KiwiSaver fund rankings released

Chopping and changing at eight of the biggest KiwiSaver providers has stopped them from delivering a gold-star performance, but all were good enough for a pass mark.

The first independent research to look past headline returns and try to predict the future prospects of KiwiSaver nest eggs concluded the big funds offered ''pretty good'' value for money.

Morningstar's fund analysts looked at five factors, including the quality of people, investment strategies and price and delivered a positive, but not glowing, endorsement.

Analysts researched the six default providers plus Westpac and Fisher Funds and awarded each a ranking from positive - divided into Gold, Silver, and Bronze - to neutral and negative.

The highest rating dished out was Bronze, meaning the advantages of the fund clearly outweighed the disadvantages. No fund met the gold or silver standard of having ''notable'' or ''standout'' advantages.

Morningstar's co-head of fund research Chris Douglas said changes in key people and policies had stopped funds achieving better than bronze.

''No KiwiSaver manager has had the same people running the money for the first four years.''

''In every case there has been significant changes to the investment team.

There have also been some very large process and asset allocation changes and corporate changes,'' he said.

Bronze was still a positive rating. ''We are saying that, for our clients, we'd be more than happy for them to buy these funds,'' said Douglas.

Bronze rankings went to Mercer, OnePath (including ANZ, SIL, and National Bank) and Westpac.

ASB, AXA, Fisher Funds, and Tower were rated neutral, meaning they met the investment grade but were unlikely to deliver standout returns.
No funds were assessed as having flaws that would significantly hamper their future performance.

AMP KiwiSaver was rated as ''under review'', meaning more information was needed, because of uncertainty about how it will manage the transition to new managers.

Ownership of the two schemes has merged but Douglas said it was not yet clear how AMP's potentially problematic unlisted property assets would be dealt with.

When it came to ranking funds, those that regularly reviewed asset allocation and made sure any changes flowed down to the funds were more likely to be ranked bronze, while lower-ranked funds were considered more likely to be ''hamstrung'' by corporate and staff changes, said Douglas.

He said funds would probably score better in future rankings once new staff and strategies had bedded in.

''When you look at the teams that we have on table...I'm really positive about where the industry's heading.''
One of the scheme's most controversial aspects - fees and expenses - received a positive review compared with similar funds in Australia.

Whilst ''not outrageously cheap'' they were close to wholesale rates as opposed to the more expensive retail rates that are usually paid by mum and dad investors, said Douglas.

- © Fairfax NZ News