2016 drew to an unpleasant close for many KiwiSaver funds, Aon’s latest industry survey shows.
In the December quarter, only cash funds posted a uniformly positive return.
Across all the other fund types, most funds went backwards over the three months – although balanced, moderate and conservative funds were the most affected.
Over the quarter, Kiwi Wealth’s growth fund was the best performer, with a 4.2% return. The worst was Generate’s conservative, losing 2.9%.
Over the past year, Mercer’s high growth fund topped the table with 7.8% and Generate’s focused growth was at the bottom, losing 0.4%.
Guy Fisher, an investment consultant at Aon, said the main issue for the quarter was a rise in interest rates and bond yields, which drove negative returns for domestic and global fixed interest.
“Global shares performed well in anticipation of Trump’s pro-growth policies, but New Zealand shares fell. New Zealand is a high-yielding share market, attractive for investors looking for yield, but vulnerable as interest rates rise,” he said.
“We would expect this volatility to continue. There is uncertainty around the timing and the impact of Trump’s policies. The actual amount of fiscal stimulus may be lower than currently assumed as the government debt to GDP ratio is already very high and politicians will be unlikely to sign off on policies that send it significantly higher.
“Even if they do, passing legislation takes time and may not happen until near the end of 2017. In addition is appears that the Fed will be raising the cash rate this year (probably sooner rather than later), which could send long term interest rates higher. And there is political uncertainty in Europe with elections this year in France, Germany and the Netherlands.”