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Mercer's KiwiSaver results show major asset allocation changes taking time to come to fruition

Posted in KiwiSaver

The latest data released for KiwiSaver performance as at December 31, 2012 is from Mercer and MercerSuperTrust. Our story covering the results to September 30, 2012 can be found here.

Mercer's December results show that the Default option (Conservative Fund) continues to be one of the market leaders over both one and five year time periods.

In mid-2012 Mercer picked up OnePath's former chief investment officer, Philip Houghton-Brown.

This appointment has added further international expertise to the local team. When the local talent is combined with Mercer's global research capabilities this would make them one of the best resourced KiwiSaver providers.

Mercer is currently the third largest KiwiSaver default provider with $644 million under management; they are still some distance behind the leading default provider ASB ($1.513 billion)

When it comes to investment strategy Mercer has elected to be quite dynamic in positioning their portfolio to take advatnage of emerging trends or forecast market movements.

Mercer's core portfolios are also seen as some of the most diversified with investors having exposure to traditional asset classes as well as holdings in unlisted securities and alternative assets (which could include for example; Forestry, Commodities, Natural Resources, Hedge Funds and Infrastructure).

A recent research report by Morningstar dated December 21, 2012 highlights that some of the major asset allocation changes made back in 2009 have yet to come to fruition. The research note also points out that the addition of alternatives fund managers and unlisted assets, plus the tactical move into cash, has negatively impacted on returns.

Many of the diversified multi-sector funds (Conservative, Balanced, Moderate, Active Balanced, Growth and High Growth) have performed poorly compared to their peers over the past 12-months.

Over the past five year period to December 31, Mercer has shown superior performance in the Default, Cash and Fixed Income sectors where there is a greater focus on capital stable securities as opposed to risker assets such as shares.

Below is a table of the longer term performance of the Mercer and Mercer SuperTrust funds. The return data is before tax and after fees and is as published by the managers. (No adjustments have been made to take into account those additional fees which scheme providers may charge and which are not included in calculating the fund performance. We do make such adjustments, but they will not be included until the full benchmarking is published.)

Mercer KiwiSaver Scheme
(31 December 2012)
1 year
(p.a.)
5 year
(p.a.)
Since inception* (Oct 2007)
(p.a.)
Conservative Fund (default) 7.9% 5.5% 5.2%
Balanced Fund 10.8% 2.6% 1.9%
High Growth Fund 12.2% 0.3% -0.6%
Cash Fund 2.9% 4.6% 4.7%

 

 

 

 

 

 

 

Mercer SuperTrust KiwiSaver Scheme
(31 December 2012)
1 year
(p.a.)
5 year
(p.a.)
Since inception* (Oct 2007)
(p.a.)
Conservative Fund 7.3% 4.3% 4.0%
Moderate Fund 9.8% 3.4% 2.7%
Active Balanced Fund 10.8% 2.4% 1.8%
Growth Fund 11.8% 1.5% 0.8%
High Growth Fund 13.3% 0.2% -0.7%
Cash Fund 2.9% 4.6% 4.7%
Fixed Interest Fund 6.7% 7.8% 7.6%
Real Assets Fund 9.3% -0.7% -2.0%
Trans-Tasman Fund 21.8% 1.3% 0.2%
Global Fund 16.2% -1.0% -1.9%

 

 

 

 

 

 

 

 

 

 

 

* Mercer has not reported the return since inception for the various funds. We have calculated the since inception return using monthly returns provided directly by the manager.

More detailed performance reporting can be found here ».

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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