Just one of almost 60 diversified KiwiSaver funds on the Melville Jessup Weaver (MJW) investment survey radar turned in a negative result during the three months to December 31, 2022, as a bounce in global markets rescued all others from a four-quarter washout.
“ essentially all [diversified] funds in our KiwiSaver universe had a positive return. It was a conventional ‘risk on’ quarter with the funds with greater allocations to growth assets doing the best,” the latest MJW report says.
“The improvement in fortunes in the final quarter was not enough to change the 2022 calendar year, however.”
Over the 12-month period, returns for the KiwiSaver diversified funds in the MJW universe ranged from a high of -3.8 per cent for the ultra-conservative BNZ First Home Buyer Fund to the low of -20.2 per cent for the ESG-flavoured ASB Positive Impact Fund – the latter standing out as the sole red-inked product in the December quarter standings.
The ASB Positive Impact fund was down -2.3 per cent for the quarter compared to the median 2 per cent for the balanced category and 3.4 per cent for the best-in-class ANZ Balanced Growth Fund.
ASB overhauled the Positive Impact Fund last June, appointing investment partner, BlackRock, as underlying manager in place of Mercer (international shares) and Vanguard (global bonds).
Following the revamp, the flagship ESG vehicle for ASB now invests in the BlackRock iShares Green Bond Fund and Global Impact Fund.
Launched in 2019 amid growing ESG fervour, the now $109 million ASB KiwiSaver Positive Impact Fund is also down over the three years to the end of 2022.
Most KiwiSaver conservative funds along with a handful of moderate and balanced strategies in the MJW survey also reported negative returns for the three-year period following the 2022 bond rout: all growth funds and most balanced funds remain positive over the same timeframe.
Meanwhile, the new breed of KiwiSaver default funds came into line with balanced counterparts, reporting a median quarterly return of 2 per cent, the MJW data shows, ranging from 1.3 per cent for SuperLife to the BNZ high score of 2.8 per cent.
As per broader annual performance, the six default funds ended the 12-month period under water with SuperLife (-10.6 per cent) faring best while Simplicity (-13.7 per cent) and Kiwi Wealth (-14 per cent) filled the bottom spots.
Despite the December quarter bump for most asset classes, the report – authored by MJW actuary and investment consultant, William Nelson – says 2022 was the third-worst for global equities over the decades since 2000 “only outperforming the 2002 and 2008 years (the years of the dot-com bust and global financial crisis respectively)”.
“By contrast, 2021 was one of the best years. We can therefore infer from… that the overall performance over 2021-2022 has been respectable on average,” Nelson says.
He also notes the volatility of volatility during any annual period can vary widely: both 2009 and 2020, for example, both began the first 50 trading days or so in tumultuous fashion before ending the year on historic highs.
“Years such as these serve as a reminder of the speed with which markets can recover and of the difficulties in making short term investment predictions.”