Median KiwiSaver fund returns ended virtually identical across all risk profiles during the June quarter, according to the just-released Melville Jessup Weaver (MJW) investment survey.
The MJW study shows average KiwiSaver fund performance held in an unusually tight band of 0.6 to 0.8 per cent for the three-month period.
Growth and moderate funds reported the best median quarterly returns followed by conservative (0.7 per cent) and balanced (0.6 per cent) in a period dominated by upbeat international share markets.
“While many asset sectors saw muted, or negative, returns in the June quarter, global equities again posted strong results,” the report says. “This was flattering for diversified funds, since they tend to have large exposures to this sector.”
The MSCI World shares index rose 3.4 per cent on a fully hedged basis but only 0.7 per cent unhedged.
However, with NZ cash and fixed income returning 1.4 and 0.5 per cent, respectively, over the quarter and global bonds flat, defensively weighted funds also held up well.
Portfolios exposed to local listed real estate (-8.5 per cent) and NZ equities (-3.1 per cent) suffered most during the three-month period.
Quasi-passive provider, Simplicity, topped the growth and balanced MJW KiwiSaver tables for the three-monthly performance while BNZ was best among the conservative and moderate cohorts.
At the same time, active-style managers struggled during the quarter with all three Fisher-owned options, Milford and ANZ filling the bottom spots in the June KiwiSaver growth fund category.
Despite losing 0.7 per cent over the three months to June 30, the Milford growth fund remains number one for the three-, five- and 10-year periods.
The June quarter marked a low point for the ANZ KiwiSaver growth fund, which finished last on -1.5 per cent and lower quartile for all periods covered in the MJW survey.
In particular, the ANZ international equities multi-manager vehicle (which the bank’s KiwiSaver funds feed into) stumbled in the quarter as all four underlying strategies fell into negative territory – notably, MFS, which was off -4.5 per cent for the three months.
Last week ANZ replaced MFS with a BlackRock multi-factor strategy in the first move of an expected investment revamp at the bank-owned manager.
Short-term fund returns remain a highly unreliable gauge of future performance, of course, but the recent manager-go-round in the MJW survey highlights a number of fluctuating risks as investors parse inflation, interest rates, high stock valuations and geopolitical tensions.
For example, MJW principal, Ben Trollip, says in the report that US share market “valuation levels this century are clearly significantly higher than what was normal in the last century”.
Trollip says while investors remain optimistic on falling inflation and looming rate cuts, markets are “overlooking any potential volatility from… political themes” including a raft of contentious elections and wars.
“While bond market volatility is above average, it is trending down. Equity market volatility is not far off ‘rock bottom’ levels. And all the while we have two major conflicts underway in Ukraine and Gaza,” he says in the report.
“The potential for a black swan event – an unforeseen risk manifesting in financial markets – would appear to be high.”