KiwiSaver performance comparisons to March 31, 2013 shows smaller managers are doing better than 'big brother'

KiwiSaver performance comparisons to March 31, 2013 shows smaller managers are doing better than 'big brother'

With a majority of the major KiwiSaver providers having released their performance data to March 31, 2013 we have updated our ranking table.

Detailed performance data can be found here ».

Reviews of the individual KiwiSaver managers over the past month have revealed that in the more conservative strategies, schemes which are either passively managed (ASB) or have a majority of passive investments in their strategy (SuperLife) have proven to perform as well and in some cases better than those managers who are seeking to add value over and above the market indices.

In contrast, those investors who have a longer time horizon and can accept more volatility in their returns have been better served by schemes and managers who actively manage the portfolios by making tactical asset allocation decisions and being prepared to trade in and out of securities.

The out-performance of actively managed portfolios comes despite the relatively higher level of fees and other trading related costs such as brokerage are deducted. Whether these managers are providing returns which are commensurate with the risks they are taking is a question for another day.

We have also noticed those managers who would be categorised as being 'smaller to mid-sized' have generally performed better than the 'big brother' companies. The notable smaller to mid-sized players who have performed well are Milford, SuperLife and Aon.

(Although SuperLife's FUM for each scheme is not disclosed on their website we have categorised them as mid-sized for comparison purposes. SuperLife as a company manages close to $1 bln worth of superannuation money and hence why we classify them as mid-sized.)

OnePath claims top spot in two of the categories and is an obvious exception to the core smaller to mid sized firm observation.

Another interesting observation is the mix of investment styles for the top three schemes in each category.

ASB and SuperLife are either passive or predominately passive while the other managers actively manage the portfolios and charge a premium for this. We can not categorically say one style has been better than the other over the past three years to March 31, 2013.

Also those managers who have larger exposures to global bonds have generally performed better than those with a more domestic focus.

Furthermore, having a higher weighting to NZ shares and being under-weight Australian and global shares (unhedged) has helped some managers performance. Those managers that hedge or partially hedge their global share portfolio have recorded a pick up over unhedged equivalents.

In the single sector funds, OnePath and SuperLife dominate the leaderboard.

Of the single sector funds the best performance over the past three years has come from OnePath's SIL Australasian property fund, which returned 15.2% p.a., and this was closely followed by SuperLife's NZ Equity portfolio at 15.1% p.a.

Over the past 12-months the best single sector fund return was SuperLife's NZ Equity portfolio with a 35.8% gain which highlights how strong the NZ sharemarket has been and also reflects the quality of the advice the manager has received from their broker at Forsyth Barr.

The tables below highlight the top three funds in each of the major categories (Default, Conservative, Moderate, Balanced, Growth and Aggressive). The returns shown are before tax and have been adjusted to deduct any additional fees which the various KiwiSaver providers have not been taken into account already.

Please keep in mind that performance is only one of the criteria that should be considered when reviewing your KiwiSaver provider and other factors such as investment strategy, processes, people and fees need to be taken into account.

An authorised financial adviser (AFA) will be able to assist you in choosing the right fund for you based on your tolerance to risk, goals, objectives and life stage.

The Total Expense Ratio (TER) is provided by Morningstar in their latest quarterly performance survey. SuperLife is not covered by Morningstar and hence will show as not available (n/a).

Here are the top three performers for 3 year returns in each of our categories:

Default 3-year return p.a. FUM $ mln 2012 Total Expense Ratio (TER)
OnePath Conservative 6.6% 635.7 0.56%
Tower Cash Enhanced 5.5% 462.8 0.57%
Mercer Conservative (=) 5.4% 660.8 0.59%
ASB Conservative (=) 5.4% 1,603.6 0.40%

 

 

 

 

 

 

Conservative 3-year return p.a. FUM $ mln 2012 Total Expense Ratio (TER)
SuperLife The D Fund 7.9% n/a n/a
SuperLife Aim 30 7.4% n/a n/a
One Path Conservative 6.6% 635.7 0.56%

 

 

 

 

 

Moderate 3-year return p.a. FUM $ mln 2012 Total Expense Ratio (TER)
Aon Russell LifePoints Conservative 8.4% 47.7 1.07%
Aon Russell LifePoints 2015 8.2% 3.7 1.05%
SuperLife AIM First Home 7.7% n/a n/a

 

 

 

 

 

Balanced 3-year return p.a. FUM $ mln 2012 Total Expense Ratio (TER)
Aon Russell LifePoints Moderate 8.3% 8.0 1.11%
OnePath SIL Balanced 8.3% 205.3 1.11%
Aon Russell LifePoints 2025 8.1% 6.8 1.14%

 

 

 

 

 

Growth 3-year return p.a. FUM $ mln 2012 Total Expense Ratio (TER)
OnePath SIL Balanced Growth 9.0% 190.6 1.16%
AMP OnePath Balanced 8.8% 49.7 0.86%
ANZ Balanced Growth 8.6% 135.7 1.20%

 

 

 

 

 

Aggressive 3-year return p.a. FUM $ mln 2012 Total Expense Ratio (TER)
Milford Active Growth 11.8% 109.8 1.85%
Aon Milford 11.3% 49.8 1.33%
OnePath SIL Growth 9.6% 135.2 1.21%

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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