Growth funds outperformed all other KiwiSaver schemes

Growth funds outperformed all other KiwiSaver schemes

Growth funds outperformed all other KiwiSaver schemes in 2012 - Mercer’s KiwiSaver Survey

  • 7 February 2013
  • New Zealand, Auckland

KiwiSaver funds with a ‘Growth’ focus, which include a high allocation to shares and property, led the pack for the last quarter of 2012, according to Mercer’s KiwiSaver Survey.

The quarterly survey provides KiwiSaver funds and stand-alone corporate superannuation schemes with a measure to compare their performance against other schemes in the KiwiSaver universe: growth, default, conservative or balanced.

The results reveal growth funds continued to outperform other funds, recording a median return of 4.0% for the period, while KiwiSaver default funds produced the lowest results, with a median return of 1.6%. Conservative funds saw a median gain of 2.1% and balanced funds 3.2%.

Performance across KiwiSaver funds saw the best median return from Milford Active Growth, showing a return of 5.7% for the quarter.

Overall for 2012 the median fund return for growth funds was 14.1%, with Milford Active Growth hitting the top spot, returning 27.1% over the past 12 months. The median manager (across all universes) returned 3.2% over the quarter and 11.9% over the last 12 months (after fees but before tax).

Philip Houghton-Brown, Head of Investments, Mercer New Zealand says 2012 fund performance is encouraging for KiwiSaver members.

“Following improved market conditions in the last 6 months of 2012, KiwiSaver growth funds have fared best over the last quarter, and entire 12 month period. However, it’s important to note growth funds are behind the other three multi-sector options when compared over the five years since KiwiSaver’s inception.

“Looking at key global economic statistics, investors enjoyed another quarter of strong returns, following generally pleasing economic data. This positivity was extended with the eleventh-hour compromise that avoided the worst of the so called ‘fiscal cliff’ in the US. However, investors are still conscious that although we have seen the long term cyclical downturn in global growth stabilise, the Eurozone still remains mired in recession.

“There is still a lot of work to be done to get the global economy back on its feet in 2013. Having said that, we are seeing positive recovery in the housing sector, especially in the US where we anticipate a rise in residential investment. Closer to home, although New Zealand has faced a rise in unemployment levels in recent months, residential investment is also picking up due to demand in Auckland and the beginning of the Canterbury rebuild. Overall, equity markets are continuing to benefit from this backdrop and the ongoing low-interest-rate environment,” Mr Houghton-Brown said.

The table below shows each universe median return and the top performing fund over the past quarter and 12 months.

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

Mercer KiwiSaver Survey 3 months (%) 1 yr (%pa) 2 yrs (%pa) 3 yrs (%pa) 5 yrs (%pa)
Default Universe Median 1.6 7.4 5.9 5.9 5.1
Conservative Universe Median 2.1 8.7 7.0 6.6 5.3
Balanced Universe Median 3.2 11.9 6.4 6.6 3.5
Growth Universe Median 4.0 14.1 5.3 6.0 2.4

About Mercer

Mercer is a global leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 55,000 employees worldwide and annual revenue exceeding $12 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. Follow Mercer on Twitter @Mercer_NZ