Investment performance fell in a narrow range across all KiwiSaver aggregate risk profiles during the September quarter, new Morningstar shows, with default funds edging the field.
The average default fund was up 4.2 per cent for the three months to September 30, according the Morningstar KiwiSaver survey, as other risk-weighted returns ranged from 3.6 per cent for conservative to 4.1 per cent in the growth category.
In the one-year period, which featured bullish share markets, investment performance conformed with theory as higher risk delivered higher returns, spanning 11.6 per cent for conservative funds through to 21.6 per cent in the aggressive cohort.
“Over 10 years, the aggressive category average has given investors an annualized return of 9.1%, followed by growth (8.2%), balanced (6.7%), moderate (4.8%), and conservative (4.3%),” the Morningstar report says.
The fee-constrained default field, though, outperformed balanced fund counterparts over both the quarterly and annual periods. KiwiSaver default fund asset allocation switched from conservative to balanced settings in December 2021 as part of a government-initiated provider shake-out.
During the 12 months to September 30 the median default fund returned 17.2 per cent versus 16.7 per cent for the broader balanced cohort, the Morningstar data shows.
The researcher covers more than 30 balanced funds that collectively held over $24.2 billion at quarter-end compared to six default options managing a total $4.2 billion (or about 3.5 per cent of the entire KiwiSaver market).
In spite of mandated asset allocation ranges, performance among the default funds has varied considerably over the short time-span to date. For the one-year period (key three-year data won’t kick in until the March 2025 quarter), default fund returns spanned from 15.6 per cent for SuperLife to the Booster result of 18.2 per cent.
Manager rankings tend to shift quarter-to-quarter across the wider KiwiSaver diversified fund market, but the Morningstar report namechecks Milford and Generate, in particular, as consistent longer-term performers.
Indeed, Milford retains top spot for 10-year performance in the conservative, balanced and growth categories with Generate ahead in the longer-term ‘moderate’ risk-weighted funds and Fisher Two number one among aggressive options.
But the September quarter survey also includes a strong mid-term showing by ethical investment specialist manager, Pathfinder, which topped the five-year charts for conservative, balanced and growth.
The Morningstar KiwiSaver universe (which covers about 95 per cent of assets) grew to $117.6 billion as at September 30 from about $110.9 billion three months earlier.
ANZ remains the largest single KiwiSaver provider with almost $21.8 billion under management (despite market share sliding another 0.2 per cent quarter-on-quarter to 18.5 per cent) in a largely unchanged size ranking.
However, Fisher Funds slipped $130 million or so behind ASB by September 30 after ending the June quarter neck-and-neck.