KiwiSaver rally strongest in riskier, long term plays

KiwiSaver investors with strong stomachs and funds in high growth, higher risk assets did best as the global market recovery over the past six months, according to a Morningstar Australasia survey.

A substantial investment market rally has seen the NZ sharemarket up 22%, Australia up 35% and the aggregate global sharemarket up almost 12% since March. “The past six months have clearly illustrated how quickly markets can turn around,” said Chris Douglas, Morningstar Australasia’s manager, Fund Analysis. 

“KiwiSavers who switched to conservative options would have missed out on these rapid gains. While short-term volatility is inevitable, KiwiSaver options investing in growth assets continue to offer the greatest potential for growing the value of retirement savings over the longer term.” 

Reporting on over 120 KiwiSaver investment options, all categories produced positive results said Douglas. The best-performing funds were the growth-oriented vehicles with greater proportions of their assets in local and international share and listed property. “

These were the funds that were hardest hit by the market declines from late 2007 to early 2009,” he said. “Most KiwiSaver options in the Multi-Sector Growth and Aggressive categories returned 15 to 20% over the six month period.

Conversely, more conservative funds that invested principally in cash and fixed interest have not benefitted from this rally.” 

The majority of KiwiSaver assets are in multi-sector funds which invest in a range of assets. However, the top performing KiwiSaver funds over the two years to September 30 2009 were in single-sector categories according to Morningstar.

An absolute return approach and ultra-high cash weighting enabled Aon KiwiSaver Milford Aggressive to return almost 13%. “We have cautioned in previous reports about the trade-off between maintaining a high cash weighting and potential returns,” Douglas said.

“A high cash weighting will hold up returns during market downturns, but acts as a drag when markets recover. The three and six-month returns to September 30 2009 for a number of options illustrate this clearly – they did not perform as well during the market rally as funds with higher weightings in growth assets.” 

To view the full KiwiSaver performance table, click here.

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KiwiSaver rally strongest in riskier, long term plays

KiwiSaver investors with strong stomachs and funds in high growth, higher risk assets did best as the global market recovery over the past six months, according to a Morningstar Australasia survey.

A substantial investment market rally has seen the NZ sharemarket up 22%, Australia up 35% and the aggregate global sharemarket up almost 12% since March. “The past six months have clearly illustrated how quickly markets can turn around,” said Chris Douglas, Morningstar Australasia’s manager, Fund Analysis. 

“KiwiSavers who switched to conservative options would have missed out on these rapid gains. While short-term volatility is inevitable, KiwiSaver options investing in growth assets continue to offer the greatest potential for growing the value of retirement savings over the longer term.” 

Reporting on over 120 KiwiSaver investment options, all categories produced positive results said Douglas. The best-performing funds were the growth-oriented vehicles with greater proportions of their assets in local and international share and listed property. “

These were the funds that were hardest hit by the market declines from late 2007 to early 2009,” he said. “Most KiwiSaver options in the Multi-Sector Growth and Aggressive categories returned 15 to 20% over the six month period.

Conversely, more conservative funds that invested principally in cash and fixed interest have not benefitted from this rally.” 

The majority of KiwiSaver assets are in multi-sector funds which invest in a range of assets. However, the top performing KiwiSaver funds over the two years to September 30 2009 were in single-sector categories according to Morningstar.

An absolute return approach and ultra-high cash weighting enabled Aon KiwiSaver Milford Aggressive to return almost 13%. “We have cautioned in previous reports about the trade-off between maintaining a high cash weighting and potential returns,” Douglas said.

“A high cash weighting will hold up returns during market downturns, but acts as a drag when markets recover. The three and six-month returns to September 30 2009 for a number of options illustrate this clearly – they did not perform as well during the market rally as funds with higher weightings in growth assets.” 

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KiwiSaver Performance Survey – Returns to 30 September 2009

KiwiSaver Performance Survey – Returns to 30 September 2009

 

KiwiSaver Performance Survey – Returns to 30 September 2009
         
Default Options Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
AMP KiwiSaver (Default) Fund AMP 2.52263 4.44335 2.92895
ASB KiwiSaver Conservative Fund (Default) ASB 3.80984 6.36083 6.05995
AXA KiwiSaver Income Plus (Default) AXA 5.31008 9.66905 8.04755
ING KiwiSaver – Conservative Fund (Default) ING 4.12122 6.34851 5.64229
Mercer KiwiSaver Conservative (Default) Mercer 6.5506 12.38718 9.2587
TOWER KiwiPlan-Cash Enhanced (Default) Tower 3.39631 6.83383 4.77185
         
