Growth funds, which principally invest in equities and property, were the best performing KiwiSaver products in the third quarter thanks to a rally on global equity markets.
That's according to Mercer's KiwiSaver Survey, a quarterly barometer of how the various investment choices performed in the period.
The study found growth funds returned a median of 5.7 per cent for the three months ending September, outpacing returns of 2.7 per cent for default funds, 3.4 per cent for conservative funds and 4.6 per cent for balanced funds.
The best performing fund in the quarter was Aon Russell Lifepoints, which returned 8.5 per cent over the three months.
On an annualised basis, the median growth fund returned 13.8 per cent while OnePath's SIL Growth was the best performer with investment gains of 17 per cent over the 12 months.
The performance of growth funds was driven by a sudden surge in equity market activity in the period, as investors' bets that US, Chinese and European policymakers would be compelled to inject further stimulus into their economies paid off.
"Following improved market conditions in previous months, shares were the main benefactor with growth funds faring best over the quarter," said Philip Houghton-Brown, Mercer's head of investments for New Zealand.
"Despite the market unrest over the past year, growth funds continue to perform the best during this period, however they are still behind the other three multi-sector options when compared over the five years since KiwiSaver's inception."
He said the downturn in the global economy appears to have bottomed out, which could suggest that growth-linked assets such as stocks could continue to outperform - however there are still significant risks out there.
Chief amongst these is the looming US fiscal cliff, a US$600 billion ($734 billion) package of spending cuts and tax hikes that could automatically kick in at the end of the year unless policy makers reach a compromise on government borrowing.