KiwiSaver returns show equity dominant strategies continuing to outperform; Actively managed bank schemes superior across many categories

KiwiSaver returns show equity dominant strategies continuing to outperform; Actively managed bank schemes superior across many categories

By Craig Simpson

ANZ continue their domination of the KiwiSaver performance table as at December 31, 2013. Westpac, Milford and Mercer are also notable performers within the various KiwiSaver categories.

Just like the last quarter's results, ANZ and Milford continue to dominate the multi-sector areas while Mercer shows their skills in single sector funds.

Craig's Investment Partners are comfortably out-performing fellow broker Forsyth Barr in the NZ & Australian sector over the past three-years. The Grosvenor Trans-Tasman Smaller Companies Fund has been beaten up over the past three years and is handsomely underperforming the larger company portfolios managed by Mercer and ANZ. I should hasten to add that smaller company fund returns can be extremely volatile and this is a snap shot of the performance of this specific fund at this juncture.  

Equity markets remain buoyant and those KiwiSaver funds with large exposures to global sharemarkets have been rewarding investors and in a number of cases the return for the past 12-months has been in excess of 20%. Those investors who have been in the more aggressive funds since KiwiSaver started in 2007 should now be seeing some solid growth in their balances.

Although most of the commentary covering the December 31 returns has tended to concentrate on the performance of equity markets and the superior results being delivered by the growth or aggressive funds, we can not forget that the conservative strategies are still providing those risk adverse investors with solid returns.

The top funds in the Conservative space are returning 7.8% p.a. on average over the last three years (before tax). This is well above the average bank term deposit and would more than adequately compensate investors for the additional inherent risk involved with including a small share exposure in their portfolio. 

The following tables outline the top three performers on a adjusted basis over the past three, two and one years for each of the main categories. To save readers from the same frustrations we encountered trying to find the quarterly disclosure documents for each provider, a link to these important documents is included in the table.

Can't see your fund? You can review the full ranking tables by clicking here.

Default 3yr 2yr 1yr Periodic Disclosure Statement
ANZ OnePath Conservative 6.1   4.6
Mercer Conservative 6.0 7.3 7.0
ASB Conservative 5.1   4.5
Tower Cash Enhanced 5.1   4.0
Sector average (of funds reported) 5.4 6.6 5.2  

Based on our data and performance ranking and return calculation methodology, the worst performing Default fund in this sector is the AMP Default Fund.

Tower's KiwiSaver scheme has recently been renamed Fisher Funds Two KiwiSaver Scheme (http://www.ff2kiwisaver.co.nz).

Conservative 3yr 2yr 1yr Periodic Disclosure Statement
Westpac Capital Protection Plan 1 9.2 16.7 19.7
Westpac Capital Protection Plan 2 9.2 16.7 19.7
Westpac Capital Protection Plan 3 9.2 16.7 19.7
Sector average (of funds reported) 5.9 10.1 8.3  

Based on our performance rankings and return calculation methodology, the worst performing Conservative fund in this sector is Tower Preservation Fund.

Tower's KiwiSaver scheme has recently been renamed Fisher Funds Two KiwiSaver Scheme (http://www.ff2kiwisaver.co.nz).

Moderate 3yr 2yr 1yr Periodic Disclosure Statement
ANZ Conservative Balanced 7.8   8.5
ANZ OneAnswer Conservative Balanced 7.8   8.4
Aon Russell Lifepoints 2015 7.6 10.2 7.3
Sector average (of funds reported) 6.2 7.1 5.8  

Based on our performance rankings and return calculation methodology, the worst performing Moderate fund in this sector is the Craig's IP Conservative Fund.

Balanced 3yr 2yr 1yr Periodic Disclosure Statement
Milford Balanced 11.1 16.5 15.5
ANZ Balanced 9.3   12.1
ANZ OneAnswer Balanced 9.2   12.0
Sector average (of funds reported) 7.4 11.5 10.2  

Based on our performance rankings and return calculation methodology, the worst performing Balanced fund in this sector is the Forsyth Barr Balanced Fund.

Growth 3yr 2yr 1yr Periodic Disclosure Statement
ANZ OneAnswer Balanced Growth Fund 10.8   15.9
ANZ Balanced Growth 10.8   15.9
AMP ANZ OnePath Balanced 10.1   14.5
Sector average (of funds reported) 7.9 12.6 12.1  

Based on our performance rankings and return calculation methodology, the worst performing Growth fund in this sector is the Forsyth Barr Growth Fund.

Aggressive 3yr 2yr 1yr Periodic Disclosure Statement
Milford Active Growth 15.1 22.1 18.9
Aon Milford 14.8 21.8 18.5
ANZ Growth 12.2   19.6
Sector average (of funds reported) 9.1 15.8 16.6  

Based on our performance rankings and return calculation methodology, the worst performing Aggressive fund in this sector is the Lifestages Growth Fund.

As more return data is collated we will update the tables and commentary as appropriate.

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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7 Comments

Good to see such an informative article. 

http://www.stuff.co.nz/business/money/9710275/KiwiSaver-not-helping-NZ-report
 
$4.9B of the $19B within Kiwisaver came from government subsidies. Hmmmm.

They then invest that money in the economy, buying dairy farms etc. Its like eating your own foot.

Hamish,
The subsidies do look disproportionate at this point in time but I can see these ending in the not so distant future when the NZ Super fund receives contributions again.
Craig

Whether that's a good use of Government money depends on two things that it is impossible to know for absolute certain, though I've no doubt many of us have opinions:
 

  • whether KiwiSaver has encouraged people to save who would not have saved otherwise.  If all the subsidy has done is encourage people to save in KiwiSaver when otherwise they would have saved in some other way, then it hasn't achieved much. 
  • what the Government would have done with the money otherwise; stashing it in savings is still better than (eg) pouring it into loss making enterprises, at least it hasn't actually been lost 

 
In any case the proportion of the total amount accounted for by Government subsidies should be on a reducing track as fewer people are left still to join and collect their $1000, and as a result of reduction in the matching rate from $1/$1 to $0.50/$1.

Thanks Craig for the very usefull article. Theres are so many investment providers. I guess the Kiwisaver scheme saved them from GFC.
Theres always that struggle of choice between safe, risky investment and fees.
An opinion on best value recommendation for each class would be really intersting, based on the above. 

2TB...there is a continual battle between risk and return and costs associated with achieving the return.
Rather than look at cost why not think about risk adjusted returns. This would show you who is producing the best returns for each unit of risk. You can then compare various funds across the entire spectrum (low risk vs high risk).
I feel comparing returns against fees is not an appropriate mechanism for assessing what is the best value.
You will not see risk adjusted return analysis readily available and I am disappointed that it is not included as some of the core requirements as part of the disclosure regime.
Craig.

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