Morningstar: Fortunes turn for KiwiSaver funds

A strong quarter for share markets has helped KiwiSaver funds back into positive territory.

Morningstar’s latest KiwiSaver survey shows all the funds on its database turn in a positive result for the March quarter, after almost uniformly losing money the previous three months.

Over the March quarter the S&P/NZX 50 Index was up 11.7%, erasing the previous quarter’s loss of -5.8%.

Australian shares gained 10.9% over the quarter and 12.1% over the year.

The Australian market was led by the IT sector, the miners, and consumer discretionary stocks.

Morningstar said international equities had enjoyed a remarkably strong rally for the quarter.

The MSCI World Index was up 11%.

Morningstar said the returns of KiwiSaver funds generally reflected the underlying market conditions.

All surveyed KiwiSaver funds made positive returns.

Average multisector category returns ranged from 10.1% for the aggressive category to 3.6% for the conservative category.

Top performers over the quarter against their peer group included Simplicity's conservative fund at 4.6%, AMP Income Generator at 6.9%, Summer Investment Selection at 7.8%, ANZ Default Growth at 11% and Booster Geared Growth at 14.3%.

Annual returns for multisector options ranged from 11.7% down to 0.8%.

Over 10 years, the growth category average had given investors a double-digit annualised return of 10.9%, followed by aggressive (9.6%), balanced (9%), moderate (7.2%), and conservative (6.6%).

ANZ still has the largest KiwiSaver share, with $13.4 billion of the total $54.6b under management.

“A strong rebound in markets over the first quarter saw KiwiSaver balances bounce back, with every surveyed KiwiSaver fund making positive returns”, said Tim Murphy, Morningstar’s director of manager research, Asia-Pacific.

“The last six months have highlighted the importance of KiwiSaver investors taking a long term approach and not reacting to short term market movements.”