If ever there was a sector within the KiwiSaver universe where fund names were for most part irrelevant, the Growth fund category would be it.
Within our Growth Fund category we have a mix of funds labeled 'Balanced', 'Balanced Growth' and 'Growth' funds.
We have identified in previous stories there is no industry standard for categorising funds and various research houses have different assessment criteria.
There is also a degree of subjectiveness when categorising funds and their suitability for specific types of investors. For an explanation of how we classify funds see here.
There is a trend emerging across all of the sectors where the returns of the top performing funds in each category are over-lapping those in the next sector up on the risk spectrum.
For example, the best performing Balanced funds could easily slot into the middle of the Growth fund category, and likewise with the top Growth funds, they would comfortably sit around the middle of the 'Aggressive' category based on their current long-term returns.
While some degree of over-lapping of performance across the various categories is to be expected, from an investor's perspective it means you can potentially select funds with a lower level of risk which will deliver an optimal level of return.
Our analysis shows a large number of funds have returned in excess of 9% p.a. (11 out of 20) compared to our last review where only nine exceeded this benchmark on a compound basis since April 2008.
Again only five funds returned over 10% p.a. and these are the same funds identified in our December analysis.
Overall we have seen an improvement in the long term performance of all the funds in this category.
AMP ANZ Default Balanced is the best-in-class Growth fund performer in terms of the full period track record. To get this classification it must not only have the best track record for the full period, but its returns over the past three years must not be less that those it earned over the full period.
On our regular savings basis, investing in the top funds you would have earned $12,911 more than you have contributed.
While that may not seem a lot based on your ending fund value of $35,811 it is very significant when you realise that $22,899 is what you, your employer and the Government contributed. The average Growth fund earnings after-tax and after-fees is $5,422 more than the $7,489 you would have earned in a Default fund.
Over the shorter three-year period a majority of the funds have exceeded double figures, which in turn is bolstering the longer term numbers. The same managers that are leading the pack in the shorter term are also leaders over the long term.
AMP, AON ANZ and Staples Rodway continue their dominance of this category and are extending their lead on the rest of the pack with some above average three-year return numbers.
Here are the full comparison as at March 31, 2015 for Growth Funds.
| Growth Funds |
Cumulative
contributions
(EE, ER, Govt)
|
+ Cum net gains
after all tax, fees
|
Effective
cum return
|
= Ending value
in your account
|
Effective
last 3 yr
return % p.a.
|
|||
| since April 2008 | X | Y | Z | |||||
| to March 2015 |
$
|
% p.a.
|
$
|
|||||
| AMP ANZ Default Balanced |
G
|
B
|
G
|
22,899
|
13,291
|
10.7%
|
36,191
|
11.8%
|
| ANZ OneAnswer Balanced Growth |
G
|
G
|
G
|
22,899
|
13,095
|
10.5%
|
35,994
|
11.9%
|
| Aon Russell LifePoints Growth |
G
|
G
|
G
|
22,899
|
12,858
|
10.4%
|
35,757
|
11.8%
|
| Staples Rodway Balanced | G | B | G | 22,899 | 12,815 | 10.3% | 35,714 | 11.2% |
| ANZ Balanced Growth | G | G | G | 22,899 | 12,499 | 10.1% | 35,398 | 11.3% |
| Aon Russell LifePoints 2035 |
G
|
G
|
G
|
22,899
|
12,194
|
9.9%
|
35,093
|
11.0%
|
| ANZ Default Balanced Growth | G | G | G | 22,899 | 11,966 | 9.7% | 34,865 | 11.3% |
| Aon Russell LifePoints Balanced |
G
|
B
|
B
|
22,899
|
11,960
|
9.7%
|
34,860
|
10.7%
|
| Mercer SuperTrust Growth | G | G | A | 22,899 | 11,784 | 9.6% | 34,684 | 11.3% |
| Aon ANZ Default Balanced |
G
|
B
|
B
|
22,899
|
11,691
|
9.6%
|
34,590
|
10.2%
|
| ASB Balanced |
G
|
B
|
B
|
22,899
|
10,961
|
9.0%
|
33,861
|
10.1%
|
| Fisher Funds Two Growth |
G
|
G
|
G
|
22,899
|
10,597
|
8.8%
|
33,496
|
10.3%
|
| Westpac Balanced | G | B | B | 22,899 | 10,146 | 8.4% | 33,046 | 9.5% |
| AMP Balanced |
G
|
B
|
B
|
22,899
|
9,516
|
7.9%
|
32,415
|
8.7%
|
| Craigs Growth |
G
|
G
|
|
22,899
|
8,420
|
7.1%
|
31,319
|
8.1%
|
| SmartKiwi Balanced | G | B | B | 22,899 | 8,279 | 7.0% | 31,179 | 8.9% |
| Craigs Balanced | G | B | 22,899 | 8,051 | 6.8% | 30,950 | 7.5% | |
| Craigs Balanced SRI |
G
|
B
|
|
22,899
|
8,050
|
6.8%
|
30,950
|
8.1%
|
| ------------------- | ||||||||
| Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition | ||||||||
| G = Growth, B = Balanced, A = Aggressive | ||||||||
The following Growth funds have not been going long enough to be included in the above table.
| Growth Funds |
Cumulative
contributions
(EE, ER, Govt)
|
+ Cum net gains
after all tax, fees
|
Effective
cum return
|
= Ending value
in your account
|
Effective
last 3 yr
return % p.a.
|
|||
| since April 2008 | X | Y | Z | |||||
| to March 2015 |
$
|
% p.a.
|
$
|
|||||
| Grosvenor Balanced Growth | G | G | G | 16,199 | 5,525 | 8.3% | 21,724 | 8.5% |
| BNZ Growth | G | G | G | 6,507 | 2,202 | 11.7% | 8,709 | n/a |
| Generate Growth | G | G | G | 6,287 | 1,911 | 9.7% | 8,199 | n/a |
| ------------------- | ||||||||
| Column X is interest.co.nz definition, column Y is Sorted's definition, column Z is Morningstar's definition | ||||||||
| G = 'Growth', B = 'Balanced', A = 'Aggressive' | ||||||||
For explanations about how we calculate our 'regular savings returns' and how we classify funds, see here and here.
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.
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 March reviews of the Conservative & Default funds, Moderate funds and Balanced funds can be found here, here and here.
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