KiwiSaver

OnePath has seen off competition from Fisher Funds and Milford Asset Management to be named Morningstar KiwiSaver Fund Manager of the Year.

The OnePath general manager funds, David Boyle, said he was delighted with the win.

“It’s a fantastic moment in the sense that the OnePath brand has been recognised with this award, particularly given the criteria that Morningstar used, which was quite extensive, particularly from a customer experience perspective.”

The Morningstar Australasia co-head of fund research, Chris Douglas, said the award winners, “have all shown themselves to be outstanding stewards of their investors’ capital.”

Morningstar praised OnePath’s transparent KiwiSaver options, broad selection of fee choices and strong performances.

“Morningstar’s analysts consider OnePath the best all-round solution for New Zealander’s retirement savings needs,” the company said.

Boyle said the wider criteria used to assess the award and the fact that KiwiSaver is more of a mass-market product made their success especially pleasing.

He said that during the awards ceremony Douglas said Morningstar had, “extended the criteria to include not only the performance of the scheme, but the transparency of fees, the quality of regular updates, the education material, the website, the tools and content on that website to assist KiwiSaver members with information and transparency, [these] were key factors.”

While Boyle stressed the importance of the wider factors around the OnePath offering, he also acknowledged the importance of fund performance.

“We take performance as a given, we have to deliver a level of performance and it needs to be consistent and consistently good relative to peers and the market. That’s what we strive for as a funds management provider as well as a KiwiSaver provider,” he said.

March 2 will see either Fisher funds, OnePath or Milford Asset Management emerge triumphant from the Morningstar Fund Manager of the Year Awards having been crowned KiwiSaver Manager of the Year for 2010.

Good Returns spokes to all three providers to try and find out what makes them amongst the best three KiwiSaver managers in the country last year.

For Fisher Funds managing director Carmel Fisher, being nominated in the KiwiSaver category is especially pleasing.

“Their finalists for KiwiSaver are slightly different in that they focus a little bit on client service, communications, all round offering really,” she said.

Fisher believes the company’s approach to communicating with their clients is one of their key pluses.

“We’ve always believed that if you communicate well with investors about how you’re investing their money and why, then they become better investors over time because they understand the process and engage with it, and we’ve certainly done that with KiwiSaver. For a number of KiwiSaver members, their KiwiSaver accounts represent the first time they’ve ever invested, so there is an education process to be done and we take that seriously.”

She also said that fact that KiwiSaver is a long-term investment means the investor will go through numerous market cycles, adding to the importance of effective communication.

“For a lot of people their KiwiSaver account is locked up for a long period of time, so the more they can be educated and communicated with on the way through, even though they can’t access their money, at least they understand what its doing and why its behaving the way it does.”

“Then I think they will be more engaged with it and take more interest in it, which they should as its their retirement savings,” she said.

For Milford Asset Management managing director Anthony Quirk, communication is also an essential part of the company’s approach to KiwiSaver management.

“We’ve made a big commitment to have very good communication to our investors on our website and communicating with them directly so we’ve made quite a deliberate effort in that area,” he said.

“This means we’re very transparent in terms of what we report to clients on the performance, what’s done well, what hasn’t done well, we’re very open with them in lots of different areas which I think is appreciated, which I think Morningstar has recognised as well.”

He said they had received positive feedback from their KiwiSaver customers both in terms of their performance – which Quirk acknowledged as the “bottom line” – and on how they report.

“We do get people transferring from other providers who make good contrast with the information they get with us to what they received previously, so it’s something we’ve been very conscious is an important thing to do.”

“Investors not only want to know that their funds are managed well, they want to understand how they’re managed.”

For OnePath general manager, funds management, David Boyle, their nomination is a reflection of the company’s track record of investing in different market cycles over 25 years and the experience that comes from managing the country’s oldest and largest superannuation schemes.

“These are some of the reasons for our default KiwiSaver provider status where the strength and stability of the manager was paramount for meeting rigorous criteria, along with a demonstrated ability to process and administer the scheme at the highest standard.”

Boyle said over the last three-and-a-half years the company has focused on meeting the needs of more than one-in-five New Zealanders with a KiwiSaver scheme.

“We offer the widest range of investment choices including five multi-sector funds and the lifetimes option, delivering the best quality and services to our members,” he said.

“In general we have delivered above market performance in the numerous investment sectors we work in.”

Fidelity Life’s Options Kiwi Fund was named as the best performing KiwiSaver fund out of 120 surveyed by FundSource for the three years to December 31, 2010.

With an annual average return of 11.59% over three years the Fidelity Life Kiwi Options was placed well ahead of the next placed fund in the survey, the Milford KiwiSaver Aggressive Fund.

In the year to January 31 it returned 9.21%.

The fund is one of the more unique KiwiSaver funds and is modeled on Fidelity’s Options Portfolio, managed by Tyndall Investment Management, which is a cash fund that issues options on US 10-year and other government bonds.

Fidelity Life CEO Milton Jennings said the alternative, fixed-interest strategy of the Options Kiwi Fund had produced consistently high returns for its KiwiSaver investors and attracted a growing number of New Zealanders.

The overall fund is now worth $36.7 million, up 64% on the year-earlier period.

“We have to produce consistent, and consistently high, returns for our customers to be successful,” Jennings said.

“The key benefit of our Options Kiwi Fund for investors is its focus on sound medium to long term management. This means the shorter term swings of potentially volatile financial markets are smoothed out.”

Jennings said that for Options KiwiSaver Fund customers, “the results speak for themselves.”

“An initial $1,000 invested with Fidelity Life in the fund three years ago on February 1, 2008 is now worth $1,473.97 on January 28, 2011.”

Jennings also said some 80% of Fidelity Life’s senior management have all or some of their portfolios invested in the company’s Options range of products.

He also said KiwiSaver has been a constant growth area for Fidelity Life, with a 96.6% increase in KiwiSaver funds under management, from $92.3 million on January 31, 2010 to $181.5 million on January 31, 2011.

Fidelity Life has signed up a total of 72,000 KiwiSaver members since the launch of the scheme more than three years ago.

KiwiSaver funds ended 2010 strongly with positive returns across all sectors for the December quarter – and the year – according to the latest Mercer KiwiSaver Survey.

KiwiSaver growth funds – which have the greatest exposure to shares and property – performed best with a median return of 3.7% for the quarter ended December 31. The best performing fund for the quarter was the AMP Aggressive Growth Fund, with a 6.3% return.

By comparison, the more conservative default fund, had a median return of 0.9%.

Positive returns across the board were enjoyed by all KiwiSavers over last year.

For the whole of 2010, growth funds and balanced funds performed best with median returns of 7.1%, while conservative funds had 6.1% and default funds 5.9%.

At the start of 2010, an investment of $100 in the median default fund would be nearly $106, Conservative fund $106, Balanced and Growth funds $107, excluding the impact of any employer or government contributions.

Among the top performing Growth funds the Fisher Funds Growth Fund was the best performer, up 12.1% in the 12 months to December 2010.

Over the year the best performing fund in the Default sector was the Mercer Conservative (6.2%), the best performing Conservative fund was the Aon Russell Lifepoints 2015 (10%) and the best performing Balanced fund was the Aon Russell Balanced (10.4%).

However, since the scheme’s launch in 2007 funds with the highest allocation to bonds and cash remain the best performers, reflecting volatile sharemarket performance over that period.