More conservative KiwiSaver schemes are starting to get their chance to shine.
After a number of years where growth and aggressive schemes were the outperformers, a period of sharemarket volatility has seen the balance tip back in favour of those invested in less risky assets.
Morningstar has released its survey for the quarter ended March 31.
It found funds with a tilt towards defensive assets outperformed growth funds in the quarter. Average returns were positive across the board, ranging from 0.79% for the aggressive category through to 2.65% for the moderate category.
“Despite a volatile first quarter in global markets, most KiwiSaver funds delivered positive performance, with more conservatively-oriented options in particular doing well,” Morningstar Australasia director of manager research Tim Murphy said. “Strong returns from bond markets, coupled with the local sharemarket’s resilience, meant that most KiwiSaver investors’ retirement savings continued to grow.”
Fixed interest returns were strong across the board, as global bond yields generally fell over the quarter, while another unexpected cut to the OCR in March was a further positive for local bond performance.
In equities, New Zealand was one of the strongest performing markets in the world in the March quarter, benefitting funds with greater exposure to domestic stocks. Australian equities weren’t as strong, despite the rebound in commodity prices, while most international equity exposures delivered negative returns for the quarter.
Aon Russell KiwiSaver Scheme was again a standout performer in most of its categories. Aon’s outperformance is due primarily to its low exposure to growth assets.
Kiwi Wealth KiwiSaver had a tough quarter, with all its multi-sector funds sitting at the bottom of their respective peer groups. Kiwi Wealth has no exposure to Australian or New Zealand shares.
Over a longer term, Aon KiwiSaver Russell and ANZ KiwiSaver were at or near the top of most categories and were the most consistent performers across the board. Mercer KiwiSaver continues to be a top performer within the conservative category, while Milford KiwiSaver comfortably tops the balanced category over the long term, despite a weaker quarter.