How have KiwiSaver investments performed over the past 12 Months?
It has been an excellent year for KiwiSaver investors. Over the past 12 months, many KiwiSaver funds have demonstrated substantial annual returns exceeding their long-term averages.
Surpassing Pre-Covid status
By July 2020, markets were seeing return to their pre-Covid state. A combination of low returns from term deposits, and a swell of people taking to online investing during lockdown, has seen markets since exceed their pre-pandemic position.
In March 2021, the overall monetary value of KiwiSaver funds under management had grown from $62 billion – as of 2020 – to an impressive $81.6 billion.
We have had a look at the returns of a bank KiwiSaver provider, ANZ, as well as Milford, a a New Zealand-owned company provider to analyse how they have performed.
KiwiSaver at ANZ
ANZ, or Australia New Zealand Banking Group, is an international bank. They are the largest KiwiSaver provider. They have long been a default fund, although that status will be revoked at the end of November. As a KiwiSaver scheme, they won the Good Returns Fund Manager of the Year 2020.
ANZ KiwiSaver Scheme’s most recent data is from September 2021 and gives an overview of each fund’s performance. The data displayed includes ANZ’s annual fund charge but excludes taxes and membership fees.
ANZ has seen some outstanding returns on most of its higher volatility funds.
This includes their Growth, Conservative and Balanced Growth.
The table above shows that the performance of these Funds in the past years has doubled to triple the expected annual return shown in the “Since Launch’’ column.
The Growth Fund has shown the highest past year return, which makes sense as it has the highest percentage of its investments devoted to growth assets – listed properties and infrastructure, and equities. This means it benefits the most from market highs, which we have seen over the past year.
ANZ has given some explanation as to why their funds have performed so well, including the global rollout of Covid-19 vaccines, the influx of businesses re-opening back up, the expected easing on inflation in the US and Europe and a strong-performing share market.
As of now, the market has begun to settle and dip again, locally due to Auckland returning to lockdown and globally due to changes in the Chinese market and rising bond yields.
KiwiSaver at Milford
Milford is a New Zealand-owned investment firm. In 2021, it won the Canstar Provider of the Year Award and the Morningstar Overall New Zealand Fund Manager of the Year Award, among others.
Milford’s most recent data is from October 2021, so it is not completely comparable to ANZ as it displays more of the current dip in the market we are experiencing. However, we can still get a gauge of the way that their funds perform compared to a bank-owned scheme.
Most of Milford’s KiwiSaver Schemes are new, and do not have data past the one-year mark. Most of the schemes began in 2020 or 2019, apart from the Conservative and Balanced funds, which started in 2012 and 2010, respectively.
The data from Milford’s older funds show a strong performance, and the newer ones can be speculated from the past ten months.
We can see the higher volatility funds have been outperforming, the lower volatility, such as Cash and Conservative. The one-year All their funds’ one-year returns are currently outperforming the expected ‘Since Launch’ figures.
Milford’s higher volatility funds currently outperform ANZ’s equivalent; however, that doesn’t mean Milford is the better fund. ANZ’s conservative funds are looking much healthier than Milford’s.
About KiwiSaver providers
As of October 15, 2021, there were 27 KiwiSaver providers, with about $81.6 billion of New Zealanders’ money invested. Within these, 27 KiwiSaver providers are 305 different funds, with a wide range of investment options to choose from.
The choices can be overwhelming as a new KiwiSaver investor. However, the variety of funds really means that there is the perfect fit for everyone’s individual goals.
As we have seen from our providers above, it is not always super reliable to depend on a fund’s most recent returns, as the market and investments can fluctuate wildly in as little as one month. To choose the right KiwiSaver, consumers are recommended to talk with a trusted financial advisor.
To make an optimal decision, KiwiSaver investors should keep five things in mind their age and capacity for volatility; if they want to use their KiwiSaver for property or retirement; the finances they desire at retirement; the individual fund’s fees and investment style. By weighing up these factors, your financial advisors can help you with calculated decisions to help you fit that lifestyle.
Clive Fernandes is an Authorised Financial Adviser and the director of National Capital, a financial advisory firm that provides personalised investment advice, with a primary focus on KiwiSaver.
Disclaimer: The above article is not intended to be personalised advice. It is general in nature and may not be relevant to an individual’s circumstances. Before making any investment, insurance or other financial decisions, you should consult a professional financial adviser. A copy of Clive Fernandes’ disclosure statement is available on request and free of charge.