KiwiSaver scheme providers have started releasing their latest quarterly KiwiSaver data for the period ending September 30, 2013. Our report covering the previous period can be found here.
As we had expected, the growth oriented funds have outperfomed their conservative peers as equity markets continue to rise as the US Fed declines opportunities to taper back their quantitative easing (QE) program and at the same time bond yields have been rising.
We observed in our previous review of the June 30 returns that over the past five years, the passively managed investment strategies had out-performed the actively managed ones.
This observation no longer holds for all the funds with actively managed Conservative & Growth fund marginally ahead of their passive alternatives, while the Active Balanced and Balanced funds are running neck and neck with each other.
Which style of investment management offer the best returns has been the subject of much conjecture. John Berry from Pathfinder Asset Management sums up the situation well in a recent article.
"Active vs passive discussions can be animated – there are strong believers on both sides with a wide range of views backed by endless academic studies. The debate has continued for decades and has not yet been settled – there can be inconsistencies across asset classes, time periods, market conditions and geographies. Perhaps we have to accept that for The Great Debate there is no single right answer….. "
Recent months have seen funds with high bond exposures struggle against a difficult backdrop and in many cases are posting negative returs to investors.
Many conservative investors will be disappointed with the returns they are achieving from what is principally a low risk and low chance of capital loss investment strategy. This further proves there is risk even in what would normally be considered "safer" investments.
Having said all this the returns posted by ASB are in not poor, in fact they are very respectable and reflect what has happened in global markets.
Excluding the Cash Fund with returned just under 3%, the returns for the core Conservative to Growth Funds returned between 5% and 16% for the past 12-months before taking into account deductions for tax.
On a post tax and all fund related fees basis the returns (excluding the Cash Fund) should fall within a range from 4.4% through to 14.4%. The exact after tax returns will be confirmed shortly.
These return ranges may seem wide, however they are in line with aggregate market index performance as illustrated in the table below. The indices in the table is a sample of the main ones used to benchmark performance. (Some managers will chose different benchmarks for a wide number of reasons.)
| Index Reference | 12 Month return |
| NZX NZ Government Stock | -2.1% |
| NZX Corporate A Grade | 3.0% |
| Barclays Global Agg Index Hedged to NZD | 2.8% |
| Citigroup WGBI Hedged to NZD | 3.2% |
| NZX50 | 23.5% |
| All Ordinaries Accumulation (NZD) | 10.8% |
| MSCI World (NZD) with net divs | 19.9% |
| MSCI World (NZD) with net divs 100% Hedged | 24.8% |
| data sourced from Tyndall.co.nz |
In the FirstChoice range which was closed to investors earlier this year the Active High Growth and Global Sustainability fund's continues to out-perform the core strategies offered under the ASB umbrella. These two funds have returned 21.8% and 25.5% respectively over the last 12 months (before tax and after fees).
Our June 30 summary showed for the past five years that conservative funds were reigning supreme, however the gap between the conservative and aggressive (high equity) portfolios had narrowed markedly.
With equity markets continuing their extended bull run, the tide has turned in favour of the more aggressive strategies, for now at least.
Across the board all the five-year and since inception returns are positive. After deducting tax at the highest tax rate of 28% per annum, since inception the Firstchoice Active High Growth Fund would be the only fund to be under water since inception.
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 30 Sept 2013 |
1 year (p.a.) |
5 year (p.a.) |
Since inception (p.a.) |
| NZ Cash Fund | 3.0% | 2.9% | 3.9% |
| Conservative Fund | 5.0% | 5.5% | 4.9% |
| Moderate Fund | 8.0% | 6.0% | 4.3% |
| Balanced Fund | 12.0% | 6.3% | 3.4% |
| Growth Fund | 15.9% | 6.3% | 2.4% |
When we have confirmation of the after tax and fees data we will update this story.
|
FirstChoice KiwiSaver Scheme 30 Sept 2013 |
1 year (p.a.) |
5 year (p.a.) |
Since inception (p.a.) |
| NZ Cash Fund | 3.0% | 2.9% | 3.9% |
| Conservative Fund | 5.0% | 5.6% | 4.9% |
| Moderate Fund | 8.0% | 6.0% | 4.1% |
| Balanced Fund | 12.0% | 6.4% | 3.4% |
| Growth Fund | 15.9% | 6.3% | 2.3% |
| Active Conservative Fund | 7.9% | 6.2% | 4.5% |
| Active Balanced Fund | 12.7% | 6.1% | 3.0% |
| Active Growth Fund | 17.1% | 6.3% | 2.1% |
| Active High Growth Fund | 21.8% | 3.6% | 0.1% |
| Global Sustainability Fund | 25.5% | 8.9% | 7.0% |
More detailed performance reporting can be found here ».
The table below outlines the assset allocation for each ASB fund which is currently open for investment.
|
ASB KiwiSaver |
Cash (%) |
NZ Bonds (%) |
Global Bonds (%) |
Property (%) |
Global Property (%) |
NZ & AU Shares (%) |
Global Shares (%) |
| NZ Cash | 100 | ||||||
| Conservative | 21.1 | 29.6 | 29.6 | 9.0 | 10.7 | ||
| Moderate | 11.1 | 24.7 | 24.7 | 6.0 | 16.0 | 17.5 | |
| Balanced | 6.4 | 16.8 | 17.8 | 6.9 | 20.1 | 32.0 | |
| Growth | 3.5 | 8.9 | 8.9 | 6.9 | 28.1 | 43.7 |
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