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Find the right fund fit: Morningstar

KiwiSaver investors are being told it’s better to focus on finding the right fund for their risk profile than to chase managers based on past performance.

Friday, January 23rd 2015, 6:00AM

by Susan Edmunds

Morningstar has released its latest KiwiSaver survey, for the December 2014 quarter.

It shows most asset classes registering positive returns.

The growth category of KiwiSaver funds was the strongest in the quarter, posting a return of 3.38%. Conservative funds were the weakest, with 2.41%.

Generate KiwiSaver and Kiwi Wealth KiwiSaver were the standout performers during the quarter.

Aon KiwiSaver Russell was the strongest performer in the income categories as its allocation to international bond markets helped boost returns.

Milford KiwiSaver Conservative was again a standout fund in the moderate category.

Morningstar said in its report it was more appropriate to evaluate the performance of a KiwiSaver scheme by studying its long-term returns than to look at it on a quarter-by-quarter basis.

“Aon KiwiSaver Russell is the most notable performer as it is at or near the top across all five categories. These funds have historically sat at the higher end of the growth/income split for each category range thereby benefiting from strong performance of equities.,” the report said.

ANZ KiwiSaver isthe strongest of  the default providers across the board, benefiting from more exposure to international markets than competitors.

But Morningstar warned that swapping to a new provider on the basis of past performance could be a poor decision.

The report said equity markets had risen to levels that likely could not be sustained as central banks moved towards tightening.
Instead, they said investors should focus on getting the right risk profile, which would pay off in the long run.

“We believe that it’s important for investors to first make sure that they are in the most appropriate risk profile. This decision, which corresponds with asset allocation, is likely to be the key determinant of future performance.”

« KiwiSavers' missing millionsKiwiSaver effect has wide reach »

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 ▼3.89 ▲4.05 4.39
ASB Bank Special - ▼3.39 ▲3.55 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
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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 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
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HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
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HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
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Pepper Money Near Prime 5.64 - 5.44 5.44
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RESIMAC Special - - - -
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TSB Special 5.29 3.55 3.45 3.89
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