Healthy returns for growth Kiwisaver funds

REBECCA STEVENSON
Last updated 16:03 29/01/2014

Relevant offers

Money

Rich listers favour property investment, according to NBR Rich List Budget Buster: All that glitters is not gold Sheldon Slabbert: Is inflation really dead? Paper bank statements fall out of favour as digital takes over Givealittle 5 per cent fee may cause stress for campaigners Auckland house sale prices leave official valuations in the dust What does bridal shop failure mean for customers who have paid deposits? Recruitment consultant ripped off foreign workers in Christchurch Think you're bored at work? Try these jobs Wealth is only key to happiness if you know how to spend it

KiwiSaver funds with exposure to sharemarkets recorded impressive returns last year compared with conservative funds, a new survey says.

Independent researcher Morningstar released its KiwiSaver survey for the December quarter this afternoon.

It says global markets' strong run in the quarter, during which sharemarkets swelled by more than 9 per cent, translated into healthy returns for growth KiwiSaver schemes.

Across the year sharemarkets performed even better for their investors, reporting an increase in value of 27 per cent, the company said.

Aggressive and growth KiwiSaver funds usually hold riskier investments like stocks and property. Conservative and moderate funds tend to hold a mix of bank deposits and fixed interest investments, shying away from shares due to their volatility.

Aggressive and growth funds reported average returns of 5.66 per cent and 4.54 per cent for the quarter.

Moderate and conservative funds returned 2.11 per cent and 1.61 per cent respectively, Morningstar said.

It was a similar story in 2012 with shares having a "banner" year.

Morningstar Australasia co-head of fund research Chris Douglas said investors in conservative options were lagging growth funds with property and fixed interest investments providing low returns in 2013.

New Zealand fixed interest was one of the worst-performing sectors for the year, he said, down 1.16 per cent.

In the more than five years since the global financial crisis average growth KiwiSaver funds have delivered 10 per cent per year compared with conservative funds which returned 6.2 per cent, Douglas said.

"So investors in the lower risk profile have lost out relatively speaking, anyway. This is the cost of not choosing the most appropriate risk profile. A few percentage points can make a big difference over 20 to 30 years."

More than 2 million New Zealanders now belong to the superannuation scheme, about half of the eligible population.


Ad Feedback

- Fairfax Media

Comments

Special offers

Featured Promotions

Sponsored Content