Growth assets the 2012 KiwiSaver winner
Shares padded the Christmas stockings of KiwiSavers last year, with a last-minute rally rounding off a strong year for savers with money in growth assets.
Conservative fixed interest investments in cash and bonds - KiwiSaver's star performers over a tumultuous five years - were eclipsed in 2012 by shares and listed property, helping put spikier growth and balanced funds on top over three years.
"Shares and listed property have now produced very respectable returns over the last three years," said research house Morningstar in its quarterly report on KiwiSaver performance.
"New Zealand shares have returned a shade under 8 per cent per annum, while listed property has surged."
Morningstar estimates just under 10 per cent of the $13.6 billion in KiwiSaver money it tracks is invested in New Zealand shares and another 27 per cent is in shares in Australia and elsewhere.
Listed property here and overseas accounts for about another 4 per cent.
More than half of the money is in fixed income assets.
Looking back over the five year life of the scheme - a relatively short period in investing terms - default and conservative funds remain on top, a category which catches the six big funds into which undecided automatically enrolled savers are put.
Good gains on the sharemarkets in three of the four quarters last year helped put growth, balanced and moderate funds ahead of their conservative alter-egos over the past three years.
On average, balanced, growth and aggressive funds posted double digits returns in 2012.
Morningstar researchers sounded a note of caution to anyone hoping to time the market, warning that crystal ball-gazing was "brutally difficult".
"Not many people predicted the striking 2012 returns sharemarkets around the world delivered," the researchers said.
"So likewise, be just as cautious when you hear those who expect these returns will continue.
"As we have seen in recent years, things don't always pan out as expected, especially in a world which continues to have low growth, high unemployment, and record government and household debt."
With volatile returns seemingly here to stay and United States and European debt uncertainties remaining, it was more important than ever not too pay too much in fees, said Morningstar.
"High fees erode future returns potential," it said.
Returns reported by the research house are published after fees, before tax and taking into account the Government tax credit.
Morningstar's KiwiSaver database at a glance:
- 16 providers - $13.6 billion under management
- Two biggest providers, ASB and OnePath combined, control 46 per cent of assets
- $5.1 billion in Conservative funds, with $1.5 billion of that in a single ASB fund.