Despite a tough quarter for investors, most KiwiSaver funds were still in positive territory for the year, according to the latest consultant surveys.
However, both the Aon Hewitt and Melville Jessup Weaver (MJW) September quarter surveys found a wide dispersion of returns among managers, particularly in the growth sector.
According to the MJW survey, over the 12 months to the end of September the median growth fund was up 6.8 per cent while the conservative fund sector recorded a median return of 5.9 per cent.
Over the five-year period the median growth and conservative KiwiSaver funds returned 9.6 per cent and 6.2 per cent respectively.
“The five-year range of results varies more for the growth funds (from 11.8% for ANZ to 6.4% for Grosvenor) than the conservative funds (from 7.7% for Aon Russell to 5.3% for AMP Default),” the MJW report says. “So choosing the right growth fund manager can be seen as more important than choosing a conservative fund manager.”
Likewise, the Aon KiwiSaver survey found a broad spread of returns for the 23 growth funds it covers.
“Over the last 12 months, returns in this category range from -0.8% for the AMP Aggressive Fund to +13.0% for the Generate Focused Growth Fund,” the Aon survey says. “… Over the full 7½ years [included in the KiwiSaver survey], returns range from 2.8% p.a. from the AMP Aggressive Fund to 8.2% p.a. for the Fisher Funds Growth Fund, with a median return across all funds of 5.4% p.a.”
Guy Fisher, Aon investment consultant, said the survey shows while most managers stick closely to benchmark asset allocation “there are a few managers making significant tactical asset calls”.
“Milford is considerably overweight cash (26.2% versus a benchmark of 10.0%), as is ANZ (10.6% versus a benchmark of 4.0%) and Fisher Funds (7.8% versus a benchmark of zero),” the survey says. “Fisher Funds also has a large underweight to New Zealand and Australian Shares (33.8% versus a benchmark of 49.0%).”
Fisher said the results also indicate “higher fees are not a barrier to good performance”.
“Many of the better-performing funds have relatively high fees,” he said. “If you look at ANZ, which has both a default (passive, low cost) option and an active option in each category, in all cases the active (more expensive) option has outperformed.”
Overall, both surveys found ANZ, Milford, Aon Russell and KiwiWealth were consistent high-performers while ASB and AMP were anchored down the bottom end.
“ASB’s performance is generally disappointing despite their low fees. The ASB Conservative fund is the largest single KiwiSaver fund ($2.8bn), but is ranked 13th out of 14 over the long term in that category – only AMP is worse than ASB,” the Aon report says.
The MJW survey says the underperformance of the AMP KiwiSaver funds was primarily due to the “poor results from the asset classes they have selected with which to diversify their results and their decision to pursue a diversified strategy”. “Hopefully in due course this strategy will produce rewards for their investors,” the MJW report says.