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We review the regular savings returns for Moderate and Balanced KiwiSaver funds, identifying who has the best long-term returns

Investing
We review the regular savings returns for Moderate and Balanced KiwiSaver funds, identifying who has the best long-term returns
Regular contributions change the way you should look at your KiwiSaver returns. <a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

Regular readers will know that we have been analysing KiwiSaver serturns on the basis of regular savings patterns.

These give importantly different results because the size of your kiwisaver balance grows over time, and therefore it stands to reason that the percentage amount of your returns means more when the balance is larger than when it was smaller.

The key is the dollar return being added to your contrubutions, rather than just the % return the fund claims.

We have previously reported on these returns for Default and Conservative funds here.

We are now reporting on the Balanced and Moderate fund groups through to June 2014.

Within the Moderate and Balanced categories there is some dispersion in returns which if continued over the very long term would create large differences in an investors terminal wealth.

Interestingly in the Moderate category the first three funds ranked on their performance since inception all 'sub contract' the ultimate management of investor money to Russell Investments. BNZ has only been going for just over one year so their return since inception whilst impressive is not necessarily a fair comparison against those funds that have had to ride out the GFC.

Of those funds that have been analysed since April 2008, ANZ continue to show their class as do AMP and Fisher Funds.

In the Balanced category, Milford and BNZ top the table although these funds have not been available for the full term of the analysis and have benefited from strong equity markets in the past 12-months or so.

Of the funds that have been invested since April 2008 ANZ, AMP, Kiwi Wealth and Fisher Funds dominate the top half of the leaderboard.

Across both categories in the three-year data we are seeing some consistency in returns and in a large number of cases the three-year return data is now looking very similar to the returns since inception.

When looking at our tables it is important to benchmark your fund's performance with others that have a similar objective.

We believe long term performance is a key way to assess how a fund performs. But there is always a concern that a fund may be resting of earlier laurels, and long term results don't show recent under-performance.

To keep an eye on that aspect, we are adding an additional metric - the return over the last three years. Any shorter can encourage you to consider switching in a way that is neither healthy for your returns, nor recognising of long-term gains. Don't use your KiwiSaver account as a sharetrader would. It is a long-term commitment. (If you are keen to chase high returns, choose an aggressive fund and leave the research and trading to their experts.)

Here is the comparison as at June 2014 for Moderate Funds.

At the "lower risk" end of the spectrum - that is those funds labeled Defensive, Conservative, or Moderate - you should expect some variability in returns including losses; however these would be expected to be few and far between over the life of your investment.

There are price risks in bonds and other fixed income components of these funds, although funds that are straight Cash have little.

In return for the low risks, you can expect modest returns however.

One change we have made in our tables is we are no longer providing return data for those funds which have either closed to new investment or have wound-up or are in the process of winding up.

We are for the first time able to compare the Kiwi Wealth Scheme (previously known as GMI KiwiSaver) against the rest of the market following the receipt of the required data.

Moderate Funds      
Cumulative $
contributions
+ Cum net gains
after all tax, fees
Effective*
cum return
= Ending value
in your account
Effective
last 3 yr return
since April 2008 X Y Z
to June 2014      
(EE, ER, Govt)
$
% p.a.
$
% p.a.
       
 
 
 
 
