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Morningstar: Don't expect another 2019

Investors are still being rewarded for taking risk – but there may not be another year like 2019 for some time, Morningstar’s director of manager research for Asia-Pacific Tim Murphy says.

Wednesday, February 12th 2020, 10:57PM

The research house has put out its latest KiwiSaver survey, which showed some of the top performers in the three months were AMP’s KiwiSaver Default fund, up 0.7%; Generate’s Conservative fund, up 2.1%; AMP ASB Balanced, up 2.9%; Generate KiwiSaver Growth, up 5.2%; and Generate Focused Growth, up 6.6%.

Murphy said it had been a good quarter for the markets, with the NZX50 up 5.2% and 30.4% for the year. Australian shares were up 23.4% over the 12 months.

He said that default funds were the worst-performing group in the survey, which highlighted the need for people to make an active fund choice.

Over 10 years, default funds returned an average 5.7% a year, conservative 6.1%, moderate 6.5%, balanced 8.1% and growth 9.8%. For the year, average annual returns ranged from 23.3% in aggressive funds to 8.5% for conservative.

“I think it certainly highlights again a reminder for KiwiSaver members who have not taken the chance to actively choose that the default options are not necessarily the best place for long-term savings. We’re seeing that now, a far lower return over the long term.”

He said there was a spread of performance, with managers who had more money in equities generally doing better. Those who were more exposed to the US and tech sector globally were doing well, and local technology, utility and infrastructure stocks had also given fund managers a boost.

Over the 10-year period AMP lagged group averages across all types of funds. Murphy said over time the differences between funds tended to become smaller.

But he said investors should not get used to double-digit returns on an ongoing basis and should not expect 2020 to be as strong as 2019.

“I’m confident 2019 will go down as one of the strongest years return wise for the investment market.”

Tags: KiwiSaver Morningstar

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  • a2: could the milk be starting to turn?
    “Great Fundemental look.I guess in the ASX50 . as long as Aussies still love buying the Dip..its no worries Graeme Adams...”
    2 days ago by Graeme33
  • It starts with governance
    “Hi David and thanks for your words also. I did read the FMA stuff before the post and also in my first response mention...”
    2 days ago by gavin austin adviser business compliance
  • AMP reports profit drop amid 'solid' result
    “Sadly, AMP is becoming less and less relevant. Apart from this tiny blip of positive cash inflow, they've been bleeding clients...”
    2 days ago by Contrarian
  • It starts with governance
    “Good words Gavin - might also mention the FMA publication - https://www.fma.govt.nz/compliance/guidance-library/corporate-governance-in-new-zealand-principles-and-guidelines/...”
    2 days ago by dcwhyte
  • It starts with governance
    “adviser1 - go talk to Partners Life. they have a great tool to help with this sort of stuff. ...”
    2 days ago by Tash
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Last updated: 14 August 2020 1:06pm

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