No clear reason for KiwiSaver success

Morningstar says there’s no clear differentiating factor that makes high-performing KiwiSaver funds stand out.

Its latest KiwiSaver survey, to June 30, showed returns bounced back after a tough start to the year.

“Australian and New Zealand equities led the way, while the falling New Zealand dollar helped ensure solid global equity returns. As a result, those KiwiSaver investors in the Balanced and Growth-orientated schemes had the strongest returns,” Morningstar director of manager research ratings Asia-Pacific Chris Douglas said.

Top performers over the quarter against their peer group include ANZ Default KiwiSaver Scheme Conservative (Default) 1.85% (Multisector Conservative),Generate KiwiSaver Conservative Fund 3.51% (Multisector Moderate), Summer Investment Selection 5.50% (Multisector Balanced), Generate KiwiSaver Growth Fund 5.85% (Multisector Growth), and Booster KiwiSaver Geared Growth 7.04% (Multisector Aggressive).

Evaluating the performance of a KiwiSaver scheme during longer periods provides a more meaningful assessment.

During the 10 years to June 30, Milford Active Growth, Milford KiwiSaver Balanced, Fisher Funds KiwiSaver Growth and Aon Russell Lifepoints, and ANZ KiwiSaver were the top-performing options in their respective categories.

Douglas said there was no clear factor that made those successful.

“Managers like Milford are very active and started out with a very large New Zealand book and have done well out of the New Zealand market and then become more diversified as they’ve grown larger.”

Fisher Funds had been similar, using small-cap investments to leverage growth. Aon Russell had large biases to global fixed interest and equities, which had been a sweet spot over the past few years, Douglas said.

ANZ was consistent with a consistent framework and some tactical asset allocation. “In some ways ANZ shows the most resilience of all of them. They’re all very different with different biases in their with the potential to general returns from different parts of the portfolio. That’s what makes KiwiSaver interesting.”

KiwiSaver assets on the Morningstar database grew to $48.8 billion at June 30, from $35.7 billion at the end of 2016. ANZ is the largest KiwiSaver provider with a market share of 25.2%.