NZ investors piled into cash and bonds last year with funds under management in the asset classes soaring by at least 20 per cent over the 12-month period, new Reserve Bank of NZ (RBNZ) figures show.
Cash fund holdings grew 20 per cent year-on-year to end 2023 at $44.3 billion while short-term and long-term debt assets under management rose by 25.3 per cent and 21.2 per cent, respectively.
The tilt to fixed income came amid a positive year for all asset classes with the value of equities in the funds sector up almost 11 per cent to close at more than $124 billion.
Despite the recovery last year from the 2022 rout, shares held by NZ managed funds still lag the December 2021 high of $130 billion plus, according to the RBNZ data: equities remain the most popular asset class followed by long-term bonds ($73.1 billion).
Nonetheless, total assets under management in the local funds sector – including some private wealth discretionary investment management service (DIMS) portfolios – hit a new peak at the end of last year.
“Total funds under management increased 4.0% to $271.2b for the quarter ending 31 Dec ’23, this has exceeded the record high of $267.9 recorded in June ’23,” the RBNZ report says.
“Annually, total funds under management went up 8.4%. All quarters in 2023 showed annual growth in total funds under management.”
KiwiSaver represents almost 40 per cent of the overall NZ funds market after rising 17.2 per cent last year to a record high of $107.5 billion.
“Other Superannuation [funds] showed a quarterly increase of 3.7% and a yearly decrease of 8.9%,” the central bank study says.
The RBNZ statistics show KiwiSaver now equates for half of the almost $214 billion ‘consolidated’ managed fund assets – a measure that carves out individually managed portfolios ($48 billion) and certain wholesale funds ($13.3 billion).
Over the December quarter, the RBNZ clocked KiwiSaver growth of some $$6.7 billion – up 6.6 per cent as flows and strong markets supported growth.
While slightly out of synch with the NZ central bank, Australian research house, Plan for Life (PFL), found KiwiSaver funds grew about 7 per cent in the final three months of 2023, rising from $97.9 billion to land at $104.8 billion over the period.
Investment earnings accounted for $5.5 billion of the December quarter growth with net fund flows adding $1.4 billion to the KiwiSaver pot, according to the PFL analysis.
The Milford scheme saw the largest quarterly gain of 12 per cent (almost $800 million) with Generate and Simplicity also registering double-digit increases for the quarter of 10.3 per cent and 10.2 per cent, respectively.
Smartshares (9.2 per cent) and Booster (8.5 per cent) recorded above average growth results but seven of the larger providers named in the PFL table fell below par, ranging from 5.4 per cent (Fisher and Mercer) to 6.8 per cent for BNZ.
ANZ accrued more than $1.1 billion during the December quarter to break through the $20 billion threshold across its three KiwiSaver schemes. With almost $16 billion under management, Fisher Funds, also a three-scheme machine, gave up some ground to third-placed ASB (close to $15.8 billion) over the three-month period but remains comfortably second.
The PFL figures show the cohort of about 20 smaller schemes lumped under ‘others’ enjoyed a good quarter, growing 9.2 per cent to bring up a combined funds under management of $5.8 billion.
For example, two of the newest KiwiSaver schemes – Kernel and Sharesies – breached the $100 million mark just a year or so after launch. Other fresh arrivals including InvestNow and the adviser-distributed Aurora scheme are circling the $250 million level.
Earlier this month, Aurora – one of the fastest-growing KiwiSaver schemes since it went live late in 2021 – reached 10,000 members ($240 million under management).
Meanwhile, a slew of slightly older local boutiques such as Kōura ($120 million plus) and Pathfinder ($335 million and 9,000 members) have seen some momentum recently.
Member transfer numbers averaged about 11,500 per month in the latter two-thirds of last year, according to Inland Revenue Department (IRD) statistics. While scheme-swapping slowed down a little this January to almost 9,200, the figure is almost double compared to the same month in 2023.
Schemes also saw bumper flows of almost $1 billion in January this year (up $120 million year-on-year) from employer and employee contributions. July is the big month for KiwiSaver inflows as the government pays out the member tax credit (MTC): last July the MTC bill came in at just under $1 billion bringing total flows for that month to $1.7 billion.