QuayStreet and Generate prominent in Morningstar’s latest KiwiSaver results

KiwiSaver assets increased, owing significantly to market movements, to end the March quarter at $108.6 billion, up $4 billion from the end of last year.

The overall tone for the quarter was cautious optimism, while inflation was a concern, global growth prospects improved, and global equity markets delivered strong returns, particularly for unhedged holdings due to the weaker NZ dollar, says Morningstar director global fund data Greg Bunkall.

The five biggest providers, ANZ, Fisher, ASB, Milford and AMP accounted for 68% of assets and 69% of the $849m generated in fees. The average annual fee was around 0.78%.

Average asset allocation was 40.7% income and 59.3% growth, compared to 42.9% income and 57.1% growth for the previous quarter.

ANZ retained its usual position as the biggest provider with $20.4 billion in assets but at 18.8%, its market share declined from 19.5% the previous quarter. Fisher at second place with ($16.67b) stayed the same with 15.4% market share over the last two quarters. Nipping at Fisher’s heels, ASB was again third ($16.64b) but closed the gap, increasing its market share to 15.3% up from 15.1% at the end of 2023.

In fourth place Westpac ($10.7b) also slipped to 9.9% from 10.2% at the end of December, while Milford in fifth place ($8.5b) increased market share to 7.9% from 7.5% the previous quarter.

All multisector KiwiSaver funds produced positive returns for the period, with funds containing risk assets performing best. Returns for multi sector funds ranged from 2% for conservative funds to 8.8% for aggressive.

Of the default options, Booster ($563.6m) had the best returns for the quarter (5.5%) and the year (14%), while Westpac, the biggest default provider with $754.1 million, reported the lowest returns (4.4%) and (11.1%) for the same respective periods.

QuayStreet continued to perform well across many time periods in the conservative and balanced categories, Milford had consistently high performance with moderate, balanced and growth categories over the long term (five to 10 years), but has struggled to place in the top spots over shorter time spans. Generate had strong numbers across many time periods.

In the conservative category Fisher Funds topped returns for the quarter (2.6%), the one year (9.6%) and five year period (3.9%). Milford had the best returns for the 10 year period with 5.8%.

In the moderate category Generate topped the quarter (4.1%), the one year (11.2%) and the 10 year period (6%).

For balanced it was QuayStreet’s socially responsible fund which topped the quarter (7.5%) and the one year period (16.7%), while QuayStreet’s balanced fund had the highest returns for the three year period (7.6%). Milford’s balanced fund had the highest returns for the five year (8.1%) and 10 year (8.8%) period.

In the growth category, QuayStreet topped the quarter (9.3%) and the three year (9.6%) period. Generate growth fund was top for the one year period (20.3%), while Milfford active growth took top place for the five year (10.6%) and 10-year (10.4%).

In the aggressive category it was Generate focused growth fund at number one (11.4%) for the quarter and the year (25.4%), with Milford topping the five year period (8.6%) and Booster socially responsible high growth topping the 10-year returns (10.2%).

Over 10 years investors in the aggressive category have had average returns of 9.1%, followed by growth (8.4%), balanced (6.8%), moderate (4.8%), and conservative (4.3%).

Nikko relaunches its KiwiSaver proposition

Nikko has relaunched its GoalsGetter KiwiSaver proposition adding other managers’ funds and making improvements for advisers.

Nikko’s GoalsGetter KiwiSaver Scheme now has a diversified mix of 18 high-calibre funds.

It says these funds have been hand-picked by Nikko AM NZ’s experienced team from a range of leading fund managers and include funds from Milford, Harbour, Salt, Pathfinder and Generate alongside Nikko AM’s own funds.

Nikko AM New Zealand managing director, Stuart Williams, says that putting a structured, pre-vetted framework around fund choice plays a key role in enabling KiwiSaver members to realise the benefits of diversification.

“Diversification is one of the core fundamentals of successful investing. But achieving the right portfolio settings still requires thorough market knowledge and investment expertise.”

“While we’re not the first KiwiSaver scheme to offer a multi-fund solution, others rely on the individual to understand the options and make their own fund selections from a wide variety of possibilities. This can often lead to poor choices and/or an unbalanced portfolio.”

Williams says that the scheme has also been designed to assist financial advisers to provide robust, cost-effective, tailored solutions for their clients.

Goals Getter’s funds have been vetted by investment experts, including an independent investment consultant.

“Our inbuilt expert robo-advice functionality can further refine the selection and guide members to the most suitable funds based on their personal objectives and risk preferences,” Williams says.

“The GoalsGetter KiwiSaver Scheme not only provides financial advisers with the ability to deliver a personalised diversified portfolio solution across quality fund managers; our
market-leading technology supports a streamlined, fully-digital client experience from onboarding to tracking performance to transacting.”

“This evolution of our KiwiSaver scheme offering under the GoalsGetter brand is very much in line with the GoalsGetter philosophy of connecting individual investors, either directly or through their financial adviser, with expert strategies tailored to their savings ambition,” he says.

