NZ stock rally lifts KiwiSaver

A rally in the New Zealand and Australian stock markets has helped the majority of KiwiSaver funds to climb out of the red, according to fund monitoring firm Fundsource.

Until recently most funds in the balanced and growth sectors, which have a higher level of investment in shares and property assets, have had negative returns.

But figures for three months to May 31 show the average balanced fund grew 4.86 per cent while the average growth fund grew 8.46 per cent.

Fundsource head Yvonne Davie said many KiwiSavers would be pleased to see the returns now in the black.

She put much of the performance down to a high level of investment in the New Zealand and Australian sharemarkets.

"While focusing on short-term performance is not necessarily advisable when thinking about long-term savings, it is interesting to note how the strong performance of late has been mainly attributable to our own local market and our neighbours across the Tasman."

The NZX-50 was up 9.59 per cent over the three months while the ASX-200 was up 13.93 per cent.

However over one year the average performance remains negative for both the balanced and growth sectors.

The average balanced fund was down 7.36 per cent while the average growth fund was down 14.43 per cent.

The top performing fund in the growth sector was Fisher Funds' Growth fund, which beat 25 other funds to return 20.92 per cent over three months, although over one year it is fourth behind funds managed by Huljich Wealth Management.

In the balanced sector the SmartKiwi balanced fund, which is run by NZX-owned Smartshares, was top over three months with a return of 9.23 per cent.

However over one year the fund, part of which tracks the NZX-50 and the S&P Australian 50 MidCap Index, was the worst performer out of 30 funds monitored by Fundsource, which is also owned by the NZX. Over one year it was down 14.37 per cent.

The top performer was the Huljich Balanced Fund.

Performance in the conservative or defensive sector - where funds invest the majority of their money into fixed interest and cash assets - was less pronounced, reflecting their lower volatility.

Over three months the top performer was ASB's First Choice Active Conservative Fund, with a return of 4.3 per cent, although it was 20th out of 21 funds over the year.

The top performer over the year was the Huljich Conservative Diversified KiwiSaver fund, which was up 10.22 per cent.

Davie said the turnaround in performance was a timely reminder for savers to make sure they are in the right type of fund.

"The key for KiwiSaver is to ensure that they are in the appropriate fund for their own circumstances, and that will of course include how long they will be contributing to their KiwiSaver fund prior to retirement."

SAVING SCORES

KiwiSaver performance to May 31

Sector:
Defensive/conservative funds
3 month average return: 2.36 per cent
1 year average return: 1.8 per cent

Sector:
Balanced funds
3 month average return: 4.86 per cent
1 year average return: -7.36 per cent

Sector:
Growth funds
3 month average return: 8.46 per cent
1 year average return: -14.43 per cent