Craigs Investment Partners KiwiSaver results show most portfolios have outperformed their benchmarks since inception

Craigs IP offers what we think is some of the best disclosure around their holdings and composition of returns for the strategy in terms of income and growth return. The information is openly available on their website but is not necessarily in the most prominent position so does take some finding. To access the website click here.

The latest data released for KiwiSaver performance as at March 31, 2013 is from Craigs Investment Partners (Craigs IP). Our story covering the returns to December 30, 2012 can be found here.

The strategies on offer are similar to those of their competitor Forsyth Barr, however they do have less focus on single sector portfolios under their kiwiSTART Select Investment programme and provide investors more diversified "ready made" strategies.

Craigs IP allow a self selected investment option where investors can select specific securities from a nominated listed of approved investments which are overseen by an internal investment committee. The list of approved securities is expected to change over time as the firms investment recommendations change.

Examining the performance of the various funds and single sector portfolios on an after fees but before tax basis a large number of the portfolios have out-performed their benchmarks. Of the eight strategies to under perform (Fixed Interest, Equity and Conservative Fund) the Conservative Fund was the only fund that was close to benchmark (i.e. within 0.5%).

The Fixed Interest Fund has trailed its benchmark over one, two and three-years and since inception. The Equity Fund has trailed its benchmark over all time periods according to the data provided in their fact sheet.

Rather ironically the two worst performing funds have the most money invested into them. As at March 31, $69 mln was invested into the Fixed Interest Fund and just over $98 mln invested in the Equity Fund.

The best performing strategy by a clear margin is the NZ Equity Fund. A return of 13.7% per annum since inception is just above its benchmark (13.3% per annum) but a great result nonetheless. This strategy has a 11% exposure to listed property and a small cash holding (1.8%) with the rest invested into predominately top 50 companies. The largest holdings within the fund are in Auckland Airport and Ryman Healthcare.

Craigs IP offer a Balanced SRI Fund which is the smallest fund in their stable but has performed reasonably well since inception, beating its benchmark and doing so with considerably less volatility. The asset mix is 60% growth and 40% income assets. NZ fixed income securities makes up 27.7% of the fund, cash a further 14.8% and the remainder is equities with a higher weighting to NZ companies (26%). The exposure to Australian and global equities is 17.5% and 14% respectively.

Like the Balanced SRI Fund, Craigs IP Balanced and Growth Funds have provided investors with solid out-performance over their benchmark since inception and with considerably lower volatility. The funds performance in the short term has been impacted by lack-lustre performance of heavyweight Australian mining stocks, BHP & Rio Tinto, as commodity prices have softened.

The Balanced Fund has 41% exposed to Cash and Fixed Income, 5% to NZ Property and the balance to NZ, Australian and global equities. Of the equity exposures,  18.8% is held in Australian shares. The Australian and global equity exposures remain unhedged as they are in all the portfolios.

Within the Growth Fund, Cash and Fixed Income makes up 26%, 27% in NZ shares, 25% is in Australian companies and the balance in global equities both directly held and via listed exchange traded funds or UK Listed Investment Trusts.

An interesting name in the global equity portion is The Ranger Equity Bear ETF (0.2% of the fund). This is a new name to us and a quick Google search reveals the fund actively short sells domestic securities (US companies) with the aim of profiting from a fall in the market.

To date this fund has under performed the S&P 500 Index by 3% last month and approximately 26% over the past 12-months according to the funds website. The Gross expense ratio on the fund currently sits at 3.30% which appears to be extremely expensive given the miserable returns achieved to date.

The Australian Equity Fund offered by Craigs IP has provided a positive outperformance over the nominated benchmark (95% SX 200 Accumulation Index in NZD and 5% 90-day Bank Bills) over the past one and two-years and since inception. Plotting the unit price against the benchmark return shows there is a high correlation between the two sets of data.

With such a high correlation between the fund and the benchmark we were not surprised to see many of the heavy hitting Australian companies represented in the portfolio (e.g. CSL, BHP, Westpac, CBA, Woolworths).

Below is a table of the longer term performance of the Craigs IP 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.)

* 5 year returns are not available for all of the funds.

More detailed performance reporting can be found here ».

Note: due to rounding the numbers may not add up to 100%.