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

Aggressive KiwiSaver schemes have been turning in cracking returns.

Using our unique 'regular savings' model to calculate fund returns, it is clear that the Aggressive fund category has been largely delivering excellent high long term after-tax, after-fee returns.

Our review looks at returns from April 2008 which is now a six and a half year stretch. We also look at the past three years, to try and see whether funds are falling off the pace and relying on earlier results.

But what we have found is that most of the managers of this group have maintained an excellent, consistent standard.

For funds that have been operating for most of the period, the top ten have averaged a +12.5% return per year, after tax and after fees. In anyone's book, that is very good.

If we look at just the past three years, two funds who are not in that top 10 stand out. In other words they are pushing their way up in terms of track record.

KiwiWealth Growth Fund, and ANZ OneAnswer International Shares Fund both delivered +17.3% per annum, after tax and after fees. Again in anyone's book, that is outstanding.

Both are international equities funds, benefiting from well-targeted share portfolios. The best of these funds are delivering returns not too dissimilar to the Cullen Fund.

But not all are starring. 

A handful can't even make 5% and the fund managers involved in these funds involve some 'big names', like Craigs Investment Parners and Grosvenor (a newly appointed default fund manager).

The Mercer SuperTrust Real Assets fund is one of two that has generated lower returns in the past three years than over the full period (based on our return calculation methodology). This fund invests in listed & unlisted property, infrastructure, alternative assets including natural resources. The returns from these types of assets may vary significantly from year to year.

And Craigs have the odd distinction of topping the list for long-term results (+13.7% in their Craigs NZ Equity fund), while also coming in second to bottom (+4.3% for their Craigs Australian Equity fund). They know New Zealand it seems, but are lost in Australia.

Past returns are no guarantee of future results. But a strong consistent track record is something investors should value.

Other analysts make a big deal about fee levels. We know the international research (mainly based on American markets), but our analysis focuses on after tax and after fees. We think if you are getting superior returns after fees, obsessions about fee levels are unnecessary. The key however is the long term view, and New Zealand KiwiSaver funds now have track records well over five years so it is relevant to start looking at these longer term achievements by managers. (The past three year view is only a qualifier to show whether they are 'still' earning their keep.)

Here are the full comparison as at September 30, 2014 for Aggressive Funds.

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

For explanations about how we calculate our 'regular savings returns' and how we classify funds, see here and here.

The following Aggressive funds have not been going long enough to be included in the above table.

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.

Our next review will look at Sepetmber returns in Growth funds as part of our updated monitoring of regular savings KiwiSaver returns.