Savers should be wary of picking their KiwiSaver fund based on past performance alone, says Morningstar co-head of research Chris Douglas.
The research firm yesterday released its quarterly performance tables for KiwiSaver which now have five years of investment history for most of the providers.
The tables show conservative KiwiSaver funds, where most of the money is invested in cash and fixed interest, have been the best performers on average over the past five years with an annual return of 5 per cent.
But Douglas said just because conservative funds had performed well over the past five years did not mean they would post equally strong results in the future.
"High single-digit returns from fixed interest in the future are unlikely, given that interest rates are so low," he said.
"For those who have a long time to retirement [at least 10 years or more], a more balanced approach with a tilt towards growth assets is likely to be the more appropriate option."
Douglas also warned investors off picking individual funds based on past performance.
"Choosing a KiwiSaver provider on the back of its five-year performance number alone is therefore likely to be a poor decision.
"We know that fund manager results swing around, and while a lot has happened over the past five years, this is still a comparatively short timeframe."
Douglas said KiwiSaver assets had grown at a phenomenal rate.
At the end of the first year of KiwiSaver just $954 million was invested. That has since grown to $12.1 billion, with more than two million members.
Best Performer over five years:
Milford Active Growth Fund 12 per cent per annum
Worst performer over five years:
Smartshares Growth Fund -5 per cent per annum