Regular readers will know that we have been analysing KiwiSaver returns on the basis of regular savings patterns.
These give importantly different results because the size of your KiwiSaver balance grows over time, and therefore it stands to reason that the percentage amount of your returns means more when the balance is larger than when it was smaller.
The key is the dollar return being added to your contributions, rather than just the % return the fund claims.
We have previously reported on these returns for Default and Conservative funds here and Balanced and Moderate funds here.
We are now reporting on the Aggressive and Growth fund groups.
It is important to benchmark your fund's performance with others that have a similar objective.
But as we have pointed out before, there is no real agreement over how to classify funds.
The funds themselves describe a risk label. But so does Sorted, and other professional analysts such as Morningstar.
But our view is that none of these are very satisfactory. You can see our opinion here, and the following tables are based on that.
However, for easy reference we have supplied a code that shows how others have classifies them.
We believe long-term performance is a key way to assess how a fund performs. But there is always a concern that a fund may be resting on earlier laurels, and long term results don't show recent under-performance.
To keep an eye on that aspect, we are adding an additional metric - the return over the last three years. Any shorter can encourage you to consider switching in a way that is neither healthy for your returns, nor recognising of long-term gains. Don't use your KiwiSaver account as a share trader would. It is a long-term commitment. (If you are keen to chase high returns, choose an aggressive fund and leave the research and trading to their experts.)
Here is the comparison as at March 2014 for Aggressive Funds.
Aggressive funds are traditionally those portfolios which have the highest exposure to shares and the most volatile returns from one year to the next. The probability of experiencing a negative return in any one year is higher than for other risk profile. Although the losses in capital may be experienced more frequently, over the long run your capital value should grow more quickly than the more conservative funds.
| Aggressive Funds |
Cumulative $ contributions |
+ Cum net gains after tax and fees |
Effective cum return |
= Ending value in your account |
Effective last 3 yr return |
|||
| since April 2008 | X | Y | Z | |||||
| to March 2014 | (EE, ER, Govt) | $ | % p.a. | $ | % pa | |||
| Craigs NZ Equity | A | A | 9,509 | 3,233 | 15.83% | 12,743 | 14.78% | |
| Aon Milford | A | G | AE | 17,885 | 11,965 | 15.17% | 29,850 | 16.96% |
| Milford Active Growth | A | G | AE | 17,885 | 11,933 | 15.14% | 29,818 | 16.92% |
| Mercer SuperTrust TransTasman | A | A | AE | 17,885 | 10,085 | 13.34% | 27,970 | 15.06% |
| ANZ OneAnswer Aust Share | A | A | AE | 17,885 | 10,080 | 13.33% | 27,965 | 14.47% |
| FirstChoice Global Sustainability | A | A | IE | 17,885 | 7,999 | 11.12% | 25,884 | 11.57% |
| ANZ OneAnswer Intl Property | A | A | P | 17,885 | 7,773 | 10.87% | 25,658 | 8.82% |
| ANZ Growth | A | G | G | 17,885 | 7,362 | 10.40% | 25,247 | 10.69% |
| Fisher Funds Growth | A | A | A | 17,885 | 7,162 | 10.17% | 25,047 | 8.16% |
| ANZ OneAnswer Aust Property | A | A | P | 17,885 | 7,159 | 10.17% | 25,044 | 11.26% |
| ANZ OneAnswer Growth | A | G | G | 17,885 | 7,103 | 10.10% | 24,988 | 10.21% |
| Mercer SuperTrust Shares | A | A | AE | 17,885 | 6,631 | 9.55% | 24,516 | 9.44% |
| Aon Russell LifePoints 2045 | A | G | A | 17,885 | 6,622 | 9.53% | 24,507 | 9.60% |
| ANZ OnePath Growth | A | G | G | 17,885 | 6,086 | 8.89% | 23,971 | 9.16% |
| FirstChoice Growth | A | G | G | 17,885 | 5,854 | 8.60% | 23,739 | 9.50% |
| ASB Growth | A | G | G | 17,885 | 5,829 | 8.57% | 23,714 | 8.56% |
| Fisher Funds TWO Equity | A | A | IE | 17,885 | 5,825 | 8.57% | 23,710 | 8.20% |
| FirstChoice Active Growth | A | G | G | 17,885 | 5,781 | 8.51% | 23,666 | 8.84% |
| AMP Aggressive | A | A | A | 17,885 | 5,615 | 8.31% | 23,500 | 8.90% |
| Fidelity Options | A | A | Misc | 17,885 | 5,610 | 8.30% | 23,495 | 5.23% |
