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Our comprehensive review of moderate fund regular savings returns as at March 31, 2015, identifying who has the best long-term returns

Our comprehensive review of moderate fund regular savings returns as at March 31, 2015, identifying who has the best long-term returns

Consistent and improving returns are the key themes for the Moderate KiwiSaver category for the period ending March 31.

AON and ANZ continue their dominance of the leader board claiming 7 of the 8 top spots and almost all of the funds over the past three years have exceeded their longer term returns.

In fact Aon Russell LifePoints 2015 is the best-in-class Moderate fund performer in terms of the full period track record. To get this classification it must not only have the best track record for the full period, but its returns over the past three years must not be less that those it earned over the full period.

Please note that the Fisher Funds Conservative fund has not been fully vested for the entire period and therefore its position in the table may not exactly reflect its comparative performance.

Most funds in this Moderate category may be 'consistent' and 'improving', but across the group there is a worryingly high range in performance between these funds. You might expect less variation given where the risk profile is pitched. But that just goes to emphasise how important asset allocation and manager skill is over the longer run, even for Moderate funds. Savers have an important role to play, checking track records and choosing managers who can perform consistently well.

Over the full term of our regular savings analysis, Moderate funds compared to the more conservatively managed Default funds, have delivered an extra $2,228 worth of returns on average; that is they have delivered $9,717 in returns over and above the contributions compared with the $7,489 for Default funds.

However, because of their more conservative nature Moderate funds have delivered $7,489 less after-fees, after-tax returns than Growth funds and $9,838 less than Aggressive funds over the same period. These numbers are the based on the average cumulative gain after tax and fees for the top five contributors in each sector.

While no single fund in the Moderate category has achieved a double digit return either over the long term or the last three years, these funds do deliver consistent results much better than bank term deposits and with much less risk than aggressive and growth funds. The returns for the period ending March 31 are very similar to those for the period ending December 31, 2014.

There continues to be is some dispersion in terms of returns from the best to worst performing funds over the longer time horizon.

The improvement of some of the more recent three year returns is helping to lift the longer term performance and this especially evident in managers such as Fisher Funds which have added another 0.4% to their long term returns since our last review for the period ending December 31, 2014. This type of recent improvement will lift them up the table in future if they can keep it going.

The funds which continue to drag the chain in terms of their longer term and th year data are the Grosvenor and Craig's Investment Partners. Smart Kiwi the NZX's KiwiSaver proposition is the only other one to produce a sub 6% long term return.

Here is the comparison as at March 2015 for Moderate Funds:

Moderate Funds      
Cumulative
contributions
(EE, ER, Govt)
+ Cum net gains
after all tax, fees
Effective
cum return
= Ending value
in your account
Effective
last 3 yr
return % p.a.
since April 2008 X Y Z
to March 2015      
$
% p.a.
$
                 
Aon Russell LifePoints 2015 M C M 22,899 10,065 8.4% 32,964 8.4%
Aon Russell LifePoints Conserv M C C 22,899 9,806 8.2% 32,706 8.0%
ANZ OneAnswer Cons. Balanced M B M 22,899 9,744 8.1% 32,643 8.7%
ANZ Conservative Balanced M B M 22,899 9,649 8.0% 32,548 8.6%
ANZ Default Conserv. Balanced M B M 22,899 9,323 7.8% 32,223 8.4%
AMP Moderate M B M 22,899 8,108 6.8% 31,007 7.1%
ANZ OneAnswer Conservative M C C 22,899 7,972 6.7% 30,871 6.9%
ANZ Conservative M C C 22,899 7,915 6.7% 30,814 6.9%
Fisher Funds TWO Conserv M C M 22,899 7,829 6.6% 30,728 6.6%
Mercer SuperTrust Conservative M C M 22,899 7,829 6.6% 30,729 6.7%
Westpac Conservative M C M 22,899 7,598 6.4% 30,497 6.5%
AMP Conservative M C M 22,899 7,450 6.3% 30,349 6.1%
Fisher Funds Conservative M C C 19,123 5,309 6.0% 24,432 6.9%
SmartKiwi Conservative M C C 22,899 6,700 5.6% 29,599 6.3%
Grosvenor Conservative M C M 22,899 6,342 5.3% 29,241 4.7%
Craigs Conservative M C   22,899 6,339 5.3% 29,239 5.3%

Those funds that have recently launched and do not have a long enough track record to be included in the main table above are shown below:

Moderate Funds      
Cumulative $
contributions
(EE, ER, Govt)
+ Cum net gains
after all tax, fees
Effective*
cum return
= Ending value
in your account
Effective
last 3 yr return
since April 2008 X Y Z
to March 2015      
$
% p.a.
$
% p.a.
       
 
 
 
 
 
BNZ Moderate M B M 6,507 1,906 9.0% 8,414 n/a
Generate Conservative M C M 6,287 1,527 5.2% 7,814 n/a

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

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.

The right fund type for you will depend on your tolerance for risk and importantly on your life stage. You should move only with appropriate advice and for a substantial reason.

Our March review of Conservative and Default funds can be found here.

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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Days to the General Election: 36
See Party Policies here. Party Lists here.