Despite launching amid heightened market volatility most of the six new KiwiSaver balanced funds reported a smooth transition last December with just one anomaly.
Performance figures show five of the six default balanced funds reported monthly returns in December hovering around 2 per cent – ranging from 1.84 per cent for BNZ to 2.74 per cent for SuperLife – with Simplicity the outlier at 0.21 per cent.
By contrast, the almost identical non-default Simplicity balanced fund was up 1.73 per cent during December, suggesting the default money may not have been fully invested for the 31-day period.
The six default schemes received about $380 million apiece as the new regime kicked off on December 1 last year as the Inland Revenue Department reallocated funds flowing from the five discontinued providers: AMP, ANZ, ASB, Fisher Funds, Mercer.
While it is understood the complex transition saw little in the way of feared market disruption as assets changed hands, volatility creates risks for such bulk transfers.
For example, a Mercer NZ report published last year notes out-of-market risks – where investors hold cash in-between changing managers – can lead to “unpredictable losses or gains”.
But the impact of the KiwiSaver transition also shows up in just-released data from Australian research house, Plan for Life (PFL).
According to the PFL December quarter KiwiSaver report, only two of the 12 named providers saw double-digit funds under management (FUM) growth during the last three months of 2021 – both default providers.
The Booster KiwiSaver scheme surged more than 17.1 per cent over the quarter to reach $3.8 billion while BNZ was up almost 14 per cent to $4.6 billion (from $4 billion at the end of September last year).
Simplicity added 9.3 per cent to its KiwiSaver FUM during the December quarter, amounting to an increase of almost $200 million, while fellow defaults, Westpac and Kiwi Wealth, grew 5.7 per cent and 6.1 per cent, respectively, over the same period (or $520 million and $380 million in real terms), according to the PFL figures.
However, even the transfer kicker was not enough to push the growth-rate of most default schemes above the Milford Asset Management increase of 9.6 per cent over the final three months of last year to hit $4.8 billion.
Of the outgoing default KiwiSaver providers only ANZ turned in a positive growth number for the December quarter with FUM up 1.3 per cent to finish the year on almost $19.3 billion.
AMP was down 8.3 per cent during the three-month period, bleeding over $550 million in FUM, followed by Mercer (-4.2 per cent) while Fisher and ASB ended the year just below par at -0.7 per cent and -0.6 per cent, respectively.
PFL does not name the remaining default, SuperLife, in its table lumping the provider among the ‘others’ category, which rose a collective 2.3 per cent to total over $6.3 billion by year-end.
Overall, the KiwiSaver market grew 2.7 per cent in the December quarter to record a new high of $91.3 billion including net fund flows of $1.6 billion and investment returns of $900 million: a turbulent start to 2022 will likely a lower March quarter figure.