By Amanda Morrall
Q) Which investments have taken Fisher Fund's growth fund from a top performer to rank 15 in such a short time,and should this type of investment be held or shunned in your opinion?
A) Just a reminder that we can't and don't give advice, just information of a general nature to help you make an informed decision. The type of fund you are invested in depends on a number of factor including your age, time frame for investing, your risk appetite, as well as intentions. Other considerations include fees, performance, transparency, communication and disclosures.
Also, it's worth restating that KiwiSaver, for the majority of the 1.8 million members, is a long-term investment. As such, it's important not to get too hung up on short-term results, although it is understandable why many do in the wake of dramatic fluctuations in performance.
Although Fisher Funds growth fund ranked 15th for its peer group in the past year, it has maintained its position among the top three since inception. (See interest.co.nz's performance ranking tables for the various categories of funds here). For more comparative data on KiwiSaver see also Morningstar's Dec.31, 2011 report here. For an explaination of what defines an aggressive fund, click here.
Whilst there was no single investment that caused the Fisher Fund's growth fund to fall in its ranking, Carmel Fisher said the key contributors to its under performance (relative to other "growth" and "aggressive funds" ) related to its international equities exposure, "specifically its Asian bias and also its overweight position in Australia, relative to New Zealand."
"We were amongst the best performers in 2010 but in 2011 the investments positions that we had that helped us to be a great performer in 2010 hurt us in 2011.''
Fisher Funds growth fund has a 40% allocation to international equities, which according to Fisher, is higher than average for this peer group. Where others tend to have a higher exposure to European and American equities, as per the MSCI index, Fisher Funds, as an active value manager, shows preference to particular stocks. (See Fisher Fund's Website for a breakdown on asset allocation here).
"Most of our peers have a heavy bias to New Zealand which was a great performer last year whereas we have maintained a heavier bias towards Australia which was a relative under performer."
For a year in review on KiwiSaver see Amanda Morrall double shot interview with Morningstar's Chris Douglas here.
Fisher said there were no plans to alter the fund's composition although it did shore up its New Zealand equities to match its Australian exposure. Fisher said her investment team was confident that an upturn in China would buoy the fund's performance in 2012.
"We still have a high conviction view on China and believe it's going to be a relative out performer in the year ahead, so we're happy with our positions there. We also expect that the renaissance of China or its "soft landing " will be positive for Australia so our Australian holdings should have a better year too.
"We do recognise that New Zealand could well have another strong year given our economy is well positioned relative to the rest of the world and also the SOE listings will also likely underpin the NZX performance. So we've moved slightly at the margins; we now have a 50/50 New Zealand Australian weighting which is still higher than our competitors but we're comfortable that we have an even weighting to two markets which we think should be relative out performers next year."
Do you have a KiwiSaver question? See our comprehensive list of Q&As here and feel free to add to it, if you can't find your question there.