Kiwisaver growth funds reclaim lost ground

Kiwisaver growth funds continue to reclaim lost ground - Mercer’s September KiwiSaver survey

Tuesday 17th November

For the second consecutive quarter KiwiSaver growth funds were the stand out performers producing a median return of 10.8 per cent, according to Mercer’s KiwiSaver Survey.

The best performing growth fund over the quarter was the Fisher Funds Growth Fund (+15.2%).  It was also the best performing growth fund for the past twelve months (20.3%). Over the past year the median growth fund return was 1.2 per cent.

Martin Lewington, Head of Mercer in New Zealand said balanced and growth funds were well on the way to reclaiming the losses experienced through the global financial crisis.

“In the last six months balanced and growth funds have pegged back approximately half the losses experienced through the global financial crisis. This result is in stark contrast to the previous twelve months in which only conservative funds, on average, provided a positive return for KiwiSaver investors.”

“This return to positive growth territory is good news for investors, particularly those with a long term horizon who can afford to ride out the short term volatility.”

§  The best performing Default[1] fund over the quarter was the Mercer KiwiSaver Conservative Fund (+6.5%). It was also the best performing over the last 12 months (+3.2%).

§  The best performing Conservative fund over the quarter was the Mercer Conservative Fund (+7.3%), while the AXA Conservative Fund was the best performing over the last 12 months (+8.5%).

§  The best performing Balanced fund over the quarter was the Mercer Active Balanced Fund (+10.9%), while the Mercer Moderate Fund was the best performing over the last 12 months (+7.4%).

§  The best performing Growth fund over the quarter was the Fisher Funds Growth Fund (+15.2%).  It was also the best performing over the last 12 months (+20.3%).

Fisher Funds Growth Fund was a new addition to the Mercer survey, now in its second quarter. The survey reports on returns of the default KiwiSaver funds and other large fund managers.

No end in sight for growth in funds under management

Mr Lewington added that KiwiSaver funds under management were growing at an unprecedented rate, with the six default funds growing by an impressive 36 per cent over the past quarter (see table below).

At 30 September 2009 there were almost 1.2 million Kiwi Saver’s (1,189,587 to be exact) with some $4.25 billion transferred to KiwiSaver providers.  The Schemes’ growth continues to far exceed all predictions, despite the global financial crisis.

“The strong growth in FUM is attributable not only too strong investment returns in the September quarter (a median return of 4% for the Default funds) but more significantly to contributions into funds, particularly the annual payment of the government tax credits. 

“Even as the growth in membership abates, investment returns, member contributions, employer subsidies and government tax credits will ensure FUM continues to grow at a rapid pace,” said Mr Lewington.

Managers shift strategy to growth assets

In line with the improved returns for growth funds, there has been a notable shift to growth assets (shares and property) across the board.

“Multi-strategy funds, even at the conservative end of the spectrum, have tilted their allocations towards the growth assets over the past quarter to take advantage of the strong returns in shares and property sectors, and as they position themselves for a 2010 economic growth story,” said Mr Lewington.

Quarter to September 30 2009

12 months to September 30 2009

Fund type

Median return (%)

Top performing fund name

Top performing fund return (%)

Median return (%)

Top performing fund name

Top performing fund return (%)

Default

4.0

Mercer KiwiSaver Conservative Fund

6.5

5.9

Mercer KiwiSaver Conservative Fund

9.3

Conservative

5.0

Mercer Conservative Fund

7.3

4.8

AXA Conservative Fund

8.5

Balanced

7.8

Mercer Active Balanced Fund

10.9

3.1

Mercer Moderate Fund

7.4

Growth

10.8

Fisher Funds Growth Fund

15.2

1.2

Fisher Funds Growth Fund

20.3

ends

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