| Mercer SuperTrust Real Assets | A | A | P | 17,885 | 5,543 | 8.22% | 23,429 | 7.93% |
| Mercer High Growth | A | A | 17,885 | 5,489 | 8.15% | 23,374 | 7.96% | |
| FirstChoice Active High Growth | A | A | IE | 17,885 | 5,411 | 8.05% | 23,296 | 9.09% |
| Mercer SuperTrust High Growth | A | A | A | 17,885 | 5,372 | 8.00% | 23,257 | 7.68% |
| Westpac Growth | A | G | G | 17,885 | 5,360 | 7.98% | 23,245 | 7.86% |
| AMP Growth | A | G | G | 17,885 | 5,298 | 7.90% | 23,183 | 8.39% |
| SmartKiwi Growth | A | A | AE | 17,885 | 5,261 | 7.86% | 23,146 | 8.09% |
| Mercer SuperTrust Global Shares | A | A | IE | 17,885 | 5,096 | 7.65% | 22,981 | 6.77% |
| Brook Professional Growth | A | A | A | 17,885 | 5,088 | 7.64% | 22,973 | 8.76% |
| Craigs Equity | A | A | 12,952 | 2,473 | 7.24% | 15,425 | 6.06% | |
| Fidelity Aggressive | A | A | A | 17,885 | 4,709 | 7.14% | 22,594 | 5.88% |
| Fidelity AC Growth | A | G | A | 3,477 | 213 | 7.14% | 3,690 | |
| Staples Rodway Growth | A | G | G | 17,885 | 4,546 | 6.93% | 22,431 | 6.58% |
| Grosvenor International Share | A | A | IE | 11,584 | 2,318 | 6.88% | 13,902 | 7.56% |
| ANZ OneAnswer Intl Share | A | A | IE | 17,885 | 4,424 | 6.76% | 22,309 | 6.58% |
| Lifestages Growth | A | A | 17,885 | -3,540 | 6.15% | 14,345 | 5.46% | |
| Grosvenor High Growth | A | A | A | 17,885 | 3,564 | 5.59% | 21,449 | 5.17% |
| Grosvenor Socially Responsible | A | A | AE | 11,756 | 1,692 | 5.41% | 13,448 | 4.74% |
| ANZ OneAnswer Sustainable Growth | A | A | IE | 17,885 | 2,659 | 4.29% | 20,544 | 3.73% |
| Craigs Australian Equity | A | A | 9,509 | 679 | 3.82% | 10,188 | 2.58% | |
| Grosvenor Geared Growth | A | A | A | 14,336 | 2,484 | 2.82% | 16,820 | 5.17% |
| Grosvenor Trans-Tasman Small Companies | A | A | AE | 11,756 | 126 | -0.17% | 11,882 | -2.26% |
| Law Retirement Dynamic | A | G | 12,952 | -424 | -1.41% | 12,528 | -3.29% | |
| ------------------- | ||||||||
| Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition | ||||||||
| A = Aggressive, AE = Australian Equities, G = Growth, IE = International Equities, P = Property | ||||||||
Growth Funds
For Growth or Moderately Aggressive type funds there is slightly less volatility in returns compared to Aggressive funds as they will generally have some exposure to cash and fixed interest to offset some of the risks associated with sharemarket investments.
Although the losses in capital may be experienced more frequently, over the long run your capital value should grow more quickly than the more conservative funds.
Here are these comparative results:
| Growth Funds |
Cumulative $ contributions |
+ Cum net gains after tax and fees |
Effective cum return |
= Ending value in your account |
Effective last 3 yr return |
|||
| since April 2008 | X | Y | Z | |||||
| to March 2014 | (EE, ER, Govt) | $ | % p.a. | $ | % p.a. | |||
| BNZ Growth | G | G | $3,113 | $254 | 12.13% | $3,367 | 0.00% | |
| Mercer Super Trust ANZ OneAnswer Balanced | G | B | $17,885 | $6,648 | 9.57% | $24,533 | 9.07% | |
| AMP ANZ OnePath Balanced | G | B | G | $17,885 | $6,627 | 9.54% | $24,512 | 9.50% |
| ANZ Balanced Growth | G | G | G | $17,885 | $6,473 | 9.36% | $24,359 | 9.54% |
| Aon Russell LifePoints Growth | G | G | G | $17,885 | $6,468 | 9.35% | $24,354 | 9.35% |
| ANZ OneAnswer Balanced Growth | G | B | B | $17,885 | $6,233 | 9.07% | $24,118 | 9.09% |
| Aon ANZ OnePath Balanced | G | B | G | $17,885 | $6,103 | 8.91% | $23,988 | 8.45% |
| Aon Russell LifePoints 2035 | G | G | G | $17,885 | $6,035 | 8.83% | $23,920 | 8.67% |
| Fisher Funds TWO Growth | G | G | G | $17,885 | $6,000 | 8.78% | $23,885 | 8.85% |
| Aon Russell LifePoints Balanced | G | B | B | $17,885 | $5,868 | 8.62% | $23,754 | 8.28% |
| Staples Rodway Balanced | G | B | G | $17,885 | $5,836 | 8.58% | $23,722 | 8.52% |
| ANZ OnePath Balanced Growth | G | G | G | $17,885 | $5,404 | 8.04% | $23,289 | 8.15% |
| FirstChoice Balanced | G | B | B | $17,885 | $5,222 | 7.81% | $23,107 | 7.69% |
| Mercer AMP Resp.Inv.Leaders Bal. | G | B | $14,336 | $3,558 | 7.77% | $17,894 | 7.79% | |
| ASB Balanced | G | B | B | $17,885 | $5,180 | 7.75% | $23,066 | 7.60% |
| FirstChoice Active Balanced | G | B | B | $17,885 | $5,132 | 7.69% | $23,017 | 7.82% |
| AMP Balanced | G | B | B | $17,885 | $4,930 | 7.43% | $22,816 | 7.71% |
