Aon's KiwiSaver results show the wide divergence between Cash and equity returns over the past 12-months

The latest data released for KiwiSaver performance as at June 30, 2013 is from Aon.

Despite not being a default KiwiSaver provider, Aon added another $48 mln to its coffers as it continues to grow its total funds under management (FUM) rapidly. Also for the first time in many months the Aon Milford Active Growth was not the best performer over the past 12-months.

Our previous stories covering the December 31, 2012 and March 31, 2013 returns can be found here and here.

Over the past 12 months Aon's KiwiSaver funds under management (FUM) has risen by $48.5 million or approximately 30%.

About 30% of the total FUM ($54 mln of the total $200 mln) is invested into the Aon Milford Active Growth Fund with a further 25% is invested into the Aon Russell Conservative Fund.

We think investors should consider investing directly in the Milford fund in its own right in order to remove a extra layer of fees and maximise their investment returns.  

Many of the Aon funds have suffered losses in the monthly returns to end of June. Market volatility and rising interest rates have certainly not helped managers. The only fund to return a negative quarterly result was the OnePath Balanced Fund (-0.28%).

With the exception of the two Cash funds, every other fund provided investors with a double digit return for the past 12-months to June 30. Returns ranged from 2.7% to 27% depending on whether you were invested in Cash or one of the more equity focussed portfolios.

For the first time in many months the Milford Active Growth Fund was not the top performer, this honour goes to the Aon Russell Lifepoints 2045 Fund which returned 27% for the last 12-months.

The Milford Fund however showed its class with a pleasing 12.7% per annum return over five years. By contrast the Aon Russell Lifepoints 2045 Fund managed 4.7% per annum for the same period.

With the excpetion of the Milford Fund much of the top performance over the past five years has come form the more conservatively structured portfolios, with returns in-excess of 7% p.a. being recorded.

As a general observation we are seeing strong five year returns from some managers as they drop off some of the horrendous results from the early stages of the Global Financial Crisis. We would expect to see reasonably strong five year return data for at least the next few quarters unless of course something of a magnitude similar to the GFC hits markets again.

The vairous sub-managers continue to prefer:

- global shares over New Zealand shares

- New Zealand shares over Australian shares;

- global property over New Zealand property;

- and global fixed income over New Zealand fixed income.

Previously we have observed that the returns from the Aon KiwiSaver Russell Lifepoints Conservative, Moderate, Balanced and Growth funds roughly correspond to those of the Aon KiwiSaver Russell Lifepoints target date funds (2015, 2025, 2035 and 2045), however in the lastest data there is some divergence in returns which is most likely to be as a result of subtle differences in the underlying asset allocation of each fund.

The table of returns shown below illustrates that while the one-year returns from the target date funds is superior the main-stream diversified portfolios have performed better over the past five-years.

Below is a table of the longer term performance of the Aon 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.)

** The return since inception data has not been made available to us by the administrator.

More detailed performance reporting can be found here ».