KiwiSaver best performers revealed: conservative, defaults

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Default and conservative KiwiSaver funds with low exposure to shares and property have been the best performers for the quarter ended September 30, and the past year, according to Mercer's KiwiSaver Survey.

Mercer, an international investment consultancy, said global volatility continued to affect KiwiSaver fund returns.

While KiwiSaver diversified funds largely produced negative results for the quarter - with a median return of minus 3.7 per cent - the majority of default funds managed to stay positive with a median return of 0.2 per cent, Mercer, an international investment consultancy, said.

KiwiSaver default providers have a contract with the Government that requires them to meet additional reporting requirements.

The more aggressive growth funds posted a median return of minus 7.1 per cent for the period, Mercer said.

The best performing fund for the quarter was the default fund, OnePath Conservative, which returned 1.0 per cent over the period.

In the 12 months to 30 September, the median fund return was 1.5 per cent (after fees but before tax). The best performing fund for the same period was OnePath Conservative, which returned 4.8 per cent over the past 12 months.

Martin Lewington, head of Mercer New Zealand, said KiwiSaver funds could expect to see more volatility in the coming months.

"After a positive start to the year, global financial markets were highly volatile for the second consecutive quarter, with the impact of sovereign debt problems in Europe once again dominating investor sentiment," he said in a statement.

Closer to home, the conditions were more positive.

"The New Zealand economy has grown by 0.5 per cent on average for the past three quarters and the local share market, which rose by 7 per cent over the past year, is one of the few markets in positive territory over this period," Lewington said.

However, global conditions have dampened the outlook for investors. He said low interest rates and a stretched fiscal position in many developed nations had given investors cause to fear that the period of low or negative growth could persist for some time.

Mercer is a subsidiary of Marsh & McLennan Companies, a US-based global professional services and insurance brokerage.