We have a series that looks at the long and medium term track record of each KiwiSaver fund on a standardised basis.
That reveals their return performance.
This look is who we are supporting; who has the most funds under management.
For each of our risk categories, this is where the funds were as at December 31, 2017 (the last time the RBNZ's T43 industry totals were compiled).
|General risk category||$ mln||$ mln||% pa||%|
|Balanced Growth funds||5,069.4||6,337.9||+25.0||13.4|
|Cash & Conservative funds||2,267.5||2,576.8||+13.6||5.4|
|Funds we don't cover*||1,926.9||1,618.1||3.4|
|Total KiwiSaver fund value (T43)||38,695.0||47,378.0||+22.4||100.0|
* These include closed funds, company-specific funds, and some very small funds.
Growth in the above table comes from two general sources: Contributions (net of withdrawals), plus net fund earnings. As we have seen in our earlier analysis, higher risk funds have been posting earnings far higher than lower risk funds. But we have also seen that fund size growth is highly dependent on contributions. All we can say from the above data is where the weight of current investment is.
And 57.8% of our exposure is in Growth, Balanced Growth, and Aggressive funds. In a year that share had risen from 53.5%.
Our exposure to Default funds has fallen from 20.3% of all funds to 18.5%.
Our least exposures are in Conservative (5.4%) and Moderate (13.9%) funds, and our support is falling in both.
This same data shows that banks have essentially captured most of the money under management in KiwiSaver. The results are startling.
|as at December 2017||Totals||Banks||share||Others|
|General risk category||$ mln||$ mln||%||$ mln|
|Balanced Growth funds||6,337.9||4,241.7||66.9||2,096.2|
|Cash & Conservative funds||2,576.8||2,005.6||77.8||571.2|
|Funds we don't cover*||1,618.1||83.9||1,534.2|
|Total KiwiSaver fund value (T43)||47,378.0||31,762.8||66.9%||15,615.2|
More than two thirds of all KiwiSaver funds are in a bank scheme.
ANZ alone has attracted $11.4 bln or 24% of all KiwiSaver funds. They probably think that is below their 'natural' market share because they have 29% of all New Zealand banking. But that is an out-sized share given all the other non-bank fund managers competing for KiwiSaver. Banks have a huge natural advantage because they can display the customer's KiwiSaver fund balance as just another account in their banking apps. For this advantage alone, banks will continue to grab market share.
You can also see from the table above that banks' KiwiSaver balances are skewed towards the low-risk end of risk spectrum, more into Cash & Conservative, Default, and Moderate funds. This is the end where customers have been getting the most modest returns, and in the Conservative area we have seen that returns are almost always lower than bank term deposits - even though many of these funds are just invested in bank term deposits. "Conservative banker talk" at the teller and customer-facing exchanges may not actually be helping customers with the best outcomes. This is only speculation of course because what is best for a customer can only be assessed individually. But in aggregate, it smells.
All this begs the question; does our support actually flow to funds who outperform? Does leaving your funds with a bank KiwiSaver fund turbocharge or hinder growing your retirement nestegg? We will look at that in a separate review.