Which fund is your KiwiSaver in? If it’s in a conservative fund, it’s averaged 6.6% over the past five years. In a growth fund? Return has been more like 9.5%. Today there is $33.4 billion of New Zealanders’ money invested into KiwiSaver schemes. The largest amount is in ANZ ($8.67 billion) followed by ASB ($6.226 billion). ASB has 50% of their clients in their conservative fund where as ANZ only 11 % are in the conservative fund.
Here’s the problem – if you’re a long term investor (in KiwiSaver), you’re missing out on the true return you should be getting. For example, the conservative funds have averaged 6.6% for the past five years against the growth fund, that has returned 9.5% for the same period. The result could cost some investors thousands in lost gains.
We often hear of investors being told by bank tellers to move from one provider to another “so you can see your daily balance of your KiwiSaver”. What many people don’t know is that the tellers have targets and Key Performance Indicators (KPIs) to meet. If they get bonuses or any other incentives, under the FMA rules today (unlike non-bank advisers), they don’t need to disclose these benefits.
We often see people being moved from a top performing fund to a fund with a dubious performance history. For example, if you moved to the Kiwibank balanced fund last year, your return would have been 3.1% – the worst performer of all 18 funds. To make it even more disappointing, this fund has $1.064 billion invested, yet has continuously performed at the bottom of the pack.
My question is, who is benefiting from this? It seems every time I visit a Post Shop to buy mileage for my car, I’m urged to move my KiwiSaver to Kiwibank.
At WealthDesign, we buy independent KiwiSaver research, each quarter, that compares all the KiwiSaver managers and the individual fund performances. We analyse the performance of the various fund managers and help our clients make informed decisions. It isn’t about moving from one fund to another to meet targets or KPIs. It is about providing our clients with the right information, so they can make informed decisions.
KiwiSaver will eventually become one of the largest assets most of us own. How quick and how well your asset grows, will depend on how well it is managed. There’s more to your KiwiSaver fund than just being in it.
Check your KiwiSaver – give us a call today.
Source: Morningstar Research 260716
John Barber
WealthDesign – a life well planned