Aggressive KiwiSaver schemes have been turning in cracking returns now for a number of quarters in a row and our unique 'regular savings' model shows this trend continues to the end of December 2014.
Our review looks at returns from April 2008 and at the past three years, to try and identify if managers continue to improve on past results or whether they are falling off the pace compared with their peer group.
What we have found so far is that many managers are maintaining consistently high returns. Some of the more recent three year regular savings returns are heading toward 20% (after tax and fees) which is a fantastic achievement in our books. There are of course always a handful of managers that stand out and looking at our data we have identified ANZ, Milford, Aon, Mercer and Kiwi Wealth as the top five managers in the aggressive category.
As many of our readers will know, Milford is currently being investigated by the Financial Markets Authority (FMA) for possible market manipulation on some historical share trades. At this time there is no evidence to suggest the returns from the Milford Active Growth or Aon Milford funds are not accurate or need to be altered. We will keep abreast of this issue and make any necessary amendments to our return data and calculations once the FMA's investigation is complete and the findings made public.
For funds that have been operating for most of the period, the top 10 have averaged a +12.3% return per year (last quarter it was 12.5%), after tax and after fees. In anyone's book, that is still very good.
On our regular savings basis, investing in the top funds you would be better off by $16,710*. While that may not seem a lot based on your ending fund value of $38,928* it is very significant when you realise that $22,818 is what you, your employer and the Government contributed. The average Growth fund earnings after-tax and after-fees is $10,468* more than the $6,242* you would have earned in a Default fund*. The returns above the Default funds have been stellar especially when you take into account the Global Financial Crisis struck not long after KiwiSaver was first launched and the Aggressive funds were hit the hardest.
If we look at just the past three years, three funds stand out as delivering returns that are considerably higher than their long run average. These managers are Kiwi Wealth (Growth Fund) +6.0% and ANZ OneAnswer (Australasian Share Fund and International Share Fund) +4.8% & +4.7% respectively. In other words these managers have found some extra octane in their tanks and are improving their track record.
Life is not all beer and skittles in this sector, however, with a large number of managers who have been in the market since April 2008 failing to hit the 10% return on either a long term or short term basis.
The Mercer SuperTrust Real Assets fund is one of two that has generated lower returns in the past three years than over the full period (based on our return calculation methodology). This fund invests in listed & unlisted property, infrastructure, alternative assets including natural resources. The returns from these types of assets may vary significantly from year to year.
And AMP Growth Fund is the other laggard but it is showing some signs of improvement in the three year regular savings return column.
Past returns are no guarantee of future results. But a strong consistent track record is something investors should value.
Other analysts make a big deal about fee levels. We know the international research (mainly based on American markets), but our analysis focuses on after tax and after fees. We think if you are getting superior returns after fees, obsessions about fee levels are unnecessary. The key however is the long term view, and New Zealand KiwiSaver funds now have track records well over five years so it is relevant to start looking at these longer term achievements by managers. (The past three year view is only a qualifier to show whether they are 'still' earning their keep.)
Here are the full comparison as at December 31, 2014 for Aggressive Funds.
| Aggressive Funds |
Cumulative
|
+ Cum net gains
|
Effective
|
= Ending value
|
Effective
|
|||
| since April 2008 | X | Y | Z |
contributions
|
after all tax, fees
|
cum return
|
in your account
|
last 3 yr
|
| to December 2014 |
(EE, ER, Govt)
|
|
% p.a.
|
|
return % p.a.
|
|||
|
|
|
|
|
|
|
|||
| ANZ OneAnswerAustralasian Property | A | A | P |
22,218
|
17,279
|
14.0%
|
39,497
|
18.0%
|
| Milford Active Growth | A | G | AE |
22,218
|
16,929
|
13.8%
|
39,147
|
17.1%
|
| ANZ OneAnswer Int'l Property | A | A | P |
22,218
|
16,836
|
13.7%
|
39,054
