AMP dominated KiwiSaver fund growth in the December 2009 quarter with its conservative, balanced and growth funds all the best performers toppling Huljich Wealth Management from the top.
FundSource’s Latest KiwiSaver Report showed that AMP’s KiwiSaver Conservative Fund produced a return of 2.19%, its AMP KiwiSaver ING Balanced Fund a return of 5.03% and its AMP KiwiSaver Aggressive Fund a return of 4.99%.
In contrast Huljich Wealth Management’s conservative, balanced and growth funds were all ranked either bottom or second from the bottom for the quarter, although those funds still remain top over the two years to December 31.
FundSource business manager T J Singh says any fund manager can have a poor performance over the short period of three-months, it just depends on the underlying securities held and how they perform.
“FundSource looks at the minimum of a three-year risk adjusted performance to judge a fund’s performance.”
He says asset allocation has contributed to the performance of AMP funds which allocated a greater proportion towards global equities over the December quarter.
“AMP were more aggressive in terms of growth asset allocation and it’s worked well for them,” he says.
The report also looked at fund performance over longer periods and found on a one year, six month and quarterly basis growth funds have performed better than balanced funds; and balanced funds have performed better than conservative funds.
However, over the two year period, on average, conservative funds have performed better than balanced and growth funds.
Singh says the two year period to December 2009 has seen quite a lot of volatility in markets and you would expect variations in returns across fund managers that adopt different investment strategies.
“Also you would generally expect growth funds to outperform the conservative funds over a longer time period, however, the past two years have meant that funds with a higher weighting to defensive assets, such as cash and fixed interest, have outperformed the others.”
He says over the two year period, boutique fund managers like Brook and Fisher Funds, that take a very active approach to portfolio management, also appeared to have performed well as compared to their competitors.
“If we are to draw some conclusions from the statistics, it would be that KiwiSaver members should ensure they are in an investment vehicle that is aligned with their own risk appetite, investment objective and time horizon.”
Singh says many KiwiSaver members will have been automatically enrolled in a defensive or conservative fund.
“While this has been a great strategy over the past two years, it may be appropriate for some investors with greater ability to take risk and greater risk appetite, to look at growth oriented funds.”