KiwiSaver scheme providers are starting to release their latest quarterly KiwiSaver data for the period ending December 31, 2012. Our previous story covering the returns to September 30, 2012 can be found here.
After some managerial and structural changes in 2012, the investment team looking after the ASB and FirstChoice KiwiSaver schemes now has considerable industry expertise and some much needed grunt with First State Investments in Australia providing advice on strategy.
Additional external advisers can be engaged from time to time, however the buck stops with the internal investment committee who are responsible for making the final investment and strategy decisions. Included on the investment committee are senior ASB executives.
ASB has typically adopted a low cost, predominately passive approach which means it can deliver performance to its customers which is roughly in line with the market on an after fees but before tax basis.
Despite being on the front foot fees wise, the returns have been squashed somewhat by historical positions in Cash which were reasonably significant. This at a time when equity markets have been rallying significantly has meant ASB and FirstChoice returns are lagging some of their peers.
Once those structural changes are bedded in we would be expecting to see some improvement in returns relative to their peers.
ASB - through another company owned by their parent, Colonial First State Global Asset Management in Sydney - is now adopting an active approach to cash management rather than just tracking the 90-day Bank Bill Index. It is our expectation that the team in Sydney responsible for managing the cash position will be able to add value to investors by being more hands-on.
Examination of the various asset mixes shows the funds have a significant exposure to global property in the Balanced and Growth options (a small portion of which is in Australia) compared to many of their peers. They also have a bias towards global fixed income (vs domestic bonds).
The manager takes an active approach to currency hedging. At 31 December the global equity portion was partially hedged (20%), the Australian shares portion was 70% hedged, and global bonds were fully hedged. The various levels of hedging will also have impacted on the returns to investors.
This sector suffered severely during the global financial crisis (GFC) but has bounced back strongly in 2012 to be one of the better performing asset classes. Should this trend continue in the near term we would expect it will provide a boost to the returns.
One of the stand-out performers over the last 12-months has been the FirstChoice Global Sustainability Fund. The manager invests into global shares which are actively managed. To be included in the portfolio the companies must demonstrate sustainable practices and policies (either directly or indirectly).
The Global Sustainability Fund added 14.7% over the past year and since it was formed in April 2008 it has returned 4% per annum (after fees but before tax).
Generation Investment Management LLP (Generation) is the underlying investment manager of the Fund. Its founders are former US Vice President, Al Gore and former global CEO of Goldman Sachs Asset Management, David Blood.
For the last five years the clear winners were the Conservative funds and co-incidently these portfolios do not include any exposure to global property.
Below is a table of the longer term performance of the various funds. The return data is before tax and after fees and is as published by the managers. (No adjustments have been made to take into account those additional fees which scheme providers may charge and which are not included in calculating the fund performance. We do make such adjustments, but they will not be included until the full benchmarking is published.)
|
ASB KiwiSaver Scheme 31 December 2012 |
1 year (p.a.) |
5 year (p.a.) |
Since inception (p.a.) |
| NZ Cash Fund | 2.5% | 3.8% | 4.0% |
| Conservative Fund | 6.6% | 5.1% | 5.0% |
| Moderate Fund | 9.2% | 4.4% | 3.9% |
| Balanced Fund | 11.2% | 3.0% | 2.3% |
| Growth Fund | 12.8% | 1.4% | 0.5% |
|
FirstChoice KiwiSaver Scheme 31 December 2012 |
1 year (p.a.) |
5 year (p.a.) |
Since inception (p.a.) |
| NZ Cash Fund | 2.5% | 3.8% | 4.0% |
| Conservative Fund | 6.6% | 5.1% | 4.9% |
| Moderate Fund | 9.2% | 4.2% | 3.7% |
| Balanced Fund | 11.1% | 2.9% | 2.2% |
| Growth Fund | 12.8% | 1.2% | 0.5% |
| Active Conservative Fund | 8.3% | 4.3% | 4.0% |
| Active Balanced Fund | 11.2% | 2.1% | 1.7% |
| Active Growth Fund | 12.9% | 0.8% | 0.1% |
| Active High Growth Fund | 11.9% | n/a | -3.3% |
| Global Sustainability Fund | 14.7% | n/a | 4.0% |
More detailed performance reporting can be found here>>.
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