Multisector Options        
Conservative Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
AMP KiwiSaver (Default) Fund AMP 2.52263 4.44335 2.92895
ANZ KiwiSaver – Conservative Fund ING 4.21664 6.31931 4.72149
ASB FirstChoice KiwiSaver Tracker Conserv Fund ASB 3.814 6.3467 6.21177
ASB KiwiSaver Conservative Fund (Default) ASB 3.80984 6.36083 6.05995
Asteron KiwiSaver Conservative Fund Asteron 4.19651 7.3191 4.50018
AXA KiwiSaver Income Plus (Default) AXA 5.31008 9.66905 8.04755
Fidelity KiwiSaver-Capital Guaranteed Kiwi Fidelity 2.40494 3.76752 3.87059
Fidelity KiwiSaver-Conservative Kiwi Fund Fidelity 4.09445 7.71898 3.55879
Fisher Funds Conservative KiwiSaver Fund Fisher 0 — —
Gareth Morgan Kiwisaver Scheme Conservative Fund GMK 1.96988 3.12231 3.68837
Grosvenor KiwiSaver Enhanced Income Fund Grosvenor 0.69037 2.12922 4.81732
ING KiwiSaver – Conservative Fund (Default) ING 4.12122 6.34851 5.64229
ING KiwiSaver SIL Conservative Fund ING 4.30109 6.43129 5.02255
Mercer KiwiSaver Conservative (Default) Mercer 6.5506 12.38718 9.2587
National Bank KiwiSaver – Conservative ING 4.21843 6.40921 4.83301
Smartshares Smartkiwi Conservative Fund NZX 3.10014 4.56735 2.99765
TOWER KiwiPlan-Cash Enhanced (Default) Tower 3.39631 6.83383 4.77185
Average   3.453949 6.260859 5.058188
         
Moderate Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
AMP KiwiSaver Conservative Fund AMP 3.10935 3.93446 5.44119
AMP KiwiSaver Moderate Fund AMP 4.03434 5.8743 1.14654
ANZ KiwiSaver – Conservative Balanced Fund ING 6.05413 9.80874 3.51055
ASB FirstChoice KiwiSaver Active Conservative Fund ASB 6.25156 11.0979 7.42536
ASB FirstChoice KiwiSaver Tracker Moderate Fund ASB 7.11619 12.53047 3.04221
ASB KiwiSaver Moderate Fund ASB 7.03761 12.50552 3.08647
AXA KiwiSaver Conservative AXA 5.95975 10.70419 8.41956
Grosvenor KiwiSaver Conservative Fund Grosvenor 4.15655 8.61812 5.37952
Huljich Conservative Diversified KiwiSaver Fund Huljich 8.36612 12.68067 19.24964
ING KiwiSaver – Conservative Balanced ING 5.62881 9.29015 4.63475
ING KiwiSaver SIL Conservative Balanced Fund ING 6.17226 9.99022 3.88969
Mercer Super Trust KiwiSaver Conservative Mercer 7.25286 14.58588 7.03011
National Bank KiwiSaver – Conservative Balanced ING 6.09771 9.83571 3.5394
Smartshares Smartkiwi Balanced Fund NZX 10.14226 16.15241 1.35078
TOWER KiwiPlan-Conservative Tower 5.78647 10.787 4.97452
Westpac KiwiSaver-Conservative Fund Westpac 4.48032 6.82961 4.9441
Average   6.102893 10.32658 5.441524
         
Balanced Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
AMP KiwiSaver – TYNDALL Balanced Fund Tyndall 8.34534 13.41126 -1.11781
AMP KiwiSaver Balanced Fund AMP 5.55301 9.18585 -1.6148
AMP KiwiSaver Moderate Balanced Fund AMP 4.97733 7.86453 -1.10451
AMP KiwiSaver-TOWER Balanced Fund AMP 7.81601 10.9093 0.62979
ANZ KiwiSaver – Balanced Fund ING 7.82055 13.01909 2.49132
ASB FirstChoice KiwiSaver Active Balanced Fund ASB 9.04659 16.60809 3.88155
ASB FirstChoice KiwiSaver Tracker Balanced Fund ASB 9.24189 17.12086 1.00573
ASB KiwiSaver Balanced Fund ASB 9.14818 17.04686 0.60108
Asteron KiwiSaver Balanced Fund Asteron 8.20958 14.98788 3.96682
AXA KiwiSaver Balanced AXA 9.95539 19.75835 7.02054
Brook Professional KiwiSaver Scheme Balanced Fund Brook 4.91577 7.63302 4.72015
Fidelity KiwiSaver-Balanced Kiwi Fund Fidelity 5.70841 11.83666 4.51146
Fidelity KiwiSaver-Ethical Kiwi Fidelity 5.74739 11.96247 0.42986
Gareth Morgan Kiwisaver Scheme Balanced Fund GMK 2.80208 3.88421 -0.20224
Grosvenor KiwiSaver Balanced Fund Grosvenor 7.14453 13.68721 4.80635
Huljich Balanced Diversified KiwiSaver Fund Huljich 11.32757 16.55557 18.68098
ING KiwiSaver – Balanced ING 7.07559 12.0811 3.53241
ING KiwiSaver SIL Balanced Fund ING 7.93928 13.16766 3.0392
Mercer KiwiSaver Balanced Mercer 11.00625 22.27623 4.75364
Mercer Super Trust KiwiSaver Active Balanced Mercer 10.90709 22.00377 4.95829
Mercer Super Trust KiwiSaver Moderate Mercer 8.89448 17.62163 7.38444
National Bank KiwiSaver – Balanced ING 7.8247 13.01029 2.58186
TOWER KiwiPlan-Balanced Tower 6.90601 14.40538 2.80248
Westpac KiwiSaver-Balanced Fund Westpac 7.06265 12.14809 4.34369
Average   7.723986 13.84106 3.420928
         
