KiwiSaver provider rankings remained more-or-less steady at the end of the June quarter aside a minor reshuffle at the bottom-end of the market, the latest Morningstar review of the sector reveals.
Following a torrid end to 2021 that saw more than half of the 23 providers move either up or down the table as measured by funds under management (FUM), just four schemes swapped places in the most recent period.
Both Nikko and the Pie Funds-owned Juno schemes moved down a spot of two – mostly due to poor relative investment performance – while InvestNow and QuayStreet (part of Craigs Investment Partners) jumped ahead. Morningstar included InvestNow and QuayStreet for the first time in the June report but backdated the data for the two schemes to December 2021.
In the June wash-up, QuayStreet exchanged rankings with Juno, rising to 16th largest KiwiSaver provider as the latter dropped to 18th: QuayStreet held FUM on par with the December 31 figure of $481.3 million as relatively strong, if still negative, returns in the latest quarter pushed the scheme above Juno, which slumped from over $580 million at the end of last year to just under $466 million by June 30.
The Juno growth KiwiSaver fund, comprising more than 80 per cent of scheme assets, recorded the worst 12-month performance in the Morningstar category, falling more than 26 per cent. However, for the three years to June 30, the Juno growth fund retains an above-average performance record of 4.5 per cent annualised against the median 3.8 per cent.
Meanwhile, the Nikko scheme slipped to 22nd in the Morningstar size rankings with total FUM shrinking from over $57 million at the end of 2021 to $41.1 million on June 30. The Nikko FUM-slump was almost exclusively due to the ongoing rout in the underlying Ark ‘disruptive innovation’ global shares fund, which was down almost 30 per cent for the June quarter and close to -63 per cent over the 12-month period.
Ark remains the most popular fund in the Nikko KiwiSaver scheme, accounting for more than 1,200 of its almost 1,500 members and currently just under half of FUM.
The Implemented Investment Solutions-owned InvestNow KiwiSaver replaced Nikko at 21 in the Morningstar table as one of the few schemes to grow assets under management from December to June. InvestNow reported FUM of almost $62 million at the end of June quarter, up more than $10 million compared to December 31 last year.
Of the 22 other providers only two (both smaller schemes) – Kōura and Pathfinder – reported FUM-growth over the six-month period. Pathfinder added about $20 million to finish with over $170 million while Kōura rose to just above $36 million from $29.5 million.
Even Milford Asset Management, which has previously maintained KiwiSaver FUM-growth in most periods, lost some ground during the first six months of 2022, ending June about $70 million adrift of its December 31 figure of almost $5 billion.
Tim Murphy, Morningstar Asia-Pacific director manager selection, says in the report that KiwiSaver fund returns “generally reflected the challenging underlying market conditions experienced over the June quarter”.
“The average multisector category returns ranged from -4.2% for the Conservative category to -10.1% for the Aggressive category,” Murphy says.
“… Default options appointed in 2021 still have less than one year of performance, which is too short a period to make meaningful assessments. But so far in 2022 four out of the six default options trail the balanced category average.”
All of the now six default schemes are essentially index-style balanced fund products following the regime change on December 1 last year.
Simplicity recorded the worst result of the default cohort over the three months to June 30 with a return of -8.6 per cent (slightly below the manager’s comparable balanced fund result of -8.5 per cent). The NZX-owned SuperLife turned in the best default fund quarterly performance of -5.5 per cent against -7.1 per cent for its regular balanced option.
SuperLife and Simplicity were the two new default providers appointed by the government last year in a radical revamp of the system that also saw Booster, BNZ, Kiwi Wealth and Westpac retain the status as AMP, ANZ, ASB, Fisher Funds and Mercer lost out, transferring about 200,000 members and $2 billion between them to the successful bidders.