Bumper year for KiwiSaver growth funds

Impressive returns in equities and property have helped KiwiSaver growth funds achieve strong results in 2012, according to Morningstar’s latest KiwiSaver survey.

Tuesday, January 22nd 2013, 12:53PM

by Niko Kloeten

In the 12 months to December 31 growth fund returns averaged 14.0%, well ahead of balanced funds (12.4%), moderate funds (9.7%) and conservative funds (including default options), which averaged 7.9%.

The double-digit returns enjoyed by growth investors were driven by equities, which returned 24.18% on the NZX 50 and 9.52% in global shares in 2012, and listed property, which returned more than 20% for the year both in New Zealand and globally.

Fixed interest didn’t fare so well, with New Zealand bonds returning only 5.14% for the year and global bonds providing a more substantial 8.39% return.

The three-year performance of growth funds (6.6%) has now caught up to conservative funds (6.0%) after taking a hammering in the early days of KiwiSaver post-GFC, but five-year returns (2.7% versus 5.3%) are still lagging.

The Aon Milford fund was the top performer in 2012 returning 26.8%, while the Milford Active Fund has been the top performer over five years with an average return of 11.6%.

“The best-performing KiwiSaver options over the past five years continue to be SIL KiwiSaver (as well as National Bank and ANZ KiwiSaver) in the Conservative, Balanced, and Growth Multi-Sector categories,” Morningstar said in its report.

“Fidelity KiwiSaver has also performed strongly in the Balanced and Aggressive Multi-Sector categories. Others worthy of mention include Aon KiwiSaver Russell in the Conservative and Moderate categories, Brook KiwiSaver across Balanced and Growth, and Fisher Funds KiwiSaver Growth.”

Overall KiwiSaver funds under management reached $13.6 billion at the end of December, an increase of $3.3 billion in one year. The largest providers are OnePath ($3.4 billion) and ASB ($2.9 billion) who account for more than 46% of KiwiSaver assets between them.

Conservative funds ($5.1 billion) continue to be favoured by investors and are more than double the size of balanced funds ($2.4 billion) and growth funds ($2.2 billion); as a result, more than 56% of KiwiSaver money is invested in cash and bonds.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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