By David Chaston
As we have noted before, you are in an aggressive KiwiSaver fund to grow your retirement savings the fastest way possible over the long run, and you have a tolerance for risk so you are prepared to ride though the ensuing ups and downs.
Basically you accept there will be ups and downs (especially that ups will follow downs) and the net result will be as it has been over recorded investment history - a superior result by the time retirement comes around and you need these funds.
If you don't accept that premise - that 'risk' means opportunity - maybe this aggressive category is not for you.
More than $11 billion has now been invested in aggressive KiwiSaver schemes - the most of any risk category. That compares with default schemes at $8.8 billion, and growth schemes at $10.2 billion. There are 45 fund options to make this the most crowded of all categories.
The weighted average return since-inception is +8.9% pa after-all-taxes, after-all-fees. Over the past three years, the average return on this same basis is +7.4% pa. So that gives a good benchmark when looking at the track record of all the results in this category.
There is a wide range of track records, as should be expected given this is a range of funds who are aiming for results using aggressive strategies.
The largest aggressive fund is the ANZ Growth fund, one that now has more than $2.5 billion invested. It has achieved results very similar to the category weighted average - it alone is nearly a quarter of all funds invested in this category. If you add the other seven ANZ aggressive funds, ANZ manages (controls) 28% of all funds invested in this risk category. The next largest are ASB at $1.6 billion, Fisher Funds at $1.5 billion, Kiwi Wealth at $1.3 billion and Westpac at $1.0 billion. All of them are growing, so they will now be larger than these last reported levels.
Of these top five, only Kiwi Wealth is reporting returns that are significantly lower than the category weighted averages. The Kiwi Wealth Growth Fund achieved +5.9% in the past three years on our after-all-taxes, after-all-fees basis. It's a slip that may have something to do with its outsized exposure to international equities. See the fund allocation details below.
However, this is a category where you need to select with care, eyes wide open.
Firstly, as the business cycle progresses, some specialist strategies may be more volatile than others.
The top performers in our list below illustrate the point. The top three are all relatively small funds, together holding less than $100 million in investment. But they are at the top of our performance table by being singularly specialised, holding all their investment in just one type of asset group and benefiting from that laser-like focus. However, from here on out, you may wish to ponder whether that type of bull run will continue.
Even though this is the 'aggressive' category, many managers can still build in a range of asset-class diversification. This diversification comes with some amelioration of top returns compared with the best performing single-focus funds. But perhaps not others who have taken a different approach.
Therein lies your choice as an investor. The tables below can give you an idea of asset allocations of each fund and the historic track record. But to be invested here, you also need to make your own decisions about how you want to take these higher risks, and the sort of higher returns you want to chase.
And that means you are honest with yourself as to your tolerance for risk.
Again, remember it's a marathon - you are in KiwiSaver for the best long term outcome. You need confidence in your strategy.
Anyway, here is the track record of the KiwiSaver funds, which are in the highest risk category there is.
(EE, ER, Govt)
+ Cum net gains
after all tax, fees
= Ending value
in your account
last 3 yr
return % p.a.
|since April 2008||X||Y||Z|
|to June 2018||
|ANZ OneAnswer Australasian Share||A||G||AE||31,926||28,233||11.8||60,158||11.8|
|ANZ OneAnswer Australasian Property||A||A||P||31,926||23,953||10.6||55,878||8.0|
|ANZ OneAnswer International Share||A||G||IE||31,926||23,398||10.4||55,324||9.0|
|ANZ OneAnswer Growth||A||G||G||31,926||19,359||9.1||51,285||7.0|
|Fisher Funds Growth||A||A||A||31,926||19,143||9.0||51,069||8.4|
|ANZ Default Growth||A||G||G||31,926||17,957||8.6||49,883||7.0|
|Fisher Funds Two Equity||A||A||IE||31,926||17,517||8.4||49,443||8.8|
|Mercer High Growth||A||A||A||31,926||17,301||8.3||49,227||8.1|
|Kiwi Wealth Growth Fund||A||A||A||31,926||17,228||8.3||49,154||5.9|
|ANZ OneAnswer International Property||A||A||P||31,926||15,118||7.5||47,044||3.1|
|ANZ OneAnswer Sustainable Growth||A||A||IE||31,057||15,369||8.0||46,426||6.4|
|Booster High Growth||A||A||A||31,926||14,451||7.2||46,376||7.2|
|Booster Geared Growth||A||A||A||28,613||15,622||9.5||44,235||9.3|
|Milford Active Growth||A||G||AE||26,611||17,261||11.7||43,872||9.8|
|QuayStreet NZ Equity||A||A||23,829||15,033||13.1||38,863||14.0|
|Booster International Share||A||A||IE||26,380||12,178||9.2||38,558||7.3|
|Booster Socially Responsible Growth||A||A||AE||26,380||9,693||7.6||36,073||7.4|
|Booster Trans-Tasman Small Companies||A||A||AE||26,380||8,328||6.7||34,708||9.1|
|QuayStreet Australian Equity||A||A||23,829||5,718||6.0||29,548||6.2|
|Generate Focused Growth||A||A||A||18,975||6,258||10.2||25,233||8.9|
|Amanah KiwiSaver Plan||A||A||15,884||1,823||4.8||17,707||3.3|
|Booster KiwiSaver AC Growth Fund||A||G||A||14,624||2,575||7.7||17,199||7.3|
|Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition|
|A = Aggressive, AE = Australasian Equities, G = Growth, IE = International Equities, P = Property, MI = Miscellaneous. Booster was formerly Grosvenor and QuayStreet was formerly Craigs Investment Partners|
Some readers will be interested to note that there are aggressive funds returning quite low returns. Their investment strategy clearly hasn't worked - so far at least. There are even some returning less than default or conservative funds.
And here is where your contributions will be allocated, by fund. It is listed in the same order as the first table above.
|Aggressive Funds||------ how allocated, approx. ------|
|at June 2018||Cash||Fixed
|NZ / AU
|(in the same order as the table above)|
|ANZ OneAnswer Australasian Share||100|
|ANZ OneAnswer Australasian Property||100|
|ANZ OneAnswer International Share||100|
|ANZ OneAnswer Growth||6.8||13.2||20.2||47.8||12.1|
|Fisher Funds Growth||11.3||13.2||27.9||43.7||0.8||3.1|
|ANZ Default Growth||7.4||13.0||20.0||47.8||11.9|
|Fisher Funds Two Equity||5.0||36.7||58.3|
|Mercer High Growth||5.2||4.4||15.9||56.5||2.3||3.7||12.2|
|Kiwi Wealth Growth Fund||9.6||0.8||1.5||80.1||2.2||5.9|
|ANZ OneAnswer International Property||100|
|ANZ OneAnswer Sustainable Growth||2.5||97.5|
|Booster High Growth||4.4||5.5||19.7||64.2||4.8||1.3|
|Booster Geared Growth||2.6||24.2||66.7||5.3|
|Milford Active Growth||9.6||14.8||48.3||21.3||5.5|
|QuayStreet NZ Equity||15.2||82.3||2.5|
|Booster International Share||2.7||97.3|
|Booster Socially Responsible Growth||6.4||5.4||19.3||63.4||5.4|
|Booster Trans-Tasman Small Companies||5.3||94.8|
|QuayStreet Australian Equity||9.8||87.6||2.6|
|Generate Focused Growth||11.8||10.9||65.7||11.7|
|Amanah KiwiSaver Plan||4.2||95.8|
|Booster KiwiSaver AC Growth Fund||1.1||9.0||17||67.9||5|
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.
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