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KiwiSaver members told: Don't forget tax

KiwiSaver members are being told to consider the impact of tax on their investments.

Thursday, October 23rd 2014, 6:00AM

by Susan Edmunds

Morningstar has released its latest KiwiSaver survey, covering the period to September 30.

KiwiSaver schemes with international exposure performed best over the September quarter. Those that made an active decision to allocate capital to growth assets also benefited as equities outperformed bonds.

The falling NZ dollar helped funds that left international investments unhedged.

There were no standout performers across the categories, but Milford KiwiSaver came out on top of the balanced and moderate categories and ASB was solid across the board.

OneAnswer KiwiSaver was very strong in the international equities category.

Over a longer term, Aon KiwiSaver Russell was at or near the top of all five categories. 

ANZ KiwiSaver continued to be the strongest of the default providers across the board.

Morningstar said investors should not forget about the impact tax could have on their investments.

“Not all investments are subject to tax and some parts of the market are significantly more tax-efficient than others. For example, capital gains tax is not charged on New Zealand and Australian shares, whereas international shares are treated differently and typically will pay more tax. Other factors that can affect the tax paid include fees and the impact of foreign exchange.”

Morningstar included a survey of funds’ tax-cost ratio, representing how much a fund’s annualised return was reduced by the taxes members paid.

Of the balanced funds, AMP KiwiSaver LS Balanced at the highest tax-cost ratio, of 1.68%.

The least taxed was Westpac’s balanced fund.

Morningstar said tax would have a direct impact on the growth of KiwiSavers’ retirement nest eggs.

“However, investors should not select investments solely on the basis of the level of taxation, as that can lead to poor investment decisions.”

« Growing group want adviceEncourage KiwiSaver engagement: ANZ »

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.15 ▼4.04 4.49
ANZ Special - 3.65 ▼3.54 3.99
ASB Bank 5.20 4.15 4.09 4.39
ASB Bank Special - 3.65 3.59 3.89
BNZ - Classic - 3.65 ▼3.54 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
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China Construction Bank Special - 3.19 3.19 3.19
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Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 ▼4.15 ▼4.09 ▼4.39
HSBC Premier 5.24 3.35 3.35 3.35
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.65 3.85 3.95 3.89
Kiwibank 5.80 4.30 4.34 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.59 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 5.30 4.86 4.14 4.19
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RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.69 3.69 3.99
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The Co-operative Bank - Owner Occ 5.15 3.65 3.59 3.99
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Westpac 5.34 4.15 4.09 4.49
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Westpac - Offset 5.34 - - -
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Median 5.35 4.15 4.09 4.19

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