KiwiSaver funds tilted to offshore markets picked up a performance boost over the three months to June 30 during a quarter where local markets lagged, according to the latest Melville Jessup Weaver (MJW) investment survey.
The June quarter MJW report, authored by investment consultant William Nelson, says overall the three-month period “was a conventional risk-on quarter, with the more aggressive [KiwiSaver] funds performing the best”.
“However, this quarter within both equity and bond sectors, New Zealand assets have been outperformed by their global counterparts,” the analysis says. “The effect is most pronounced in the Growth funds, where the providers that have done the best (Kiwi Wealth, Generate, ANZ) all have high allocation to global equities.”
Quarterly returns in the MJW KiwiSaver growth cohort ranged from 3.8 per cent for the Fisher Two fund to 6.1 per cent for Kiwi Wealth, which now holds a long-term record among the top-three performers in the category dating back 10 years.
However, the almost $2.6 billion Milford KiwiSaver Active Growth Fund keeps its number one ranking in the MJW survey across all periods from one to 10 years. Milford also claims some long-term honours in the MJW balanced and conservative rankings with ANZ, Fisher (One and Two) and the SuperLife Ethica funds sprinkled among the top shorter-term performers in these risk profiles.
The report, too, highlights the impact of asset allocation decisions on passive investment strategies. For example, over the 12 months to June 30 index-based KiwiSaver growth funds offered by ASB, Simplicity and SuperLife returned 19.6 per cent, 19.2 per cent and 24.9 per cent, respectively.
In the MJW balanced fund group, Simplicity recorded the worst 12-month result among the 15 strategies with a return of 12.9 per cent: during the same period, the ASB and SuperLife KiwiSaver balanced funds were up a respective 13.6 per cent and 18.9 per cent. But over the three-year period the positions are reversed with Simplicity outperforming passive rivals ASB and SuperLife in both the balanced and growth sectors by between 1-2 per cent.
Simplicity has a slightly lower exposure to equities than either SuperLife or ASB in both balanced and growth categories.
However, SuperLife has the lowest allocation of the three passive-style providers to both NZ shares and local bonds.
The MJW June survey also notes a slight swing back to growth over value managers during the three-month period.
“In contrast to the previous quarter, the June quarter was one where larger stocks (as well as growth-oriented stocks) performed better,” the report says. “All the same, the rally in smaller caps over previous quarters is significant and… small cap stocks have excelled over the past 18 months, making up the ground lost in the March 2020 crash.”
On an unhedged basis, the median value international share fund returned 5.7 per cent during the quarter and almost 36 per cent for the 12 months to June 30 compared to respective 9.1 per cent and 31 per cent for global equities growth strategies captured in the MJW data.
But for the 10-year period, growth retains the upper hand with the median manager annualised return of 16.4 per cent versus just 11.1 per cent for the value team – albeit that MJW only record five growth funds and seven value strategies with a decade-long performance history.
The wholesale global equities universe open to NZ investors has expanded somewhat in recent years with 10 value and 13 growth options in the latest MJW survey as well as 13 ‘core’ funds.