Growth funds top achievers of 2009

KiwiSaver growth funds were the best performers last year but are still trailing their conservative counterparts over the long haul, according to superannuation consultants Mercer.

The average growth fund was up 16.5 per cent in 2009 but over two years they remain in the red, down 4.4 per cent per annum, after a tough 2008 dragged funds down by an average of 22.1 per cent.

The Government's six default funds which are capped at 25 per cent in growth assets gave the highest returns.

Over the last two years the average default fund grew 4.1 per cent per annum although they only grew on average by 7.2 per cent last year.

Mercer New Zealand chief executive Martin Lewington said the results reflected the severity of the global financial crisis and the speed of the rebound last year.

"The conservative positioning of default funds has paid off in the last two years but this doesn't necessarily mean it is the best option for all investors. Those with a longer-term horizon have the capacity to bear the heightened risk, but also reap the growth qualities of more aggressive investments over the course of their retirement savings," Lewington said.

But a slow-down in growth for the fourth quarter also showed markets remained volatile.

Growth funds were up on average 3.4 per cent in the last three months of 2009, down on the previous quarter where they grew 10.8 per cent.