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Rates Round Up: Nov 19

Monday, November 21st 2011, 6:48AM

Cash-heavy default and conservative KiwiSaver funds continue to outperform their riskier peers, according to Mercer’s KiwiSaver Survey for the September quarter.

While KiwiSaver diversified funds largely produced negative results for the quarter, with a median return of -3.7%, the majority of default funds managed to stay positive with a median return of 0.2%.

The more aggressive growth funds posted a median return of -7.1% for the period.

The best performing fund for the quarter was the default fund, OnePath Conservative, which returned 1.0% over the period.

In the 12 months to September 30, the median fund return was 1.5% (after fees but before tax). The best performing fund for the same period was OnePath Conservative, which returned 4.8% over the past 12 months.

Martin Lewington, Head of Mercer New Zealand said KiwiSaver funds could expect more of the same in the coming months as market volatility continues.

Government bonds beat share market
New Zealand shares performed worse than government bonds over the last decade, according to the latest quarterly comparison of indices by Mint Asset Management.
In the 10 years to September 2011 New Zealand government stock achieved a return of 94.83%, narrowly overtaking New Zealand’s stock exchange, where the top 50 index returned 93.04%.
New Zealand’s listed property sector did even better, returning 141.60% during the same period.
As well as being worst-performing out of the three compared indices, the stock market also the most volatile.

During the decade it experienced 15 negative quarters adding up to a sum total of -69.76%, compared with listed property (10 negative quarters, -47.95%) and government bonds (six negative quarters, -4.32%).

Government bonds had a negative correlation with both stocks (-0.32) and listed property (-0.19), while listed property had a 0.71 correlation with the overall stock market.

Mint Asset Management chief executive Rebecca Thomas said the poor performance by the share market showed the need for effective stock-picking.

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