We review regular savings returns to June 30, 2014 for aggressive and growth KiwiSaver funds, identifying who has the best long-term returns

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 classified 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 add 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.

The funds with higher exposures to NZ shares and NZ listed property stocks have done considerably better than those funds holding just Australian shares or Australasian smaller companies (small cap's). Of those managers who have been in the set we cover for the entire period, the standout performers continue to be Milford, ANZ and Mercer. Aon Milford is essentially a repackaged Milford Active Growth Fund.

The wide variance in returns since April 2008, and even in the past three years, should cause investors to review their KiwiSaver accounts especially if their funds are in the bottom third of the table.

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:

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.