Risk-taking pays off

KiwiSaver funds with more assets invested in growth assets shone in the December quarter, Morningstar analysis shows.

Wednesday, January 20th 2016, 9:59PM

by Susan Edmunds

The research house has released its latest quarterly KiwiSaver report, which covers the final three months of 2015.

It showed a big difference between conservative and more risky options: The average return over the quarter for conservative funds was 0.69%. For aggressive options, it hit 4.4%.

"Kiwis saving for their retirement benefitted from favourable market performance in the final quarter of last year, despite significant market turbulence, with growth-oriented funds doing particularly well," Morningstar Australasia manager research analyst Elliot Smith said. "Over the past year, every KiwiSaver fund on our database posted a positive return."

Many KiwiSavers benefitted from the performance of the New Zealand equity market, which fared much better than its global counterparts through the December quarter.

The NZX finished the year up 13.5%. The Australian market wasn't as strong: the S&P/ASX200 Index gained 3.1% over the quarter and 4.1% over the year in New Zealand dollar terms.

The New Zealand dollar's depreciation helped unhedged KiwiSaver investors achieve a 13.2% return from global equities over the entire year, although the Kiwi dollar appreciated against the AUD and USD over the fourth quarter, particularly in December.

While the MSCI World Index gained 6.2% in the December quarter, the result was a 1.4% loss in NZD terms.

BNZ was the top-performing KiwiSaver provider during the final quarter of 2015.

It benefitted from fully-hedged exposure to international equities and its top-performing Australasian equities investment. Milford and Generate remained among the top performers in the balanced and moderate categories respectively.

Over the whole of 2015, the funds in the aggressive category gained most from the strong performance of growth assets, posting an average return of 11.4%.

The conservative category's average return was 6.07%.

Generate was the standout provider over the 2015 year, its three funds either at the top or second on the table within their respective categories.

Aon Russell and ANZ remain at or near the top of most categories over longer-term timeframes, and are the most consistent performers across the board. Kiwi Wealth continues to be a top performer in the aggressive category, and Milford is comfortably atop the balanced category.

Tags: KiwiSaver Morningstar