Our comprehensive review of KiwiSaver growth funds to March 31, 2015 identifies the top performers and demonstrates how irrelevant funds names are

Our comprehensive review of KiwiSaver growth funds to March 31, 2015 identifies the top performers and demonstrates how irrelevant funds names are

If ever there was a sector within the KiwiSaver universe where fund names were for most part irrelevant, the Growth fund category would be it.

Within our Growth Fund category we have a mix of funds labeled 'Balanced', 'Balanced Growth' and 'Growth' funds.

We have identified in previous stories there is no industry standard for categorising funds and various research houses have different assessment criteria.

There is also a degree of subjectiveness when categorising funds and their suitability for specific types of investors. For an explanation of how we classify funds see here.

There is a trend emerging across all of the sectors where the returns of the top performing funds in each category are over-lapping those in the next sector up on the risk spectrum.

For example, the best performing Balanced funds could easily slot into the middle of the Growth fund category, and likewise with the top Growth funds, they would comfortably sit around the middle of the 'Aggressive' category based on their current long-term returns.

While some degree of over-lapping of performance across the various categories is to be expected, from an investor's perspective it means you can potentially select funds with a lower level of risk which will deliver an optimal level of return. 

Our analysis shows a large number of funds have returned in excess of 9% p.a. (11 out of 20) compared to our last review where only nine exceeded this benchmark on a compound basis since April 2008.

Again only five funds returned over 10% p.a. and these are the same funds identified in our December analysis.

Overall we have seen an improvement in the long term performance of all the funds in this category.

AMP ANZ Default Balanced is the best-in-class Growth 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.

On our regular savings basis, investing in the top funds you would have earned $12,911 more than you have contributed.

While that may not seem a lot based on your ending fund value of $35,811 it is very significant when you realise that $22,899 is what you, your employer and the Government contributed. The average Growth fund earnings after-tax and after-fees is $5,422 more than the $7,489 you would have earned in a Default fund.

Over the shorter three-year period a majority of the funds have exceeded double figures, which in turn is bolstering the longer term numbers. The same managers that are leading the pack in the shorter term are also leaders over the long term.

AMP, AON ANZ and Staples Rodway continue their dominance of this category and are extending their lead on the rest of the pack with some above average three-year return numbers.

Here are the full comparison as at March 31, 2015 for Growth Funds.

Growth 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.
$
                 
AMP ANZ Default Balanced
G
B
G
22,899
13,291
10.7%
36,191
11.8%
ANZ OneAnswer Balanced Growth
G
G
G
22,899
13,095
10.5%
35,994
11.9%
Aon Russell LifePoints Growth
G
G
G
22,899
12,858
10.4%
35,757
11.8%
Staples Rodway Balanced G B G 22,899 12,815 10.3% 35,714 11.2%
ANZ Balanced Growth G G G 22,899 12,499 10.1% 35,398 11.3%
Aon Russell LifePoints 2035
G
G
G
22,899
12,194
9.9%
35,093
11.0%
ANZ Default Balanced Growth G G G 22,899 11,966 9.7% 34,865 11.3%
Aon Russell LifePoints Balanced
G
B
B
22,899
11,960
9.7%
34,860
10.7%
Mercer SuperTrust Growth G G A 22,899 11,784 9.6% 34,684 11.3%
Aon ANZ Default Balanced
G
B
B
22,899
11,691
9.6%
34,590
10.2%
ASB Balanced
G
B
B
22,899
10,961
9.0%
33,861
10.1%
Fisher Funds Two Growth
G
G
G
22,899
10,597
8.8%
33,496
10.3%
Westpac Balanced G B B 22,899 10,146 8.4% 33,046 9.5%
AMP Balanced
G
B
B
22,899
9,516
7.9%
32,415
8.7%
Craigs Growth
G
G
 
22,899
8,420
7.1%
31,319
8.1%
SmartKiwi Balanced G B B 22,899 8,279 7.0% 31,179 8.9%
Craigs Balanced G B   22,899 8,051 6.8% 30,950 7.5%
Craigs Balanced SRI
G
B
 
22,899
8,050
6.8%
30,950
8.1%
-------------------        
Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition
G = Growth, B = Balanced, A = Aggressive

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

Growth 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.
$
                 
Grosvenor Balanced Growth G G G 16,199 5,525 8.3% 21,724 8.5%
BNZ Growth G G G 6,507 2,202 11.7% 8,709 n/a
Generate Growth G G G 6,287 1,911 9.7% 8,199 n/a
-------------------        
Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition  
G = 'Growth', B = 'Balanced', A = 'Aggressive'        

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 reviews of the Conservative & Default funds, Moderate funds and Balanced funds can be found here, here and 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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3 Comments

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Highlight new comments in the last hr(s).

How hard is it to make good returns when there are asset bubbles everywhere. Be very interesting to see who is still bragging when the bubble bursts.

Mike B - tend to agree, but some of the managers are obviously struggling as the data in our tables show

Thanks.