"Most KiwiSaver contributions continue to flow into the more conservative options, and despite the doom
and gloom, these have held up pretty well because of their high allocations to cash and fixed interest," Morningstar Manager, Fund Analysis Chris Douglas said.
While global investment markets continued to fall steeply in the six month period to March 31, the majority of KiwiSaver options have actually held up reasonably well.
Morningstar data shows that half of all money invested in KiwiSaver has gone into the conservative multi-sector, cash, or fixed interest categories.
"This has clearly been driven in large part by the wall of money flowing into the default options, but a number of fund managers have also taken more conservative stances in their allocations between asset classes."
All the major asset classes except cash and sovereign bonds were in the red over the six-month period. Fixed interest has performed comparatively well, with the NZX New Zealand Government Stock Index, up 12.50% over the year.
"This is where many conservative options have generated their performance," Douglas says..
He says most of the money invested in KiwiSaver options has produced positive or marginally positive returns over the year.
"This was a creditable result given the market environment.
"Leaving aside the poor performance from many markets over the past year, we firmly believe that superannuation is an investment designed to grow over the long term to produce retirement income.
"Given the relative performances of the different asset classes, it's little surprise that the best-performing multi-sector category - the home of most KiwiSaver contributions - remains the conservative group of funds, although a number of other fund managers have done very well from a flexible asset allocation approach and conservative ethos.
AMP Capital and ASB were the best default options over the March quarter, thanks in large part to their management of fixed interest. They've performed well both relative to other default providers, and also compared to the wider pool of conservative options.
Huljich was the standout performer among the rest of the field. The shop was number one across the Moderate, Balanced, and Growth categories over the past year, achieved primarily through higher allocations to more defensive assets. Huljich's Conservative vehicle, for instance, had only 17.50% in growth assets, compared to an average for the category of 30%. Others deserving mention include Brook in the Balanced and Aggressive categories, and Milford among the single-sector funds.
Like Huljich, Brook and Milford had more defensive positions, being overweight in cash.
"We caution, though, that while the payoff from maintaining a high cash weighting can be significant in the short term, making macroeconomic calls of this type can also erode potential returns on the upside when markets recover."
Few fund managers have demonstrated the ability to add value this way consistently over the long term.
To see the full table of returns click here.
New fund managers to be added to the table since last time are First New Zealand Capital and Huljich.
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