Funds with defensive assets fare best

Kiwisaver funds with a higher weighting to defensive assets such as cash and bonds have proven the top performers during the recent spell of financial turmoil, says funds assessor FundSource.

A comprehensive survey of scheme providers' investment performance over the two years to October showed what was already generally accepted: that money manager returns varied greatly depending on their preferred investment strategies.

Over the two-year stretch, on average conservative funds outperformed their more aggressive alternatives in the balanced and growth sectors, which were weighted more towards higher-risk investments such as shares and property – the asset classes worst hit during the global financial crisis.

All fund managers in the conservative sector recorded positive returns in the two- and one-year periods to October.

Huljich Wealth Management was the star performer with an annualised return of 10.57 per cent over the two years. Boutique player Huljich, which in September sacked a string of its advisers after stinging criticism of their door-to-door funds selling practices, also grabbed top spot in the balanced and growth fund sector where it posted annualised returns of 7.2 per cent over the two years and 6.42 per cent for the one-year period.

Hot on Huljich's heels in both the balanced and growth sectors were fellow boutique players Brook Asset Management and Fisher Funds. All three take an active approach to investment portfolio management.

"If we are to draw some conclusions for the statistics, it would be that KiwiSaver members should ensure they are in an investment vehicle that is aligned with their own risk appetite and investment objective," said FundSource acting business manager TJ Singh.

Many KiwiSaver members would have been automatically enrolled in a defensive or conservative fund, Mr Singh said. "While that has been a good strategy for the past two years, it might be appropriate for some investors, with greater ability to take risk and greater risk appetite, to look at growth-oriented funds."

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