| Mercer SuperTrust Growth | G | G | A | $17,885 | $4,826 | 7.30% | $22,711 | 6.89% |
| Westpac Balanced | G | B | B | $17,885 | $4,637 | 7.05% | $22,522 | 6.68% |
| Mercer Balanced | G | G | G | $17,885 | $4,619 | 7.02% | $22,504 | 6.66% |
| Mercer SuperTrust Active Balanced | G | G | G | $17,885 | $4,483 | 6.84% | $22,369 | 6.46% |
| Fidelity Growth | G | G | G | $17,885 | $4,421 | 6.76% | $22,306 | 6.98% |
| Mercer AMP Capital Balanced | G | B | $17,885 | $4,293 | 6.59% | $22,178 | 6.42% | |
| SmartKiwi Balanced | G | B | B | $17,885 | $4,225 | 6.50% | $22,110 | 6.52% |
| Craigs Growth | G | G | $17,885 | $3,897 | 6.05% | $21,782 | 5.23% | |
| Craigs Balanced SRI | G | $17,885 | $3,891 | 6.04% | $21,776 | 5.95% | ||
| Craigs Balanced | G | B | $17,885 | $3,768 | 5.87% | $21,653 | 5.18% | |
| Brook Professional Balanced | G | B | B | $17,885 | $3,577 | 5.61% | $21,462 | 6.00% |
| Grosvenor Balanced Growth | G | G | G | $11,928 | $1,714 | 5.35% | $13,642 | 5.07% |
| Law Retirement Balanced | G | G | $12,952 | -$338 | -1.12% | $12,614 | -2.78% | |
| ------------------- | ||||||||
| Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition | ||||||||
| G = Growth, B = Balanced | ||||||||
The right fund type for you will depend on your tolerance for risk and importantly on you life stage. You should move only with appropriate advice and for a substantial reason.
12 Comments
A related question is: What proportion of your Kiwisaver account at age 65 is from your 'returns' & what proportion is from your/employer/govt contribution. If you're in your 50s or older you may as well stay in a Cash fund.
Why does a Cash fund return less than a bank term deposit? Why don't the trustees just open a TD & charge zero fees?!
1. In our tracking of a 28 year old who started in 2008, by the time she is 65 (ie in 37 years) the vast majority will be 'return', followed by 'contribution'. That's just the simple power of compounding. The actual variation will depend on the type of fund you choose, and how well it performs of the period.
2. They do exactly that. But they aren't a charity - they do charge fees, which is why returns from such funds can be less than the bank TD rate. If you want fee-free, do it yourself and don't use a professional. But you won't get any of the benefits that might entail.
By the way, Cash funds are quite different to Conservative funds. Conservative funds can invest in bonds, and in a declining yield environment their returns get 'enhanced' by rising bond face values. (And in a rising yield environment they might face losses.)
Jumped to this article on this link text "Does high risk really give better long-run returns? 24 May 14, 11:47"
the answer is no. Dammit NO, and stop perpetrating the myth!!
High risk gives.... higher chance of having lower returns than projected or even losses. THATS WHAT IT MEANS _SPREAD_THE_WORD_.
What normal confuses the issues is; higher returns need to be __promised__ to make it worthwhile taking a shot at a higher risk.
Putting the money on a single number on a roulette wheel is higher risk. Thus they promise the higher payout for the 1 in 38 chance you'll not lose the whole investment - very high chance of LOSS!!!
Putting the money on a column or 1-12, 13-23, 24 - 36. Is much more likely to give you a better long run return, especially with the gamblers ruin theory taken into account (the longer you play, the more likely you are to finally hit a lose all situation). however, the instant return is much lower BECAUSE it is far more likely to return the predicted amount.
In some unscrupulous places they deliberately promote the risk level to be higher than it is, in order to get ignorant greedy people to subscribe to the investment :(
Recall the dodgy Finance companies.
One offered 16% interest, but could not get investors as people assumed it was risky.
So they then offered 8% interest on exactly the same terms. And people gave them money as they assumed it was much safer.
Of course investing with these animals at 16% or 8% was suicidal both ways.
The return is the return. And the risk is the risk. You can't analyse one using the other.
I'm with Cowboy 11.38am above.
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