KiwiSaver funds with a higher allocation to shares and property were the best performing funds in the first quarter of 2010, according to Mercer’s KiwiSaver survey.
But Mercer New Zealand boss Martin Lewington has warned that with global markets starting to wobble, the positive results may not last long.
Growth funds in the survey earned a median return of 3.3% for the quarter with Fidelity Life Aggressive the top fund at 6.3%.
Balanced funds were next best, earning a median 2.9% return with Tower Balanced coming out on top on a 3.8% return for the quarter.
However, the speed of growth has slowed for both growth and balanced funds, which earned median returns of 28.7% and 19.7% respectively in the year to March 31.
The Fisher Funds Growth Fund was the best performing fund over the entire year, making a return of 50.8% in that period.
But the wide gap in returns between growth/balanced funds and conservative/default funds seen over the last year has closed in the March quarter.
Conservative funds, which achieved a median return of 11.9% for the year, were not far behind balanced funds with a median return of 2.1% for the quarter.
Default funds were only slightly lower with a median return of 2.0% for the quarter, compared to 10.2% for the year.
Mr Lewington said funds were faring well given strong growth in global markets and better than expected corporate earnings, but growing concerns over possible sovereign debt defaults in the Eurozone could threaten the run of positive returns.
“While KiwiSaver funds have posted positive returns over the last four quarters, performance has reached a plateau and we’re not seeing the same level of growth achieved over the last six months.
“This is an outcome of the competing pressures influencing investment markets,” he said.
“While on one hand we’ve seen increased tolerance for risk, strong performance in the US market and better than expected corporate earnings, uncertainty still prevails and this is putting a cap on the markets.”
Despite their strong year growth and balanced funds still lag behind in overall performance since KiwiSaver was launched two and a half years ago.
In that time default funds have come out on top with a median return of 4.5% per year, followed by conservative funds (3.0%).
Default funds have gone backwards in that time with a median return of -0.2% while growth funds, which were hammered by the financial crisis, have achieved a median return of -3.7% per year.
The top seven default funds have grown by nearly $1 since June 2009, reaching 2.26 billion as at March 31, according to the Mercer survey.
Niko Kloeten
Mon, 10 May 2010