Best and worst KiwiSavers according to Consumer

Kiwi-owned providers have come out on top of Consumer’s annual KiwiSaver satisfaction survey.

Simplicity has the most satisfied customers, while Australian-owned provider AMP the least, the survey has revealed.

Simplicity, Generate and Milford had the most satisfied customers.

Consumer CEO Jon Duffy, said each of these NZ-owned firms not only achieved Consumers people’s choice status again, but performed above average for investment returns also.

On the other end of the scale, the big four banks BNZ, ANZ, ASB and Westpac rank sixth, ninth, tenth and eleventh place, respectively.

The survey has found a big difference in satisfaction levels when it comes to the management of their KiwiSaver funds, said Duffy.

Ratings were given for eight key measures: overall customer satisfaction, access to account information, how well customers are kept updated about their investment, timeliness of response to inquiries, the fairness of how problems and complaints are dealt with, returns on investment, ethical investments, and fees and charges.

Almost 2000 New Zealanders, aged 18 years and older, were surveyed online in January and February 2024. The overall satisfaction score is the percentage of people who scored their KiwiSaver provider 8, 9 or 10 for satisfaction on a scale of 0 (very dissatisfied) to 10 (very satisfied).

AMP scored a 39% satisfaction rating. Its customers were the least satisfied with how AMP dealt with problems and complaints.

Westpac (BT Funds Management) performed poorly across every customer satisfaction measure. It took second-to-last place, scoring particularly poorly when it came to the way it kept customers updated about their investments.

In tenth place was ASB and ANZ took ninth place. Both performed below average when it came to overall satisfaction and poorly for the fairness of their fees and charges.

Simplicity was a people’s choice winner for the fifth year in a row and ranked first with an overall satisfaction score of 79%, thanks in part to its low fees and ethical investments.

Generate was joint top performer with Simplicity for ease of accessing account information and timely responses to enquiries. It won a people’s choice award for the third year in a row.

Milford Funds picked up people's choice for the seventh year in a row, due in part to its above average performance for its fees and keeping customers updated about their investments.

Bayly will talk to coalition partners before any change to KiwiSaver

Minister of Commerce and Consumer Affairs Andrew Bayly says he wants to focus on capital markets and KiwiSaver providers have a part to play.

“The thing about KiwiSaver and capital markets in general is how do we get more capital coming into businesses, how do we make sure financing around debt is appropriate?”

He wants to make it easier for providers to invest in New Zealand business, but says there is also an issue around the settings of KiwiSaver itself.

He plans to look at it later this year and doesn't anticipate difficulty in doing so.

“No, I don’t think so. I’ve started having those conversations but part of that is working with my coalition partners. We’re in a coalition government and we need to make sure we’ve got the right settings. I think there are areas we could look at improving.”

Act KiwiSaver policies pre-election

In an alternative budget put forward by Act leader David Seymour while campaigning last year, KiwiSaver subsidies would become targeted. Members would be eligible for a subsidy of up to $521.43 capped at 5% of a participant’s taxable income. The maximum subsidy amount would reduce by 3% per dollar of income above $48,000, reducing to zero by around $65,000.

Act policy is to gradually increase the age of eligibility for superannuation but it would de-link the KiwiSaver withdrawal age from superannuation age and keep it at 65.

NZ First KiwiSaver announcements

Among New Zealand First’s 2023 election planks it announced that at a certain balance, it would give KiwiSaver members full access to their savings to downsize their mortgage. It said this was based on the Singaporean model.

Other KiwiSaver related initiatives included that it would: make KiwiSaver membership compulsory from the age of 18 after commencing employment; restore the kickstart with auto-enrolment at birth from 1 July 2024, encourage all under 18 year olds to get into KiwiSaver by offering an annual state contribution of $250, if $250 has been saved in the preceding year up until the 18th birthday; and to support the growth of KiwiSaver funds review fees and increase the government contribution in line inflation since 2007 (48%) to a current maximum of $1540.

It would also maximise returns by “repealing woke KiwiSaver default investment rules that stop investment into any lawful sector while ensuring the NZ Superfund is similarly unencumbered.”

National policy pre-election

The National party announced it would allow KiwiSaver members to split their balance across multiple providers.

Bayly says this was aimed at those with higher balances, a minimum of $100,000 and more likely between $300-400,000.

“I know there are a number of operators offering that type of scheme but people may want to change managers because you might be great in terms of investing in Europe but over here these guys invest in doing clean energy type investments and they’re the best managers of that. So that would give flexibility.”

He says he’s not sure about the party’s other pre-election promise to allow students to dip into their KiwiSaver to pay for tenancy bond deposits.

“That’s something we’d need to test with our coalition partners.

He says the big issue is people are simply not contributing enough into KiwiSaver. “

Would he increase contribution rates each year as the Australian government has done?

“That’s all up for discussion, I haven’t engaged yet with coalition partners.”

Right now his focus is the CCCFA reforms, the insurance contracts bill before the house, the customer data rights bill which is part of laying open banking, and he wants to reform the Companies Act.

“Later this year when I get through all that, when most of that work stream is completed or near completed, is to focus on capital markets.