KiwiSaver growth funds post strong returns for the year

KiwiSaver growth funds post strong returns for the year despite volatile global share market – Mercer’s KiwiSaver Survey

8th February 2011

KiwiSaver funds finished 2010 strongly with positive returns across all categories for the December quarter – and the year - according to the latest Mercer KiwiSaver Survey.

KiwiSaver growth funds - which have the greatest allocation to shares and property – performed best with a median return of 3.7% for the quarter ended 31 December, 2010. The best performing fund for the quarter ended December 31, 2010 was AMP Aggressive Growth Fund which returned 6.3% for the quarter.

By comparison, the more conservative default funds, posted a median return of 0.9%.

2010 brought positive returns across the board for KiwiSaver investors. At the start of the year, an investment of $100 in the median default fund would be nearly $106, Conservative fund $106, Balanced and Growth funds $107, excluding the impact of any employer or government contributions.

Over the past twelve months, growth funds were also the top performers. The Fisher Funds Growth Fund was the best performing growth fund earning 12.1% in the 12 months to December 2010.

However, since KiwiSaver’s inception in 2007, those funds with the highest allocations to bonds and cash remain the best performers reflecting a volatile share market environment over the period.

Martin Lewington, Head of Mercer New Zealand said that while funds ended the year in positive territory, economic recovery could still have a few bumps given the continuing concern around the level of US debt and Eurozone governments and consumers.

“Global investment markets finished the year on a high with renewed confidence over improved economic data in the US and as European sovereign debt woes failed to escalate further,” Mr Lewington said.

“Global leading indicators continue to improve, suggesting the global economy was accelerating into year-end. While concerns about European sovereign debt will continue to present headwinds for economic activity for some time, the solid economic activity in developing economies is good news for long term investors who can afford to ride out the short term wave.”

Quarter to 31 December 2010 12 months to 31 December 2010
Fund type Median return (%) Top performing fund name Top performing return (%) Median return (%) Top performing name Top performing return (%)
Default 0.8 AMP Default 1.9 5.9 Mercer Conservative 6.2
Conservative 0.9 Smartshares SmartKiwi Conservative 2.4 6.1 Aon Russell Lifepoints 2015 10.0
Balanced 2.4 Smartshares SmartKiwi Balanced 4.6 7.1 Aon Russell Balanced 10.4
Growth 3.7 AMP Aggressive 6.3 7.1 Fisher Funds Growth 12.1

Quarter Median Return (%) 1 Year Median Return (%) PTD* Return (%pa)
Default 0.8 5.9 4.5
Conservative 0.9 6.1 4.1
Balanced 2.4 7.1 1.5
Growth 3.7 7.1 -1.8
* The period to date (PTD) is 3 years and 3 months.

ENDS

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