AMP's KiwiSaver results show investors who remain in the default fund are sacrificing a better lifestyle in retirement

AMP's KiwiSaver results show investors who remain in the default fund are sacrificing a better lifestyle in retirement

The latest data released for AMP's KiwiSaver is as at 30 June 2013. (Our previous story covering returns as at March 31, 2012 can be found here).

Over the short term (i.e. one year return) AMP's Aggressive Fund has been the star performer however over every other time period the AMP OnePath Balanced Plus Fund has been consistently better.

The AMP Conservative Fund has been very consistent with annualised returns over the past five years ranging between 7.1% and 5.8%.

The Conservative Fund is the best in AMP's stable since inception with a return of 5.5% p.a. since October 2007. Consistency in returns over time is reassuring to those investors who prefer little to no volatility in their returns from year to year.

AMP in their latest quarterly strategy update noted the June quarter was a tough one for investors but it wasn’t all bad news. While higher bond yields may have resulted in negative returns for fixed interest and listed property, returns for global and domestic share were positive thanks to dividend payments helping New Zealand returns stay out of the red.

Unhedged international assets benefited from a weaker currency, while cash proved its worth as a good diversifier.

AMP expect bond yields to consolidate around current levels for the rest of this year before grinding higher as growth and inflation trend up. They remain positive on the outlook for equities and think they can handle a higher bond yield environment because it is predicated on higher growth.

Looking ahead, the managers' expectations for global growth have been knocked back a bit as a result of weaker growth in China and a slightly lower forecast for the US due to lower March quarter growth.

AMP also believes the New Zealand dollar has taken a big step towards normalisation recently and while the end of US asset purchases could see the dollar move lower, there are reasons to believe it will be supported.

Keep in mind too that the New Zealand economy is one of the fastest growing developed markets. Although interest rates are tipped to head higher in the next 12 months our export commodity prices remain robust.

Examining the returns for one and five years to 30 June, 2013 the best performing fund across most of the time periods is the AMP OnePath Balanced Plus Fund.

The last year saw the AMP Aggressive Fund pip it by less than 1% but considering the AMP OnePath Balanced Plus Fund has a higher proportion of cash and fixed interest than AMP's Aggressive Fund, we would have been expecting the margin of out-performance to have been considerably larger.

It is likely that if we calculated the returns on a risk-adjusted basis for these two funds the AMP OnePath Balanced Plus Fund would prevail as the better proposition for investors at this point in time.

Across all the balanced funds offered under AMP's KiwiSaver scheme AMP OnePath Balanced Plus Fund is light years ahead of the competition, including AMP's own in-house product.

The divergence in asset allocation which is clearly illustrated in the second table below will be the main contributor to the variance in performance across the various funds.

The asset allocation table also shows how different various 'balanced funds' can be and how they are not created equal. Before comparing funds within a sector it is important to first lift the hood and understand what is driving the performance (or lack thereof).

We highlighted a performance anomaly in our last quarterly review (as at 31 March, 2013) where the AMP Cash Fund had out-performed the Default Fund. The returns since inception show this anomaly still exists although not over every time period.

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

 

AMP KiwiSaver Scheme
(30 June 2013)
1 year
(p.a.)
5 year
(p.a.)
Since inception (p.a.)
Cash Fund 3.4% 4.2% 4.8%
Default Fund 6.6% 4.4% 4.3%
Conservative Fund 7.1% 6.0% 5.5%
Moderate Fund 9.5% 5.0% 4.2%
Moderate Balanced Fund 12.0% 4.5% 3.4%
Balanced Fund 13.7% 4.5% 3.1%
AMP OnePath Balanced Plus Fund 18.8% 6.7% 5.1%
AMP Tower Balanced Fund 12.3% 4.8% 3.7%
AMP Tyndall Balanced Fund 13.3% 4.6% 2.8%
Growth Fund 17.0% 2.9% 1.3%
Aggressive Fund 19.5% 2.2% 0.4%

 

 

 

 

 

 

 

 

 

 

 

More detailed performance reporting can be found here ».

The table below outlines the latest asset allocation for each fund sourced from either the fund manager or Morningstar. The date in brackets represents the end of the month the data was from.

AMP KiwiSaver Scheme
(30 June 2013)

Cash
(%)
NZ Bonds (%) Global Bonds
(%)
Property (%) NZ & AU  Shares
(%)
Global  Shares
(%)
Alternative Assets
(%)
Cash (31 Mar 2013) 100.0            
Default (31 Mar 2013) 67.3 6.0 3.9 3.1 5.9 13.7  
Conservative (31 Mar 2013) 24.8 28.8 17.4 2.9 7.5 18.6  
Moderate (31 Mar 2013) 20.8 23.5 13.9 4.6 10.3 26.9  
Moderate Balanced  (31 Mar 2013) 16.8 18.2 10.4 6.3 13.1 35.2  
Balanced (28 Feb 2013) 3.9 17.8 11.4 9.2 17.4 40.4  
OnePath Balanced Plus (31 May 2013) 8.2 9.6 12.7 11.1 18.8 38.2 1.4
Tower Balanced (30 June 2013) 2.8 19.6 21.1 12.9 19.7 23.9  
Tyndall Balanced (30 June 2013)   16.3 11.6   22.8 32.1 17.2
Growth (30 Apr 2013) 8.8 7.6 3.5 9.7 18.7 51.7  
Aggressive (31 Mar 2013) 4.9 2.3   11.4 21.6 60.0  

 

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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