Milford sets KiwiSaver record, takes aim at ‘raw deal’

Monday, 4 March 2019, 1:45 pm
Press Release: Milford Asset Management

Media release – 4 March 2019

Milford sets new KiwiSaver record – but takes aim at ‘raw deal’ for default fund members.

After being named the overall best KiwiSaver manager for a record fifth time by Morningstar on Wednesday, Milford urged action on behalf of KiwiSaver members sitting in default funds, who are ‘getting a raw deal’.

Responding to being named KiwiSaver Fund Manager of the Year for a record-breaking fifth time, Milford’s Head of Wealth Management & Advice Murray Harris said, “You have to remember that this has been a year where many KiwiSaver funds have actually delivered negative returns. So, we see the award as a strong endorsement of Milford’s skilled active investment approach.

“It’s great news for our KiwiSaver members. Many of them have chosen to switch to Milford from default funds and so they’re enjoying the pay-off of industry-leading results. Importantly, they’ve also actively chosen a fund – whether it’s conservative, balanced or growth – that’s the most appropriate for them. Choosing the right type of fund and the right type of provider is their key to a much brighter future.”

Morningstar December 2018 KiwiSaver Survey	5-Year Net Return (p.a.) (after fees and before tax)	Rank in Fund Category	Fund Category
Milford KiwiSaver Active Growth Fund	10.3%	1st out of 21 funds	Growth
Milford KiwiSaver Balanced Fund	8.9%	1st out of 18 funds	Balanced
Milford KiwiSaver Conservative Fund	7.9%	1st out of 13 funds	Conservative

Default Fund Average	5.2%		Conservative

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But Murray Harris says the news isn’t nearly so good for the hundreds of thousands of KiwiSaver members who are still sitting in default funds.

“Everyone in the KiwiSaver industry needs to be concerned about the huge number of KiwiSaver investors who are languishing in default funds, earning low returns. It should be obvious to everyone that the default system just doesn’t work. It’s leaving many KiwiSaver investors worse off and, as a country, that’s something we should be deeply concerned about and something we have to fix.”

“The Government is reviewing the default funds this year and the question of default fund allocation should be at the top of their list. Aside from people who may be planning a first home withdrawal in the immediate future, people who have decades to go until retirement should not be in a conservative default fund. They’re getting a raw deal. We have to do better.”

“KiwiSaver is a long-term game. If an investor chooses a provider that earns even slightly better returns, it will make an enormous difference to their retirement. We’re talking tens, and in some cases, hundreds of thousands of dollars more for their retirement.”

Murray Harris says Milford’s record-setting win this week was also a win for Milford’s unique active investment approach.

“We hear a lot of debate about fees and active versus passive management. But let’s keep it simple - what’s most important to investors is the return they’re getting from their provider after fees. And as the KiwiSaver performance numbers show, our KiwiSaver investors have earned a lot more than others after fees. By hiring investment experts who do detailed research and go out and personally meet with companies we invest in, we’ve been able to produce excellent after-fee returns for our KiwiSaver clients. And this is ultimately helping them toward a brighter future.”