Growth Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
AMP KiwiSaver-ING Balanced Fund AMP 8.65028 13.65842 -1.92589
AMP KiwiSaver Growth Fund AMP 6.80703 11.78856 -7.26702
ANZ KiwiSaver – Balanced Growth Fund ING 9.62051 16.46856 1.2178
ANZ KiwiSaver – Growth Fund ING 11.33393 19.77642 -0.09061
ASB FirstChoice KiwiSaver Active Growth Fund ASB 10.81775 19.847 3.08264
ASB FirstChoice KiwiSaver Tracker Growth Fund ASB 11.07808 21.42501 -1.82704
ASB KiwiSaver Growth Fund ASB 10.99306 21.35399 -1.87966
Asteron KiwiSaver Balanced Growth Fund Asteron 10.97161 20.5982 1.72519
Fidelity KiwiSaver-Growth Kiwi Fund Fidelity 7.21669 16.63815 1.65684
Gareth Morgan Kiwisaver Scheme Growth Fund GMK 2.23096 3.53547 -5.02577
Huljich Growth Diversified KiwiSaver Fund Huljich 13.58206 19.04957 21.03725
ING KiwiSaver – Balanced Growth ING 8.51753 15.02408 2.52307
ING KiwiSaver – Growth Fund ING 9.9574 17.92986 1.1261
ING KiwiSaver SIL Balanced Growth Fund ING 9.75111 16.65533 1.77184
ING KiwiSaver SIL Growth Fund ING 11.47832 19.91034 0.36164
Mercer Super Trust KiwiSaver Growth Mercer 11.54995 23.23812 3.15992
National Bank KiwiSaver – Balanced Growth ING 9.64049 16.40872 1.1616
National Bank KiwiSaver – Growth ING 11.33819 19.63205 -0.34444
Westpac KiwiSaver-Growth Fund Westpac 8.54191 14.66939 3.41119
Average   9.688256 17.24249 1.256561
         
Aggressive Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
AMP KiwiSaver Aggressive Fund AMP 7.6657 13.70744 -9.76458
AXA KiwiSaver Growth AXA 12.38353 25.60231 4.39517
Brook Professional KiwiSaver Scheme Growth Fund Brook 8.58495 12.96381 6.71695
Fidelity KiwiSaver-Aggressive Kiwi Fund Fidelity 9.74324 21.85532 2.99862
First NZ Capital KiwiSaver Scheme FNZC 5.98929 12.84321 -8.65922
Fisher Funds Growth KiwiSaver Fund Fisher 15.32222 36.86884 20.55343
Grosvenor KiwiSaver Geared Growth Fund Grosvenor — — —
Grosvenor KiwiSaver High Growth Fund Grosvenor 10.18129 21.12985 -0.30908
Mercer KiwiSaver High Growth Mercer 13.51313 27.60667 0.31526
Mercer Super Trust KiwiSaver High Growth Mercer 13.37516 27.31785 0.46753
TOWER KiwiPlan-Growth Tower 10.13096 21.2549 0.61897
Westpac KiwiSaver – Capital Protection Plan (1) Westpac 10.18978 18.98791 —
Average   10.64357 21.83074 1.733305
         
