KiwiSaver growth funds surge but good times may not last

Low-risk default funds had remained the most attractive for KiwiSaver investors during economic uncertainty. Photo / Supplied

KiwiSaver investors who took a punt on growth-oriented funds have been rewarded with returns of as much as 50 per cent for the 12 months to March this year, according to a survey by consultancy firm Mercer.

The most successful fund for the March quarter was the Fidelity Life Aggressive, with returns of 6.3 per cent.

In the 12 months to March 31 this year the Fisher Funds Growth Fund had a return of 50.8 per cent.

Martin Lewington, head of Mercer NZ, said it had been a great year for growth assets, but warned the next 12 months might not see such high returns.

"The market light has definitely turned amber, so it would be unusual to expect such these sort of returns continue for the next 12 months."

He said KiwiSaver investors should stick with their current choices, unless they have experienced a change in personal circumstances.

"Often people like to chase winners, and if they look at that run-up some people might be tempted to increase their exposure to those sorts of [growth] assets. We would council some caution there."

He said funds had performed well on the back of strong growth in international markets and better-than-expected corporate earnings. But there were growing concerns that the upheaval in Europe could put the brakes on the run of positive results and affect KiwiSaver returns, Lewington said.

Lewington said that after four quarters of positive returns, performance had reached a plateau brought about by competing pressures influencing investment markets.

He said low-risk default funds had remained the most attractive for KiwiSaver investors during economic uncertainty.