Surging global share markets boosted returns for NZ investors during the first three months of 2024 with the vast majority of international equities managers in the latest Melville Jessup Weaver (MJW) survey racking up double-digit returns for the period.
While fixed income, local shares and other asset classes delivered flat-to-middling results for the March quarter, offshore equities buoyed diversified portfolios where “the more risk-seeking portfolios in general performed much better than conservative portfolios”, the MJW report says.
“Taking the KiwiSaver cohort as an example, the average return from the Growth category this quarter was 6.8%, compared with just 2.1% for the Conservative group,” the survey says.
Authored this quarter by MJW investment consultant, William Nelson, the study ranked Generate as the top KiwiSaver fund in the growth category for the period with a three-month return after fees of 9 per cent – double that of the growth sector bottom-dweller for the quarter, ANZ.
Generate also recorded the best 12-month performance of just over 20 per cent while the Milford Active Growth fund retains top spot for the three-, five- and 10-year periods.
Meanwhile, Booster claimed the number one ranking among KiwiSaver default funds across all time periods covered by MJW for the government-appointed catch-all providers dating back to the March 2021 quarter.
The current batch of balanced portfolio default funds went live in December 2021, limiting the MJW performance data to the quarter, one- and two-year results.
Despite the tight constraints limiting default funds to keep 50-60 per cent in growth assets, the degree of asset allocation freedom has still seen wide divergence in performance. Over the two years to the end of March, for example, the Booster default was up 5.4 per cent compared to 4.2 per cent for the bottom-of-the-pack Westpac fund.
Collectively, the six default funds managed $3.8 billion at the end of March – or between 3-4 per cent of the overall KiwiSaver assets under management.
An MJW analysis of 17 KiwiSaver schemes encompassing more than 95 per cent of total assets in the sector found fund 10-year returns clustered according to their respective asset allocation labels with a few outliers here and there. The Booster moderate fund, for example, performed more like a conservative strategy over the 10-year period while the SuperLife balanced fund was borderline growth.
More broadly, the survey shows the median wholesale manager in most asset classes covered by MJW outperformed their respective benchmarks in the March quarter.
Across value, core and growth global shares categories, the median manager in the survey returned from about 14 per cent to 16.6 per cent in the quarter and close to 30 per cent for the 12 months to the end of March.
Hyperion, a global shares growth manager, topped the 12-month tables with a return of 52 per cent followed by the core international equities Nikko multi-manager fund, up more than 40 per cent.
Of note, the tiny Wellington-based boutique, Lighthouse, saw its global shares fund rise almost 50 per cent in the quarter and 75 per cent for the 12 months.
“… markets have begun the month of April in a negative mood,” Nelson says. “The optimism around interest rate cuts has evaporated, leading to rapid drawdowns in share market indices. It remains to be seen how the next quarter will shape up.”