By Amanda Morrall email
Warning: the following performance rankings on the worst performing KiwiSaver funds over three years comes with the following blanket caveat:
Past performance is no guarantee of future returns. It's a standard industry disclaimer but one that is widely ignored in the face of eye popping double digit quarterly returns that provoke KiwiSaver provider envy or bitterness.
As KiwiSaver is a long-term investment vehicle, it still has a long way to run and fund manager track records are still being established.
Opinion varies but many suggest a meaningful gauge of fund performance takes at least five years to establish underscoring another well worn investment that it's time in the market, not market timing.
Depending on your enrolment date in KiwiSaver and the fund you're invested it, the optics shift considerably.
Here's an example:
If you invested NZ$5,000 in OnePath's SIL International Property fund three years ago, your KiwiSaver account would have shrunk to NZ$4,535, whereas if you'd invested two years ago, it would more than have doubled, and one year's time would have grown to NZ$6,010.
The wildly different outcomes underscore both market volatility and the dangers of relying on the latest quarterly statement as a gauge of fund performance.
With that in mind, it is still interesting to see the fluctuations and to get a sense of where one's KiwiSaver fund sits relative to its peers.
For interest sake, we reverse ranked after-fee performance among the spectrum of funds to see find out which finished last on a three year annualised basis. For a complete reverse ranking listing scroll to the end of the page and find your fund by category.
To see interest.co.n'zs previous performance ranking KiwiSaver article in ascending order click here.
This is what we found. (For more on after fee performance calculation click here.)
| Aggressive Funds | Ranking | 1 year | 2 year | 3 year |
| One PathSIL International Property | 29 | 20.2 | 47.4 | -3.2 |
| Mercer Super Trust Real Assets | 28 | 5.0 | 31.1 | -2.9 |
| Mercer Super Trust Global Shares | 27 | 8.9 | 22.1 | -1.6 |
| Growth Funds | Ranking | 1 year | 2 year | 3 year |
| AMP Growth | 31 | 5.8 | 11.1 | 0.0 |
| Credit Union Balanced | 30 | 5.2 | n/a | 0.9 |
| Tower Growth | 29 | 5.4 | 17.3 | 1.6 |
| Balanced Funds | Ranking | 1 year | 2 year | 3 year |
| AMP Tyndall Balanced | 16 | 5.7 | 12.0 | 2.4 |
| AMP Tower Balanced | 15 | 5.2 | 10.8 | 2.9 |
| AMP Moderate Balanced | 13 | 4.9 | 6.8 | 3.5 |
| Moderate Funds | Ranking | 1 year | 2 year | 3 year |
| AMP Moderate | 27 | 5.2 | 8.3 | 2.5 |
| Credit Union Conservative | 26 | 4.3 | n/a | 3.2 |
| Smartshares Conservative | 25 | 3.7 | 5.2 | 3.4 |
| Conservative Funds | Ranking | 1 year | 2 year | 3 year |
| Staples Rodway Conserative | 16 | 3.2 | 2.7 | 3.6 |
| Tower Preservation | 9 | 2.8 | 2.8 | 4.1 |
| Grosvenor Enhanced Income | 6 | 2.9 | 2.8 | 4.6 |
25 Comments
That's a great idea! We're not a research house so this would be tricky and time consuming for us to obtain but agree it would be very interesting comparison. Plan to bring in some NZ fund managers to get their view on this. Carmel Fisher is our featured guest tomorrow, so I'll be sure to ask her thoughts on Benchmarking outside of the KiwiSaver peer group.
Cheers,
Amanda
Given anyone could simply buy high quality NZ Bonds such as Mighty River, Vector, Contact, AK Airport Fletcher Building with very low risk, hold them to maturity and earn ~ 8 % pre tax these are appalling returns and illustrate and industry stuffed with costs and incompetence.
Hi,
Check out our bond section for a comparison on rates for starters.
http://www.interest.co.nz/saving/moneymarket
Also, received this from a DIY couple on bonds this morning:
We are retired folk and supplement the NZ Super by having Bonds in Fonterra, Rabo Bank, Contact and Mighty River Power. That is spreading the risk over all. However unlessyou obtain these in the I.P.O. then Broker fees are an inhibiting factor on the market to buy in at a later date. Bonds have been a good investment and cost free to the holder.
Amanda
Bond prices are a bit counterintuitive. They are usually quoted as yield-to-maturity. This means you can easily compare bonds that have different details (e.g. different coupon rates or payment schedules), but it makes the process of calculating the actual price you pay more complicated.
In the case above, let's assume you want to buy 100 bonds which were originally issued at $1 face value each. Someone is willing to sell you those bonds on the secondary market for $1.0693 per bond, or $106.93 in total. Then you receive 8% coupon on 100 bonds, i.e. $8/year, and finally you receive $100 at maturity.
The yield-to-maturity is the discount rate that makes the NPV of all of those cashflows equal zero. In this case, the discount rate works out at 5.50%. The NPV calculation accounts for things such as: you might be buying the bond part-way through an interest period, so you might receive a complete half-yearly payment after only holding the bond for 2 weeks; you will receive less than what you paid ($100 vs $106.93) on maturity; and you are receiving 8% interest on the face value ($100), not on the price you paid ($106.93).
A 5.50% yield effectively says "If you buy the bonds now and hold them to maturity, the total return on the price you paid is 5.50%pa". The details of coupon rate, etc, are largely irrelevant - all you really care about is "what is the effective yield on the price I paid?". Under the covers, a higher yield implies a lower price, and vice versa.
You might want to experiment with a bond price calculator - e.g. Direct Broking has one here: http://www.directbroking.co.nz/directtrade/dynamic/bondcalc.aspx?QQSC=CEN010&QQE=NZSE. (It agrees with the prices quoted for the Contact bonds)
For anyone who is interested, here's a link to Mercer's KiwiSaver quarterly results going back to December 2010:
http://www.mercer.co.nz/press-releases/1406950
Also, I'm looking for a few good volunteers to come to our Herne Bay office and test out our KiwiSaver section. Will buy coffee in return and Bernard will sign autographs. Just joking, about the last part.
Any takers, contact me directly please at amanda.morrall@interest.co.nz
Cheers,
Key reckons kiwis won't be bothered to pull out of kiwisaver. He thinks intertia is his best mate despite Standard and Poor being concerned changes will result in less savings. Shows what he thinks of us!
Edit to add forgotten link: http://www.stuff.co.nz/business/money/5013887/Kiwisaver-changes-to-boos…
The S & P chap needs to think a bit harder.
Even if the Budget does result in less private money going into KiwiSaver, that won't necessarily mean less private money being saved. Depending on what exactly the new terms are, the financially competent may divert money away from KiwiSaver and into more profitable savings vehicles, so no change in their saving rate; the financially incompetent probably won't bother, so no change in theirs either.
Even if it does result in less private money being saved, that is still likely to be outweighed by the benefit to the public finances as less public money is spent.
I would be interested to see GMK* and Hujlich**
*I am aware GMK don't tend to participate in such things. So I looked at their website and their own performance figures are only to 31 March 2011 (it's 18 May today!). Nonetheless, the Growth fund returned a less-than-those-listed-above 4% over 1 year.
**I know they are now with FF but those plans still exist and it would be interesting to see just how off-kilter they are.
Both of these providers have (or had) high-profile people at the helm, promising to be different. They've certainly been different, I'll give 'em that.
I believe the reason that GMK isn't listed is because they provide after-tax figures (only?). You'd need to compare to after-tax figures for the other providers for a fair comparison.
(GMK has reports for members available to the end of April, I guess they just haven't updated the external graphs yet)
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