KiwiSaver funds post positive returns

Media Release

KiwiSaver funds post positive returns as fears of double-dip recession reduce – Mercer KiwiSaver Survey

Monday 8th November 2010

KiwiSaver fund returns rebounded in the September quarter – with all fund types producing positive returns as fears of a double dip recession reduce, according to the latest Mercer KiwiSaver survey.

Global share markets, which took a battering in the June quarter, bounced back helping KiwiSaver returns. KiwiSaver growth funds - which have the greatest allocation to shares – performed best with a median return of 5.8% for the quarter ended 30 September, 2010. This represents a significant turnaround from the previous quarter’s negative median return of 6.1%.*

According to the Mercer KiwiSaver survey, the best performing fund for the September quarter was Fisher Funds Growth Fund which returned 10.5 per cent for the September quarter, and 13.2 per cent in the 12 months to 30 September 2010.

Martin Lewington, Head of Mercer New Zealand said while investors would be relieved to see a positive quarter for their KiwiSaver investment, there is still uncertainty ahead.

“Global share markets have bounced back over the past quarter, as fears of the European debt crisis reduced. All asset classes produced positive returns, including property and commodities, which is great for KiwiSaver funds.”

Mr Lewington said, “While the probability of a double dip recession is lower, strong headwind pressures remain. Weak consumer spending and high unemployment in the US combine to produce an uncertain outlook for developed economies.

“The bumpy ride for KiwiSaver investors may not be over yet, but long term investors should not be overly concerned with short term movements. As the contrast between the June and September quarter shows, it is possible to regain monies notionally lost and over the long-term the result should be quite positive overall.”

Reflecting the volatile share market conditions in recent years, Mercer’s KiwiSaver survey shows funds with the highest allocation to bonds and cash had been the best performers since the inception of KiwiSaver three years ago.

Default schemes remain the strongest performers over the past three year period, recording a median return of 4.6 per cent per annum compared to -3.1 per cent per annum for growth funds.

ENDS

*Returns stated in the survey are before tax and after management fees (gross of tax and net of fees).

About Mercer:
Mercer is a leading global provider of consulting, outsourcing and investment services, with more than 25,000 clients worldwide. Mercer consultants help clients design and manage health, retirement and other benefits and optimise human capital. The firm also provides customised administration, technology and total benefit outsourcing solutions. Mercer's investment services include global leadership in investment consulting and multimanager investment management.

Mercer's global network of more than 19,000 employees, based in over 40 countries, helps ensure integrated, worldwide solutions. Our consultants work with clients to develop solutions that address global and country-specific challenges and opportunities.

For more information, visit www.mercer.co.nz

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