|
15.5%
|
| Aon Milford | A | G | AE |
22,218
|
16,778
|
13.7%
|
38,996
|
17.0%
|
| ANZ OneAnswer Australasian Share | A | A | AE |
22,218
|
15,728
|
13.0%
|
37,946
|
17.8%
|
| ANZ OneAnswer Growth | A | G | G |
22,218
|
13,192
|
11.3%
|
35,410
|
14.6%
|
| ANZ Growth | A | G | G |
22,218
|
13,061
|
11.2%
|
35,279
|
14.5%
|
| Mercer SuperTrust Shares | A | A | AE |
22,218
|
12,584
|
10.8%
|
34,802
|
14.9%
|
| Kiwi Wealth Growth Fund | A | A | A |
22,218
|
12,449
|
10.7%
|
34,667
|
16.7%
|
| ANZ Default Growth | A | G | G |
22,218
|
11,937
|
10.4%
|
34,155
|
13.4%
|
| Aon Russell LifePoints 2045 | A | G | A |
22,218
|
11,908
|
10.3%
|
34,126
|
12.8%
|
| ANZ OneAnswer Int'l Share | A | A | IE |
22,218
|
11,059
|
9.7%
|
33,277
|
14.3%
|
| Fisher Funds Growth | A | A | A |
22,218
|
10,885
|
9.6%
|
33,102
|
12.2%
|
| Mercer SuperTrust TransTasman | A | A | AE |
22,218
|
10,842
|
9.5%
|
33,059
|
12.0%
|
| Westpac Growth | A | G | G |
22,218
|
10,797
|
9.5%
|
33,014
|
12.1%
|
| ASB Growth | A | G | G |
22,218
|
10,780
|
9.5%
|
32,998
|
12.3%
|
| Fisher Funds Two Equity | A | A | IE |
22,218
|
9,932
|
8.8%
|
32,150
|
11.8%
|
| Mercer SuperTrust Real Assets | A | A | P |
22,218
|
9,906
|
8.8%
|
32,124
|
9.1%
|
| Staples Rodway Growth | A | G | G |
22,218
|
9,900
|
8.8%
|
32,118
|
10.6%
|
| Mercer High Growth | A | A | A |
22,218
|
9,739
|
8.6%
|
31,957
|
10.8%
|
| Mercer SuperTrust High Growth | A | A | A |
22,218
|
9,716
|
8.6%
|
31,934
|
10.8%
|
| AMP Aggressive | A | A | A |
22,218
|
9,474
|
8.4%
|
31,692
|
10.5%
|
| Mercer SuperTrust Global Shares | A | A | IE |
22,218
|
9,299
|
8.3%
|
31,517
|
11.4%
|
| SmartKiwi Growth | A | A | AE |
22,218
|
9,131
|
8.1%
|
31,349
|
10.0%
|
| AMP Growth | A | G | G |
22,218
|
9,029
|
8.1%
|
31,247
|
9.7%
|
| Grosvenor High Growth | A | A | A |
22,218
|
8,004
|
7.2%
|
30,222
|
11.6%
|
| --------------- | ||||||||
| Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition | ||||||||
| A = Aggressive, AE = Australasian Equities, G = Growth, IE = International Equities, P = Property | ||||||||
For those funds that have not been going for the full period (April 2008 to December 2014) the results are shown below. In this group Generate Focused Growth has been the standout performer followed by Grosvenor International Share and Amanah KiwiSaver Plan. Both Generate and Amanah are relative newcomers to the KiwiSaver universe and are yet to prove themselves over the long-term. However, the short term data shows some promise.
| Aggressive Funds |
Cumulative
|
+ Cum net gains
|
Effective
|
= Ending value
|
Effective
|
|||
| since April 2008 |
contributions
|
after all tax, fees
|
cum return
|
in your account
|
last 3 yr
|
|||
| to December 2014 |
(EE, ER, Govt)
|
|
% p.a.
|
|
return % p.a.
|
|||
|
|
|
|
|
|
||||
| ANZ OneAnswerSustainable Growth | A | A | IE |
21,609
|
7,621
|
7.5%
|
29,230
|
9.9%
|
| Grosvenor Geared Growth | A | A | A |
18,988
|
6,218
|
11.1%
|
25,206
|
12.0%
|
| Craigs Equity | A | A |
17,534
|
4,223
|
6.0%
|
21,756
|
8.8%
|
|
| Lifestages Growth | A | A |
16,917
|
4,466
|
7.4%
|
21,383
|
9.3%
|
|
| Grosvenor International Share | A | A | IE |
15,887
|
5,484
|
13.8%
|
21,371
|
14.6%
|
| Grosvenor Socially Responsible | A | A | AE |
15,887
|
3,791
|
10.5%
|
19,678
|
8.8%
|
| Grosvenor Trans-Tasman Small Companies | A | A | AE |
15,887
|
646
|
3.4%
|
16,533
|
3.8%
|
| Craigs Australian Equity | A | A |
13,604
|
2,711
|
6.2%
|
16,315
|
7.0%
|
|
| Craigs NZ Equity | A | A |
13,604
|
5,999
|
13.9%
|
19,604
|
14.2%
|
|
| Generate Focused Growth | A | A | A |
5,997
|
2,037
|
17.4%
|
8,034
|
n/a
|
| Amanah KiwiSaver Plan | A | A |
2,793
|
886
|
13.7%
|
3,678
|
n/a
|
|
| --------------- | ||||||||
| Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition | ||||||||
| A = Aggressive, AE = Australian Equities, G = Growth, IE = International Equities, P = Property | ||||||||
There are wide variances in returns since April 2008, and even in the past three years, and these should cause investors to review their KiwiSaver accounts especially if their funds are in the bottom third of the table.
For explanations about how we calculate our 'regular savings returns' and how we classify funds, see here and here.
The right fund type for you will depend on your tolerance for risk and importantly on your life stage. You should move only with appropriate advice and for a substantial reason.
Our December reviews for Conservative & Default, Moderate, Balanced and Growth funds can be found here, here, here and here.
---------------------------------
* These numbers are the average of the top five funds
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