Looking back 20 years

In this report MJW have looked at the returns from each of the major asset classes and explored the fortunes of three portfolios labelled Income, Balanced and Growth each with varying levels of exposure to growth assets. The period has seen some major movements in share markets during a period of consistent falling interest rates.

MJW look at the components of the return highlighting how the return on the income assets produces the regular consistent return favoured by many investors. As shown over the period, share investors have not been rewarded for the volatility of their returns.

Portfolios

The model portfolios are shown in Table 1.  The asset allocations are similar to the current KiwiSaver funds, albeit with more exposure to  global assets and so give an indication of how the contributions invested by current KiwiSaver members would have fared if the scheme had been introduced back in January 1993.
The bond portfolios show a consistent bias to global bonds over NZ bonds which will have boosted the returns to investors.   The asset allocation reflects MJW's current portfolio thinking. In contrast going back to June 1997 the AMP “A” unit, a balanced fund, had just 2% in global bonds. These changes are explore later in Chart 6.