KiwiSaver risk reward just 2.1%

That is the finding of Melville Jessup Weaver’s (MJW) latest investment survey, which showed the median annualised return from growth funds was 8.2%, compared to 6.1% for conservative ones.

“[This is] perhaps less than one might have expected at the outset,” it said.

MJW actuary Ben Trollip said over the past five years there had been more difference – growth funds had returned more than 12% per year compared to 6.8% for conservative. Returns from growth assets over that period have been particularly strong.

Trollip said he would expect 2% difference to be “about right” in future years. But that should not deter people with a longer investing timeline from taking more risk, he said. “Even a difference of 2% per year is going to add up. If you have a longer time horizon and can weather some volatility a more aggressive strategy makes sense.”

He said it was also important to consider the difference between funds within each category.

The best performing fund over the most recent quarter and year was Milford Active Growth, returning 5.9% and 15.2% net of fees respectively. BNZ has had good results with its growth fund third this quarter while its balanced and moderate funds each came first in their respective categories.

“There’s a wide dispersion of returns within each category, it shows it's important not only which strategy you choose but which provider you go with.”

Comments from our readers

On 21 October 2016 at 10:34 am non-aligned AFA - North Shore said:

The Milford Acvtive Growth KiwiSaver was not either the best or even second best performing KiwiSaver Fund for the most recent quarter. It wasn't even close to the best. Sadly consumers who do not use an impartial or non-aligned AFA who purchases and uses independent research to support their advice could be misled by incorrect information. I also believe this article has missed an opportunity to explain the real difference that (i.e.) just 2.1 % can make over time.

On 21 October 2016 at 12:53 pm Dirty Harry said:

@ Non-aligned
Oh, you read the whole thing? I stopped at the 6th word - Mellville...

KiwiSaver risk reward just 2.1%

KiwiSaver members in conservative funds have received returns just 2.1% per year less than those who took on extra risk in a growth fund over the past eight years.

Thursday, October 20th 2016, 5:59AM 2 Comments

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