KEY POINTS:
An Auckland fund manager is claiming to have made one of the best returns on a KiwiSaver fund, contrasting the performance of others who have lost money since the scheme was launched last year.
Anthony Quirk of Milford Asset Management said although a short time-frame was being measured, his firm's fund was making one of the better returns, with a 7.5 per cent rise since opening on October 1.
"This compares with the New Zealand market's return of - 5.6 per cent over the same period. This proves you can get positive returns in negative market conditions, although it isn't easy," Quirk said.
He called for more information to be made available by other providers because it was important that returns were transparent so people knew how their savings were going.
His comments were in response to a Weekend Herald article about returns from funds managed by ING, Tower and Fisher Funds. One ING fund - SIL KiwiSaver International Property - was down from $1 in June to 87 cents by December 23 and others have suffered losses. ING's chief investment officer, Philip Houghton-Brown, said history had shown that investment markets went up over an extended period and it was unfortunate that the recent period of financial instability had occurred so soon after many people had just made the commitment to invest.
He and Finance Minister Michael Cullen encouraged a longer-term view.
But Quirk is calling for more disclosure about KiwiSaver.
"With so many New Zealanders invested in KiwiSaver, it is essential that there is rigorous analysis of the performance of all KiwiSaver funds," Quirk said. "Of course the time frame is very short in the context of the long-term nature of KiwiSaver but even so investment performance is still crucial. As ABN Amro Craigs have noted, an extra 2.5 per cent return over 50 years can double your savings."
Quirk said Milford's performance was being posted on its website although he had qualms initially.
"We did not put it on initially as we didn't want investors to be too short-term focused on month-by-month results. At the same time we think it is also very important to be as transparent as possible and there is a natural interest in performance from investors - that is the reality we live with as investment managers.
"We've also found it very hard to compare ourselves with competitors in the KiwiSaver space with few seeming to show their performance in an easily understandable way. Perhaps it is just early days and this will improve?"
Alasdair Thompson of the Employers and Manufacturers' Association said on Saturday that KiwiSaver was nowhere near the success Cullen was claiming.
It has not only lost money for its account holders but it had also not increased the nation's total savings which was its main objective.
Most of the 381,000 subscribers were higher income people who went into KiwiSaver to get the huge taxpayer-funded subsidies, he said.
The transfer of wealth from the majority of taxpayers to the minority - mostly higher income people who were already saving - will be in the order of $775 million this year, he estimated. "Dr Cullen missed a great chance to get all employees saving by enrolling all taxpayers in the scheme and initially funding their contributions from personal tax cuts," Thompson said.
SAVING FOR KIWIS
KiwiSaver providers are investing in various funds, including:
Cash: Bank deposits and other fixed-interest investments
Conservative: Bank deposits/fixed interest investments, less shares and property
Balanced: Split between shares, property, fixed interest/bank deposits
Growth: High proportion of shares and property, less bank deposits/fixed interest
Aggressive: Mainly shares which are deemed to be high-risk.
