KiwiSavers not hurt by growth fund woes
KiwiSaver growth funds have had another tough quarter, but the long-term struggles of growth funds seem to have had little impact on investors' overall returns so far.
Thursday, July 26th 2012, 9:41AM
by Niko Kloeten
Morningstar's latest KiwiSaver survey found that the mixed returns from sharemarkets resulted in funds with higher exposures to income assets (cash and fixed interest) outperforming those with more invested in growth assets (shares and property) over the June quarter.
"Multi-Sector Conservative and Moderate options were generally the best performers over the three months to 30 June 2012, and KiwiSaver options with hefty sovereign bond and listed property allocations were among the best performers."
OnePath was the "standout performer" across the multi-sector categories, while Grosvenor and Tower were among the other providers deserving mention for strong results across a number of risk profiles, Morningstar said.
The best-performing KiwiSaver options over the past four years have been Aon KiwiSaver Russell Lifepoints within the Multi-Sector Conservative and Moderate categories, and SIL KiwiSaver and OnePath KiwiSaver in the Conservative, Moderate, Balanced, and Growth Multi-Sector categories.
Fisher Funds KiwiSaver Growth was the best-performing option across the combined Multi-Sector Growth and Aggressive categories, Morningstar said.
Over the past four years growth funds have averaged 2.5% per year after fees and before tax, compared to conservative funds which have averaged 5.3%.
Morningstar analysed how a hypothetical investor on the median New Zealand salary would have done investing 2% of their salary into KiwiSaver since day one, using ASB as the provider.
It found the difference in the size of the investor's funds at the end of June would have only been only $800 ($15,740 in conservative and $14,932 in growth).
"This is not as surprising as it may appear. In the early years of KiwiSaver it is all about being in a scheme and incrementally building up the nest egg," Morningstar's Chris Douglas said.
The results show that just being in KiwiSaver is the most important decision for now, he said.
"As the value of KiwiSaver grows, however, the risk profile decision will become increasingly important. A 15.0% loss in 2008 had virtually no impact on an investor's future KiwiSaver savings, because the investor had only just started accumulating.
"In 10-20 years' time, however, a similarly-sized loss will have a much greater impact on the investor's total savings."
Niko Kloeten can be contacted at firstname.lastname@example.org
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