KiwiSaver schemes are on track to collect a record $780 million in fees this year, according to the June quarter Morningstar report, implying a not unreasonable annual cost ratio of just under 0.8 per cent.
The Morningstar estimates (based on published fund fee rates) are broadly in line with the cost ratio of 0.81 per cent calculated for the 12 months to the end of last March in the Investment News NZ (INNZ) 2022 KiwiSaver report.
Total KiwiSaver gross costs (including fees and expenses) amounted to $717 million over the 2021/22 financial year, the INNZ study found, up almost $50 million on the previous period in line with rising funds under management.
Despite the nominal fee increase, KiwiSaver cost ratios have declined significantly over the last decade from an average of about 1.3 per cent in 2013: in the last couple of years most of the larger schemes have lowered headline fees and removed member administration fees.
As at the end of this June, Morningstar counted $97.5 billion in its slightly incomplete KiwiSaver universe.
KiwiSaver FUM soared about 6 per cent over the June quarter as strong markets lifted almost all boats bar a few unmoored sector-specific outliers.
Median diversified fund returns for the three-month period ranged from 1.2 per cent in the conservative cohort to 5.4 per cent for aggressive options. For the first time, too, the median default fund (up 3.4 per cent) outperformed the comparable balanced strategies, which reported an average quarterly return of 3.1 per cent.
“Default options appointed in 2021 had improved results compared with the latest quarter: Simplicity Default (9.6%), Booster Default Saver (9.4%), and BNZ Default (9.4%) over the one-year period,” the Morningstar report says.
The research house covers more than 95 per cent of the KiwiSaver market by funds under management with a few retail (notably, NZ Funds) and restricted schemes missing from the data. Total KiwiSaver FUM would have breached the $100 billion mark in the June quarter including the full set of schemes.
Market share positions remained relatively stable quarter-on-quarter with ANZ safely out in front (just under $20 billion) while Nikko (almost $50 million) ranked last by size in the Morningstar list.
The combined Fisher Funds/Kiwi Wealth schemes (about $15.2 billion) would also have knocked ASB ($14.9 billion) out of second place but Morningstar reports the two separately for now.
In another first, the June quarter report – authored by global fund data director, Greg Bunkall, and manager selection analyst, Evelyn Garrido – includes a green tick beside KiwiSaver funds that have earned a four or five ‘globe’ rank in the Morningstar Global Sustainability Rating.
“The Morningstar Sustainability Rating is designed to support investors in evaluating the relative environmental, social, and governance risks within portfolios,” the report says.
Morningstar owns Sustainalytics, one of the main environmental, social and governance ratings agencies.