Global financial volatility impacts KiwiSaver returns

Global financial volatility impacts KiwiSaver returns

Global financial volatility impacts KiwiSaver returns - Mercer’s KiwiSaver Survey

  • 11 August 2011
  • New Zealand, Auckland

KiwiSaver diversified funds produced contrasting results for the quarter ending 30 June 2011, with high volatility within the global financial markets affecting returns, according to Mercer’s KiwiSaver survey.

Funds with the lowest allocation to shares and property performed best, with the median KiwiSaver Conservative fund returning 1.0%, compared to the more aggressive Growth funds which recorded a median return of -1.4%.

The best performing fund for the quarter was the Mercer Conservative Fund which returned 1.5% over the period.

Martin Lewington, Head of Mercer New Zealand said although KiwiSaver funds started the year with positive returns, the recently volatility has tempered growth.

“KiwiSaver funds fared well through the first six months of 2011 with a run of positive returns, but heightened volatility this quarter has produced mixed returns. The market jitters continue on the back of a string of weak economic reports and ongoing concerns over global growth prospects and the impact sovereign debt problems will have on the Euro longer term.

“Global growth momentum has slowed down, resulting in a period of market volatility. Adding to uncertainty is the US debt issue; the market is watching closely to see how the problem is dealt with over the coming months. Despite these factors we remain cautiously optimistic on the economy and believe the recovery will continue. The domestic economy also took a hit early this year due to the earthquake in Christchurch, but it is promising to see the NZ sharemarket bucked the global trend, up 0.5% for the quarter,” said Mr Lewington.

Mr Lewington added that it is important investors maintain a long term outlook, noting that while growth funds were the hardest hit this quarter; these funds have actually topped the performance tables in two of the last three calendar years.

“Over the longer term, default funds which have the highest allocation to bonds and cash remain the best performers since KiwiSaver’s inception in 2007, largely due to their superior performance in 2008, at the height of the global financial crisis. But over a 30 year investment horizon or longer, the picture could be very different; hence the importance of selecting investment options which are appropriate given the investor’s life stage” said Mr Lewington.

   

Quarter to 30 June 2011

 

12 months to 30 June 2011

Fund Type  

Median Return (%)

Top Performing Fund

Top Fund Return (%)

 

Median Return (%)

Top Performing Fund

Top Fund Return (%)

Default  

0.9

Mercer Conservative

1.5

 

6.4

OnePath Conservative

7.3

Conservative  

1.0

Westpac Conservative

1.4

 

7.6

OnePath SIL Conservative Balanced

9.6

Balanced  

-0.1

ANZ Balanced

0.9

 

9.9

Westpac Balanced

13.3

Growth  

-1.4

OnePath SIL Balanced Growth

0.6

 

12.9

Westpac Capital Protection

15.9

 

Mercer KiwiSaver Survey

2008 (%)

2009 (%)

2010 (%)

6 mths to 6/2011 (%)

Default Universe Median

0.7

7.2

5.9

2.4

Conservative Universe Median

-2.2

8.1

6.1

3.0

Balanced Universe Median

-12.7

12.6

7.0

2.4

Growth Universe Median

-22.1

16.6

7.2

2.1


N.B. Returns stated in the survey are before tax and after management fees (gross of tax and net of fees).

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