

Douglas said the latest return pattern was much as most people would expect. “When equity markets are strong, balanced growth and aggressive funds do better.”

Funds with an exposure to shares and listed property have done well while fixed interest returns have been less impressive. Milford’s allocation to shares pushed it to the top of the conservative and balanced funds categories.

AMP, ANZ and SIL had strong results across a number of categories.  Fisher Funds, Fidelity KiwiSaver and Brook KiwiSaver performed strongly across the growth and aggressive multi-sector categories.

Milford’s Active Growth KiwiSaver posted a 13.65% return per annum over five years and was the top performer when the data was taken since inception.

Of the default schemes, OnePath’s conservative scheme is offering the best returns of 6.3% per annum over five years and 8.5% on a one-year basis.

KiwiSaver assets on the Morningstar database have grown from $954.1 million in 2008 to $14.48 billion at March 31.

Douglas was optimistic about the coming year, although he said there was always the possibility of volatility on the horizon.

He pointed to increased investment in high-yielding shares, of which the New Zealand market has more than its fair share. He said that was appealing to New Zealand and foreign investors and could keep the sharemarket buoyant for some time to come.

“But like any market we are prone to offshore jitters. We’re not out of the woods by any measure yet.”