KiwiSaver: The best and worst performers

Top performing funds in the conservative and balanced categories are much smaller. Photo / Kenny Rodger.

As KiwiSaver approaches its twelfth anniversary there is growing interest from people in the performance of their funds. A new online tool launched by the government this year called Smart Investor has made it easier than ever to compare how well your fund is going against others. In the first of a three part series Money Editor Tamsyn Parker looks at the best and worst performing funds.

Some of the biggest KiwiSaver fund managers run some of the poorest performing funds while smaller niche funds are topping the list of best performers.

Analysis of the performance figures over the last five years for the three top and bottom funds for the conservative, balanced and growth categories shows AMP funds feature in the worst three funds for all three categories.

AMP looks after around $5.5 billion in funds under management and is the fourth largest player behind the banks - ANZ, ASB and Westpac.

But that hasn't stopped its conservative fund being the poorest performer in that sector and its default fund coming in second from the bottom.

In the five years to March 31 AMP's conservative fund had an average annual return of 3.84 per cent - well down on the average annual return for the sector of 4.81 per cent.

Its fee was also higher than the sector average at 1.31 per cent compared to 1.12 per cent.

But even its default fund which has a low fee of 0.65 per cent has struggled returning a below par annual return of 4.05 per cent.

And longer term data from Morningstar shows the default fund has been a perennial poor performer. It ranks 10th out of 10 funds over 10 years, 13th out of 13 funds over five years and 15th out of 21 funds over the last year to March 31.

That's not good news for its 100,000 plus members who have $1.38 billion invested in the fund.

AMP is the fourth largest player behind the banks - ANZ, ASB and Westpac - with around $5.5 billion in funds under management. Photo / Getty Images

AMP's moderate fund is also bottom in the balanced category while its moderate balanced fund ranks third worst and its growth fund is third from the bottom in the growth category, according to latest Smart Investor data.

Jeff Ruscoe, AMP's chief client officer, said achievement of clients' retirement goals was at the core of the AMP KiwiSaver Scheme.

"As part of this, we are in constant conversations with all investment managers to review their investment strategy and performance, to ensure that AMP KiwiSaver clients are getting the outcome that helps them to achieve these goals.

"The results that clients are now seeing over the last three years from the AMP Capital investors funds inside our scheme is a result of this management."

Ruscoe said it identified some performance issues back in 2015 and steps were taken to correct them, resulting in the majority of the AMP KiwiSaver Scheme funds managed by AMP Capital delivering in the middle to top half of performance over the one and three year periods.

He said the default fund had also showed improved performance over the same period but the changes had yet to show up in the five year returns.

State-owned Kiwi Wealth manages nearly $4.3 billion in assets and is the sixth largest provider. Its conservative fund is the third poorest performer in the conservative sector with an average annual return of 4.18 per cent over the five years to March 31.

The fund has more than 51,000 investors with nearly $727 million invested.

Simon O'Grady, chief investment officer at KiwiWealth, said the poor performance of its conservative fund was almost entirely down to one key factor: it's allocation to growth assets.

He says the fund only allocated 15 per cent to growth - investment in shares and property assets - while other funds in the category typically had at least 20 per cent.

"That was a true conservative fund. But we have gone through a review recently and increased it."

KiwiWealth investors who want a more conservative strategy can move to its default fund while its balanced fund has also been shifted to fit with the change.

O'Grady said the changes had only been made as of March 31 so wouldn't be reflected in any performance data yet.

Quay Street Asset Management, which is owned by broker Craigs Investment Partners, also has two poor performing funds.

Its socially responsible fund was second from the bottom in the balanced category and its Australian equity fund was second from the bottom in the growth category.

However its New Zealand equity fund was the top performer in the growth category with an annual average return of 13.73 per cent compared to the average for the sector of 8.22 per cent.

But that fund only has 283 members with $4.5m invested.

It did not respond to requests for comment.

The worst performer in the growth category was NZ Funds inflation strategy fund which had an average annual return of 4.66 per cent compared to the sector average of 8.22 per cent.

Its fee at 1.71 per cent was also higher than the average for the growth sector of 1.5 per cent.

NZ Funds also did not respond to requests for comment on the performance of the fund.

The best performing fund in the conservative category - the Aon Russell Lifepoints 2025 fund - is tiny.

It has just 578 members and $19.9m invested but had an average annual return of 6.66 per cent over the five years to March 31 beating the sector annual average return of 4.81 per cent.

While the best performer in the balanced category was the Milford balanced fund, followed by the Aon Russell Lifepoints balanced fund and the ASB balanced fund.

To find out how your fund compares go to Smart Investor.

This is the first in a three part series looking at KiwiSaver fund performance.

Part 3: Should we weed out the worst performing KiwiSaver funds?

Clarification: An earlier version of this story incorrectly ranked ASB's moderate fund as a poor performer in the balanced category due to data from the Smart Investor tool not being updated because of a technical glitch. Data from KiwiSaver provider Generate was also excluded due to the glitch. The timing of the story also meant prior tables included a mixture of data from the five years to December 2018 and data for the five years to March 31. This was not made clear on the Smart Investor tool. The tables have been updated to use only data for the five years to March 31.