Single Sector Options        
Cash Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
AMP KiwiSaver Cash Fund AMP 0.94306 1.93129 5.44099
ANZ KiwiSaver Cash Fund NZGT 0.50752 1.12728 3.92079
ASB FirstChoice KiwiSaver NZ Cash Fund ASB 0.58698 1.30777 4.21722
ASB KiwiSaver NZ Bank Deposit Fund ASB 0.58677 1.31638 4.22593
Asteron KiwiSaver Capital Fund Asteron 0.85932 1.79721 5.18293
AXA KiwiSaver Cash AXA 1.25376 2.46013 4.89645
ING KiwiSaver – Cash Plus Fund ING 0.64557 1.3361 4.28279
ING KiwiSaver SIL Cash Plus Fund ING 0.53812 1.0728 3.67758
Mercer KiwiSaver Cash Mercer 0.89499 1.80615 5.16302
National Bank KiwiSaver Cash Fund NZGT 0.48818 1.1368 3.94059
TOWER KiwiPlan-Preservation Tower 0.72759 1.63115 4.70372
Westpac KiwiSaver-Cash Fund Westpac 0.81652 1.72175 4.09228
         
Fixed Income Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
Asteron KiwiSaver High Yield Fixed Interest Fund Asteron 2.51598 3.79741 4.02022
ING KiwiSaver SIL New Zealand Fixed Interest Fund ING 1.70578 3.02361 1.25211
ING KiwiSaver SIL International Fixed Int Fund ING 2.55103 2.10282 9.59206
         
Property Underlying
Manager		 3-month 6-month 1-year
Asteron KiwiSaver Global Property Fund Asteron 27.44681 51.49216 -27.7617
ING KiwiSaver SIL Australasian Property Fund ING 18.19272 21.78124 -2.67473
ING KiwiSaver SIL International Property Fund ING 26.37362 58.55104 -25.5953
         
Australasian Equity Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
Aon KiwiSaver Milford Aggressive Fund Milford 7.98792 14.41682 18.55229
Asteron KiwiSaver SRI Share Fund Asteron 12.3891 24.40843 8.45911
Asteron KiwiSaver Trans-Tasman Small Companies Shr Asteron 20.00222 43.90152 14.84419
ING KiwiSaver SIL Australasian Share Fund ING 13.91546 20.49329 5.04117
Smartshares Smartkiwi Growth Fund NZX 15.98917 25.85076 -1.61254
         
International Equity Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
ASB FirstChoice KiwiSaver Active High Growth Fund ASB 10.27146 21.32184 -8.3564
ASB FirstChoice KiwiSaver Global Sustainability Fd ASB 8.87045 19.13408 8.05997
Asteron KiwiSaver International Share Fund Asteron 9.17462 15.02797 -10.7277
ING KiwiSaver SIL International Share Fund ING 5.93213 13.68907 -5.22682
ING Kiwisaver SIL Sustainable Growth Fund Super’tion Inv 5.82513 10.81369 -7.38468
TOWER KiwiPlan-Equity Tower 9.86101 22.65597 -3.60041
         
Miscellaneous Underlying
Manager		 3-month
(%)		 6-month
(%)		 1-year
(%)
Fidelity KiwiSaver-Options Kiwi Fund Fidelity 10.12566 18.02974 2.07276

 

Returns are before tax and after fees. Estimated Total Fee is the sum of the ongoing Management Fees, the Trustee Fees, and Administration Fees. Min Initial is the minimum initial balance required by the fund company before investing. Mike Pero and NZF SuperKiwi KiwiSaver products are represented by the Huljich funds.

 

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KiwiSaver fees top $36 million

KiwiSaver providers just over $36.6 million in fees and expenses over the 12 months to March 31 this year, according to the latest report from the Government Actuary (GA).

The KiwiSaver report, tabled in Parliament on Wednesday, revealed the GA had also rejected an argument that smaller schemes could raise fees “if low membership meant that such an increase was necessary to cover the expenses”.

 

The GA judges KiwiSaver fees on the basis that they be “not unreasonable”.

In another major ruling during the year, the GA said its approval of KiwiSaver fees “does not in itself provide tacit approval of any form of investment”.

The report says KiwiSaver trustees must ensure all investment options meet legal requirements. As well the GA paper says providers must get written consent from members for investing in “complex” options.

“… if the investment option is complex then I would expect the Trustee to obtain written confirmation that the potential member understands the particular investment risk,” the GA report says.

About half of all KiwiSaver funds were invested in default funds as at March 31, which the GA says was probably an advantage during the global financial crisis.

“… it is hoped that as members see how the funds work in practice they will consider other investment options,” the GA says.

The GA also highlighted a couple of other “minor issues” including some providers missing the 35-day deadline to transfer funds to another scheme following a member request.

It also says there are some issues of questionable selling practices which are being investigated.

In a further superannuation report, tabled this week, the GA notes KiwiSaver may be starting to cannibalise existing superannuation schemes.

While the trend for stand-alone super schemes shifting to master trusts has continued the report says others are closing in favour of KiwiSaver or splitting contributions.

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