KiwiSaver

None of the KiwiSaver funds monitored by Morningstar have experienced negative returns over any of the one-, three- or five-year monitoring periods, which co-head of fund research Chris Douglas says has come as a pleasant surprise.

Morningstar yesterday released its KiwiSaver Performance Survey to March 31.

Douglas said the first quarter of the year had been a busy one for KiwiSaver providers, with several closing funds to new investment and BNZ joining the market.

Douglas said the latest return pattern was much as most people would expect. “When equity markets are strong, balanced growth and aggressive funds do better.”

Funds with an exposure to shares and listed property have done well while fixed interest returns have been less impressive. Milford’s allocation to shares pushed it to the top of the conservative and balanced funds categories.

AMP, ANZ and SIL had strong results across a number of categories.  Fisher Funds, Fidelity KiwiSaver and Brook KiwiSaver performed strongly across the growth and aggressive multi-sector categories.

Milford’s Active Growth KiwiSaver posted a 13.65% return per annum over five years and was the top performer when the data was taken since inception.

Of the default schemes, OnePath’s conservative scheme is offering the best returns of 6.3% per annum over five years and 8.5% on a one-year basis.

KiwiSaver assets on the Morningstar database have grown from $954.1 million in 2008 to $14.48 billion at March 31.

Douglas was optimistic about the coming year, although he said there was always the possibility of volatility on the horizon.

He pointed to increased investment in high-yielding shares, of which the New Zealand market has more than its fair share. He said that was appealing to New Zealand and foreign investors and could keep the sharemarket buoyant for some time to come.

“But like any market we are prone to offshore jitters. We’re not out of the woods by any measure yet.”

A KiwiSaver model is needed that makes it possible for financial advisers to provide the level of advice the KiwiSaver members need, in a way that is also cost-effective for advisers, says the author of a new report on the scheme.

The Financial Services Institute of Australia commissioned Claire Matthews, of Massey University’s Centre for Banking Studies, to compile its latest report, KiwiSaver and retirement savings in 2012.

It showed that the level of participation in the scheme had increased, up to just over 62% of the working-age population.

Smaller providers were gaining ground but more KiwiSaver members have their accounts with a bank. A third reported that there accounts were in bank funds.

Just over 20% had changed funds and most had moved for “bank-related” reasons. Many said they wanted all their dealings to be with one bank.

Being able to easily check their balances was one reason suggested for moving to a bank KiwiSaver scheme, but only 41% of members checked their balances more than once a year.

More than 30% said friends and family were their preferred source of advice on KiwiSaver.

Matthews said some people were not looking for advice for a financial adviser and others were not able to get it because advisers found it unprofitable.

She said banks were doing a lot of work on growing their KiwiSaver balances and were putting increasing value on them as a useful part of their product ranges.

“Kiwibank saw value in buying Gareth Morgan Investments and BNZ has chosen to go into the KiwiSaver market, which it didn’t initially.”

Fisher Funds is now the biggest New Zealand-owned and managed KiwiSaver provider, after the acquisition of TOWER investments.

The $79 million deal settled today, leaving Fisher Funds with 269,000 customers and $5.5 billion under management.

Managing director Carmel Fisher said: “We are proud of Fisher Funds’ journey to date, one that has seen us attract a large and loyal client base as a result of excellent investment returns and our commitment to servicing our clients. We look forward to extending this high quality customer service to all TOWER Investments clients.”

She said TOWER clients would not notice many differences over the short term.

“Over the next 12 months, we will select the superior elements from both the TOWER and Fisher Funds offerings to provide a range of best in class Fisher Funds branded products and services for current and future clients to choose from. As we go through the process we will keep our clients fully informed, explaining the impact and benefit of any changes.”

TOWER Investments is the fourth KiwiSaver provider acquired by Fisher Funds in the last three years taking its market share to about 10%.

The acquisition of TOWER Investments was fully funded by bank debt, Fisher Funds’ existing shareholders and the addition of TSB Bank as a 26%shareholder. No client funds were used to fund the purchase.

Only 9% of New Zealanders think the country’s superannuation is enough to live on in retirement, survey results released by the Financial Services Council show.

About 65% said it was not enough to live on. Ten per cent said they were not sure and 15% were neutral.

NZ Superannuation provides an individual $349 a week.

FSC chief executive Peter Neilson said despite that, New Zealanders were not doing enough to save for their retirement and standard KiwiSaver contributions were insufficient.

“Whilst 2 million New Zealanders have enrolled in KiwiSaver most are currently contributing at 2 per cent for the employee and 2 per cent for the employer respectively. At a 2 per cent contribution from employee/employer individuals will fall below the savings threshold that will provide them with a comfortable retirement.”

He said people needed to save 10% of their income from the time they started working to achieve a comfortable retirement.