Brook Professional, SmartShares, Medical Assurance top three providers ranked by average account

Brook Professional, SmartShares, Medical Assurance top three providers ranked by average account

By  Amanda Morrall

KiwiSaver default providers may boast the highest enrollment levels all up, but when it comes to account size the numbers stack up in favour of the small fries.

While the average account among the default providers holds around NZ$6,000, the lesser represented boutique providers are close to double that.

Brook Professional KiwiSaver Scheme is at the top of the chart with an average account size among its 362 members estimated around NZ$12,707. That's followed by SmartShares with KiwiSaver nest eggs averaging NZ$11,223 for its 1,595 members, and the Medical Assurance Society at NZ$11,188 for its 10,216 members.

ASB, by comparison, which has the second highest enrollment rate among all the default providers (with more than 270,000 members) has an average account size valued at NZ$5,162.

Account balances themselves are no indication of how well a fund _ or its provider _ has performed because values and matching employer contributions are to a large degree obviously income-driven. Regardless, the rankings are useful to the extent that they give an indication of where discriminating KiwiSavers are actively deciding where to park their retirement savings.

Just under 30% of the more than 1.6 million KiwiSavers invested are with default providers, the vast majority of which remain in default funds.

By luck more than design that has served those KiwiSavers well. On average, default funds have delivered the best returns since KiwiSaver was introduced, owing to their heavier weighting in cash and bonds. Several 'growth funds' with a higher exposure to equities took a hammering during the global economic downturn and the financial crisis.

With the market recovering, the tables have started to turn. KiwiSavers invested with some of the boutiques have benefited. Fisher Funds Growth KiwiSaver, for example, has delivered an 8.4% return per annum over three years, after fees but before taxes and expenses.

KiwiSaver membership volumes and returns are not necessarily inversely related. Fidelity KiwiSaver Scheme has an average account size of NZ$2,488 and yet its cash-option fund has returned 11.59% (after management fees) over the past three years. CEO Milton Jennings, in an interview with interest.co.nz, said this was where 80% of Fidelity's senior managers were invested in KiwiSaver.

As KiwiSaver is a long-term investment, short-term performance is not necessarily the best guide to how well your fund is doing.

Providers and financial advisers say it is more important to make sure you are in the right type of fund for your age and risk appetite and also that fees are not unreasonable. As fees typically vary depending on the kind of fund you are invested in, it is best to compare like with like.

To see how much your expense ratio (that's total fees) are relative to other funds in the same category check out our KiwiSaver fund section.  Select the highlighted type of fund you are in (conservative, balanced, growth or aggressive).

In this same section, you can compare adjusted performance rates of funds by category.

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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I cannot understand how Huljich has such an extremely low average of $1,960.  Members were given a $1,000 initial contribution and also get over $1,000 pa subsidy from the Gov't.  How many of its members have stopped contributing?.  The Huljich funds should be closed down and the Gov't money returned.  However as both Don Brash and John Banks are part of this scam I can't see it happening.  This is nothing less that a scandal and it should be investigated by the financial authorities.

I agree it seems odd that there could be such a low average over so many members, but in theory that could be the result of folk who join up their children to get the initial $1000 and then never make any further contribution (children don't get the annual subsidy, only over-18s get that). Maybe Huljich advertised to parents and grandparents in particular?

On the initial contibution alone Huljich has taken over $92 million from the Government (taxpayers).  No doubt they are generating excessive fees from this money.  This is simply theft, although probably legal it is certainly unethical, but what else would we expect when politicians are involved.

No mystery there.

They've been targeting the lower socioeconomic areas of Auckland with their teams, signing all and sundry with promises of massive returns that they had dreamt (doctored) up.

What was the outcome of the official enquiry? Or was that doctored as well.

Yes, it has been openly done with seemingly no action from regulators and I hope that there will be - one day - some consequences to providers that have accepted business sold in this way.

Default providers in particular are getting a steady influx of new members all the time whereas the smaller ones probably had most of their members in at inception.    So, as the article indicates, averaging out FUM across total membership doesn't tell the full story.  

I cannot believe that there are 52,000 Kiwisavers in the Gareth Morgan Fund, when it has performed so poorly to date.

I know these funds have many years to run, for many people and most funds will not

be able to be judged for 5-- 10 years or so,

Gareth Morgan's Kiwisaver is also not being rated by Morningstar --so its results

are not being published in the Sunday Star Times for all of NZ to see.

Perhaps they believe that their funds will actually be there at the end, and haven't had padded figures manufactured from shareholder capital injections bolstering  the statistics? We didn't have to wait your '5-10 years' for that sort of behaviour to eventuate ijn other funds, did we? Or perhaps they like the schedule of fees that is applied . Some funds charge a minimum set fee, regardless of a poor performance, and yet have the cheek to 'ask for more' if they get it right! And one I don't know the answer to. But do Morningstar only 'rate' those entities that subscribe to their service? ie: If you don't pay, we don't rate you. That happens overseas.

Morgan very publicly expressed his contempt for Morningstar quite a while back:

http://www.gmi.co.nz/pages/news/425/KiwiSaver-Performance-Scrutinised.aspx