 
BNZ Moderate M B   3,732 252 8.2% 3,984 n/a
Aon Russell LifePoints 2015 M C M 18,745 5,877 7.6% 24,622 7.7%
Aon Russell LifePoints Cons M C C 18,745 5,692 7.4% 24,437 7.3%
ANZ OneAnswer Conserv Bal M B M 18,745 5,455 7.1% 24,200 7.5%
ANZ Conservative Balanced M B M 18,745 5,379 7.0% 24,123 7.4%
ANZ Default Conserv Bal M B M 18,745 5,144 6.7% 23,888 7.2%
AMP Moderate M B M 18,745 4,792 6.3% 23,536 6.8%
Fisher Funds TWO Conserv M C M 18,745 4,615 6.1% 23,359 6.2%
AMP Conservative M C M 18,745 4,338 5.8% 23,083 5.7%
ANZ OneAnswer Conservative M C C 18,745 4,294 5.7% 23,039 5.8%
ANZ Conservative M C C 18,745 4,241 5.6% 22,986 5.8%
Fidelity Conservative M C M 18,745 4,179 5.6% 22,923 5.6%
SmartKiwi Conservative M C C 18,745 4,145 5.5% 22,890 6.0%
Mercer SuperTrust Conservative M C M 18,745 3,651 4.9% 22,396 4.7%
Grosvenor Conservative M C M 18,745 3,520 4.7% 22,265 4.4%
Westpac Conservative M C M 18,745 3,510 4.7% 22,255 5.3%
Fisher Funds Conservative M C M 15,133 2,801 4.7% 17,934 5.7%
Craigs Conservative M C   18,745 3,301 4.4% 22,046 4.1%
Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition
B = Balanced, C = ConservativeG = GrowthM = Moderate      

Balanced Funds

For Balanced or Balanced Growth type funds there is more volatility in returns as they traditionally have higher exposures to equities or property.

Sometimes, some types of bond funds deserve a higher risk assessment too.

Although the losses in capital may be experienced more frequently, over the long run your capital value should grow more quickly than the more conservative funds.

One change we have made in our tables is we are no longer providing return data for those funds which have either closed to new investment or have wound-up or are in the process of winding up.

We are for the first time able to compare the Kiwi Wealth Scheme against the rest of the market following the receipt of the required data.

Here are these comparative results:

Balanced Funds      
Cumulative $
contributions
+ Cum net gains
after all tax, fees
Effective*
cum return
= Ending value
in your account
Effective
last 3 yr return
since April 2008 X Y Z
to June 2014      
(EE, ER, Govt)
$
% p.a.
$
 % p.a.
       
 
 
 
 
 
Milford Balanced B B B 12,515 4,138 11.2% 16,653 11.2%
BNZ Balanced B B   3,732 294 9.5% 4,026 n/a
ANZ OneAnswer Balanced B B B 18,745 6,478 8.3% 25,223 9.0%
Aon Russell LifePoints 2025 B B B 18,745 6,477 8.3% 25,222 8.9%
ANZ Balanced B B B 18,745 6,409 8.2% 25,154 8.9%
Aon Russell LifePoints Mod B B M 18,745 6,301 8.1% 25,046 8.4%
AMP Fisher Funds TWO Bal B B B 18,745 6,061 7.8% 24,805 8.9%
ANZ OnePath Balanced B B B 18,745 5,911 7.6% 24,655 8.4%
Kiwi Wealth Balanced Fund B     18,745 5,875 7.6% 24,620 9.4%
Fisher Funds TWO Balanced B B B 18,745 5,781 7.5% 24,525 8.4%
AMP Tyndall Balanced B G G 18,745 5,716 7.4% 24,461 8.2%
Fidelity Ethical B B B 18,745 4,937 6.8% 23,682 7.5%
AMP Moderate Balanced B B B 18,745 5,204 6.8% 23,948 7.7%
Aon Tyndall Balanced B G G 18,745 5,150 6.7% 23,895 7.6%
ASB Moderate B B M 18,745 5,015 6.6% 23,760 6.8%
Fidelity Balanced B B B 18,745 4,745 6.3% 23,490 6.9%
Mercer SuperTrust Mod B B B 18,745 4,682 6.2% 23,426 6.2%
Grosvenor Balanced B B B 18,745 4,091 5.5% 22,836 5.9%
Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition
B = Balanced, C = ConservativeG = GrowthM = Moderate      

The right fund type for you will depend on your tolerance for risk and importantly on you life stage. You should move only with appropriate advice and for a substantial reason.

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