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KEY POINTS:
KiwiSavers whose money went into default schemes were the least affected by global credit markets over the past year, according to a Morningstar Kiwisaver Performance Survey.
The report, which analysed the performance of KiwiSaver funds until September 30, revealed the top-performing funds were the cash-heavy or conservative funds, many of which are default options.
Four of the five default funds surveyed posted positive returns AMP and Tower were the best of the five.
Chris Douglas, senior research analyst at Morningstar, said he was not surprised the default options were considered valuable.
"They've got a lot of cash in them and fixed interest so in an environment like this I don't think it's entirely surprising that they would hold up reasonably well."
But he added that there was a dispersion of returns - AXA was down 2 per cent while AMP was up 3 per cent.
The Multisector Aggressive category - also the options with the highest weighting to local and international shares - was by far the worst-hit, many down 20 to 30 per cent from their recent peaks.
"While many Kiwis have been waiting with bated breath to see how the different fund managers have performed, we hope dinner party conversations don't focus solely on these short-term numbers," said Douglas.
The top-performing KiwiSaver fund was Fidelity KiwiSaver - Options Kiwi Fund. But the report warned savers who were considering switching to this that the underlying investment strategy is built around derivatives contracts which are written on movements in 10-year government bond rates, and this is potentially volatile.
Brook Asset Management, Fidelity Life, AMP and Tower were the fund managers with the best-performing funds across the categories. All equities-based KiwiSaver options were down sharply except Milford Asset Management (offered through AonSaver).
Steven Giannoulis, general manager of marketing at ING, said the results were not surprising given the recent turbulence in financial markets.
He was happy with ING's performance in the survey - mostly in the upper-middle quartile - but pointed out that it missed the idea that new investors get $1000 up front, which will be added to the returns documented in the survey.
He warned investors to keep looking long-term and not use the survey to move from quarter to quarter's best performers.
"Over the long term, for those who are a bit younger and have got more time, then the growth-oriented funds are the ones that are the most suitable. In the last quarter those have performed the worst but they still represent the funds with the best long-term investment," he said.
Peter Verhaart, investment manager at Arcus, a wholly owned subsidiary of AXA, said he was disappointed to see AXA funds at the bottom of the survey, but the new positions in global equity markets had not had enough time to show their colours.
"All of our portfolios are focused on the longer term and probably the minimum amount of term that we would look at doing comparisons of would be three years," Verhaart said.
Douglas warned KiwiSaver investors who read the survey and then decide to look at other fund options to seek some independent, quality advice beforehand.
"It's really important to know and understand the type of strategy you've gotten into, and even those more aggressive investors have got to ask themselves how they would feel if their fund lost 20 per cent over a short-period of time, can they handle the short-term volatility and do they also know what type of products they are investing in."
He said the result did not indicate people invested unwisely, rather that the KiwiSaver scheme was introduced quickly without giving people a chance to learn much about it.
"They're just coming from a low base of knowledge to a certainextent."
"Superannuation in New Zealand is still a relatively new thing. In general I would say there are some good-quality managers in New Zealand and some good KiwiSaver options. So the outlook is not probably as gloomy as people might paint it to be."
HOW THEY RATE TOP-PERFORMING FUNDS
1. Fidelity KiwiSaver - Options Kiwi Fund up 23.28%
2. ING KiwiSaver SIL Cash Plus Fund: up 8.73 % and the other cash and fixed income funds also up.
3. AonSaver AMT KiwiSaver Milford Aggressive Fund up 7.59%
4. Brook Professional KiwiSaver Scheme Balanced Fund up 5.35%
5. AMP KiwiSaver Conservative Fund up 3.47%
LOW PERFORMING FUNDS
1. Asteron KiwiSaver Trans-Tasman Small Companies SHR down 28.18%
2. AXA KiwiSaver Growth down 20.80%
3. ASB FirstChoice KiwiSaver Active Growth Fund down 16.81%
4. AXA KiwiSaver Balanced down 14.6%
5. Smartshares Smartkiwi Balanced Fund down 13.68%
(This is a sample of funds, not a grading from best to worst)
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