Grosvenor KiwiSaver results show those with a preference for socially responsible investing have benefited the most

Grosvenor KiwiSaver results show those with a preference for socially responsible investing have benefited the most

The latest data released for KiwiSaver performance as at March 31, 2013 is from Grosvenor Financial Services. Our previous story covering the returns up to December 31, 2012 can be found here.

Recent results show that those Grosvenor portfolios with high concentrations of shares continue to perform ahead of the more conservative, fixed income laden portfolios.

The star performers over the past 12-months have been the Socially Responsible Fund (+16.2%), High Growth Fund  (+11.3%) and Geared Growth Fund (11.3%).

The Trans-Tasman Smaller Companies Fund has not performed poorly per se (+9.6%), but when you consider the NZX Smaller Companies Index did over 30% last year, this fund is certainly off the pace.

Part of the reason for the return lagging can be attributed to the 70% equity allocation to Australia and the relative under performance of this market viz-a-viz New Zealand.

The performance of smaller cap companies can be quite cyclical and the returns more volatile compared to the larger and more widely held securities.

Looking longer term, as has been the case with many of the managers we have reviewed, the Conservative Fund has been the best performer with a return since inception of 5.52% per annum. Over the past five years this fund has returned a very respectable 6.2% per annum on an after fees and before tax basis.

When examining the underlying asset allocations of the funds there are two interesting things which stick out as being different to the rest of the market:

1) the portfolios do not include any global fixed income assets; and

2) the Socially Responsible Fund just over 60% of the assets are in Australasian Shares.

These two points are interesting as most managers in the KiwiSaver space have a preference for global bonds over domestic bonds and those who offer socially responsible funds are more globally focussed.

First, the returns on the global bonds have been superior and there is also a pickup in the hedging premium which can be gained which you do not get domestically.

Managers of New Zealand bonds face the challenge of not only accessing quality issues but also achieving diversification in a market dominated by bank and utilities, so the decision not to go global is an interesting one.

Secondly, the Socially Responsible Fund has around 60% of its assets in Australasian shares and the remaining allocation is split between global shares and fixed income assets (including cash).

It is a little unusual to see around 20% of what would traditionally be seen as an equity fund held in fixed income assets. The high allocation to Australasian Shares would have been a major contributing factor to the last 12-months performance.

Grosvenor have an active hedging policy across the various sectors and currently have 50% of their global equities hedged back to NZ$. The hedging range is set at 20% to 80% for this sector.

Australian shares on the other hand are currently unhedged and the manager has a target range of between 0% and 50%.

Below is a table of the longer term performance of the Grosvenor 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.)

Grosvenor KiwiSaver Scheme
(31 March 2013)

1 year
(p.a.)
5 year
(p.a.)
Since inception (1 Oct 2007) (p.a.)
Enhanced Income Fund 3.3% 4.4% 4.8%
Conservative Fund 7.9% 6.2% 5.5%
Balanced Fund 8.9% 5.0% 3.8%
Balanced Growth Fund 10.4% n/a n/a
Geared Growth Fund 11.3% n/a n/a
High Growth Fund 11.3% 2.2% -0.3%
Socially Responsible Investment Fund 16.2% n/a n/a
Trans-Tasman Small Companies Share Fund 9.6% n/a n/a
International Share Fund 7.9% n/a n/a

 

 

 

 

 

 

 

 

 

 

More detailed performance reporting can be found here ».

The table below outlines the assset allocation for each fund as at 31 March 2013.

 

Grosvenor KiwiSaver Scheme
(31 March 2013)

Cash
(%)
NZ Bonds (%) Global Bonds
(%)
Property    (%) NZ & AU  Shares
(%)
Global  Shares
(%)
Enhanced Income Fund 7.0 93.0        
Conservative Fund 1.4 77.9     7.7 13.0
Balanced Fund 8.7 49.2     14.5 27.6
Balanced Growth Fund 4.9 34.1     22.7 38.2
Geared Growth Fund 5.1 14.0     25.8 55.0
High Growth Fund 4.3 14.1     26.1 55.5
Socially Responsible Investment Fund 0.4 17.5     61.5 20.6
Trans-Tasman Small Companies Share Fund 5.8       94.2  
International Share Fund 5.5         94.5

 

 

 

 

 

 

 

 

 

 

Note: due to rounding the numbers may not add up to 100%.

Story updated: inserted asset allocation details

 

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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