Morningstar says KiwiSaver funds under management rose to $104 billion in the December quarter, with all but two KiwiSaver funds making ‘positive returns’

KiwiSaver funds under management increased around $8 billion to $104 billion in the December quarter, according to research firm Morningstar, while all KiwiSaver funds apart from two provided “positive returns”.

This is in contrast to the September quarter where funds decreased by around $2 billion with KiwiSaver assets ending that quarter at $96 billion. All multisector KiwiSaver funds in September also only produced negative returns.

Morningstar says in the December quarter, ANZ led the KiwiSaver market share with more than $20.3 billion under management and a market share of 19.5%.

Fisher Funds came in second with a market share of 15.4% and more than $16.04 billion under management.

“The five largest KiwiSaver providers account for approximately 68% of assets in our database and generate around 69% of the fees,” says Greg Bunkall, data director at Morningstar.

Default options returned an average of 6.3% in the December quarter while the average multisector category returns ranged from 4.9% for the conservative category to 7% for the aggressive category.

The two funds that reported decreased returns in the December quarter were SuperLife UK Cash which was down 1.1% in the three months to December, and Kernel S&P Kensho Ele Veh Innv which dipped 7.2% in the same period.

Bunkall says markets were continuing to embrace moderating inflation trends which allowed scope for central banks to lower interest rates at a modest rate while also delivering a “soft landing for the global economy”.

But that sentiment was “vulnerable to challenge”.

“Growth in New Zealand is weak, and inflation pressures are receding, allowing scope for an eventual loosening of monetary policy. Timing remains uncertain,” he wrote in the report.

There also appears to be a “wider than normal array of views” over the macroeconomic outlook in 2024 – which Bunkall says supports diversification in portfolios, as well as “increasing attention” to microeconomics like business fundamentals and valuations.

“Election and political risks are expected to become more relevant internationally, with half the world’s population and around 60 countries going to the polls in 2024. The diversion of sea traffic from the Red Sea to around the Cape of Good Hope is a reminder of geopolitical frictions, which have lifted freight rates and represent another small “supply shock” on top of what is becoming repeated supply shocks,” he says.

“The path returning inflation to target still faces geopolitical challenges, and labor markets remain very tight, adding to inflation for services.”