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KiwiSaver funds reflect 'challenging underlying market conditions' and led down by real estate investment funds, says Morningstar

Personal Finance / news
KiwiSaver funds reflect 'challenging underlying market conditions' and led down by real estate investment funds, says Morningstar

KiwiSaver funds under management increased $741 million to $83.5 billion in the September quarter, according to research firm Morningstar.

This is in contrast to the June quarter where funds decreased by $4.95 billion, and the March quarter when there was a $1.5 billion drop.

“KiwiSaver funds generally reflected the challenging underlying market conditions experienced over the September quarter. The average multi-sector category returns ranged from -1.3% for the Conservative category to -1.8% for the Growth category," Morningstar Director of Manager Selection Tim Murphy says.

The average conservative fund return for the September quarter was -1.3%. Average moderate fund and balanced fund return was -1.5%. Average growth fund return was -1.8% and the average aggressive fund return was -1.6%.

The highest 3-month performance this quarter was in australasian equity by SuperLife Australia Mid Cap at 6.2%, while the lowest 3-Month performance this quarter was in property by OneAnswer International Property at -11.1%.

ANZ leads the market share with more than NZ$17.07 billion. ASB is in second position, with a market share of 16.0%. Westpac holds third spot ahead of Fisher Funds, while Kiwi Wealth sits in fifth spot. The six largest KiwiSaver providers account for approximately 69% of assets on the database. 

Top performers over the quarter against their peer group includes Milford Conservative 0.5% (Multisector Conservative), InvestNow Mint Diversif Inc 1.4% (Multisector Moderate), InvestNow Milford Balanced 1.3% (Multisector Balanced), QuayStreet Growth 1.6% (Multisector Growth) and Milford Aggressive 0.4% (Multisector Aggressive).

Tim Murphy says, “It is most appropriate to evaluate performance of a KiwiSaver scheme by studying its long-term returns. Over 10 years, the Aggressive category average has given investors an annualised return of 8.5%, followed by Growth (8.0%), Balanced (6.4%), Moderate (4.3%), and Conservative (3.9%)”.

Default options appointed in 2021 still have less than one year of performance, which is too short a period to make meaningful assessments.

NZ Real Estate Investment Trusts (REITs) have underperformed compared with the wider local equity market. 

To end of September the S&P/NZX All Real Estate Index made a capital loss of 21.8% and a total return loss including dividends of 19.4% year to date, compared with the overall equity market’s 17.2% capital loss and 15.1% overall loss year to date.

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