Our comprehensive review of balanced KiwiSaver fund returns March 31, 2015, identifying who has the best long-term returns. Top funds bunched together like a Tour de France peleton

Our comprehensive review of balanced KiwiSaver fund returns March 31, 2015, identifying who has the best long-term returns. Top funds bunched together like a Tour de France peleton

Very little separates the top seven KiwiSaver funds in this category - in fact you can throw a blanket over them.

In terms of their long term performance track record, the difference is only $1,300 or 0.9% between numbers one and seven.

No single fund which has been vested for the full period achieved a double digit per-year return over the long term.

Milford and BNZ did achieve a 10%+ p.a. return but they have not been going for the full period since April 2008.

The story is different over the last three years where three of the fully vested funds and Milford all achieved returns over 10% - (BNZ has not been going for three years yet so was excluded).

Over the shorter last-three-year period, the top seven funds have a larger dispersion in returns. This does suggest there is some difference of opinion between the various institutions regarding portfolio positioning (asset allocations), security or sub-manager selection and respective hedging positions.

All of the funds which have been going for our full 'regular savings' period have achieved returns in the short term which exceed their longer-term performance and this by-in-large reflects their greater share market exposure compared to the Moderate and Conservative funds.

ANZ OneAnswer Balanced Fund is our ‘best-in-class’ Balanced fund performer.

To be awarded this classification it must not only have the best track record for the full period, but its return over the past three years must not be less that those it earned over the full period.

Over the full period, Balanced funds have delivered an extra $3,730 in return on average compared to the more conservatively managed Default funds; that is they have delivered $11,219 in returns over and above the contributions compared with the $7,489 for Default funds.

However, compared to the heavier equity focused sectors, Balanced funds have delivered $1,461 less after-fees, after-tax returns than Growth funds and $6,108 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.

The difference in average return between the top five Balanced and Growth funds is quite small relatively speaking. We suspect the small variance is due to a combination of factors including: Growth managers not delivering returns which are commensurate with the additional levels of risk; the Balanced funds punching well above their weight; the impact of higher fees on returns; and a hang over from the GFC in the Growth fund category.

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

Balanced 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
to March 2015
 
 
 
$
% p.a.
$
 
 
 
 
         
ANZ OneAnswer Balanced B B B 22,899 11,408 9.4% 34,307 10.3%
Kiwi Wealth Balanced Fund B B B 22,899 11,345 9.3% 34,244 11.7%
ANZ Balanced B B B 22,899 11,307 9.3% 34,206 10.3%
Aon Russell LifePoints 2025 B B B 22,899 11,151 9.2% 34,050 9.8%
Aon Russell LifePoints Moderate B B M 22,899 10,882 9.0% 33,782 9.3%
AMP Nikko AM Balanced B G G 22,899 10,374 8.6% 33,274 9.9%
Mercer SuperTrust Moderate B B B 22,899 10,054 8.4% 32,953 9.2%
ANZ Default Balanced B B B 22,899 10,092 8.4% 32,992 9.3%
Aon Nikko AM Balanced B G G 22,899 9,992 8.3% 32,891 9.7%
AMP Fisher Funds Two Balanced B B B 22,899 9,538 8.0% 32,437 8.8%
Fisher Funds Two Balanced B B B 22,899 9,307 7.8% 32,207 8.8%
ASB Moderate B B M 22,899 9,216 7.7% 32,116 8.1%
AMP Moderate Balanced B B B 22,899 8,729 7.3% 31,629 7.9%
Grosvenor Balanced B B B 22,899 8,073 6.8% 30,972 7.5%

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

Balanced 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
to March 2015
 
 
 
 
% p.a.
 
 
 
 
 
         
Milford Balanced
B
B
B
16,113
8,504 13.4% 24,617 13.3%
BNZ Balanced
B
B
B
6,507
2,046 10.3% 8,553
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 you life stage. You should move only with appropriate advice and for a substantial reason.

The March review of Moderate funds can be found here and Conservative & Default Funds 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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