KiwiSaver assets rose by almost $9 billion in the June quarter to nearly $130b, due to a combination of strong market returns and inflows, Morningstar says. Photo / Getty Images
Investment research firm Morningstar says the New Zealand equity market posted a positive return over the second quarter after a dip in the the first, but still lagged overseas investments.
KiwiSaver assets increased, ending the June quarter at close to $130 billion, up almost $9b, due to a combination of strong market returns across the board, and inflows, Morningstar said in its quarterly KiwiSaver survey.
Average “multi-sector” category returns for the June quarter ranged between 2.1% for conservative and 5.6% for the aggressive category.
“Over one, three, five and 10 years, risk continues to be rewarded with the more growth assets in the category, the more it has returned,” it said.
Most multi-sector KiwiSaver funds produced positive returns over the quarter.
As for default funds, all funds with the notable exception of Fisher Funds (2.3%) returned over 4%.
“However it is worth noting that Fisher Funds’ default fund is marginally the strongest performer for the trailing one year and is middle of the pack over three years,” Morningstar said.
Generate, Quay Street, Milford and Westpac produced some strong performances across many risk profiles for the quarter.
Morningstar said it was most appropriate to evaluate the performance of a KiwiSaver scheme by studying its long-term returns.
Over 10 years, the aggressive category average has given investors an annualised return of 8.6%, followed by growth (7.8%), balanced (6.4%), moderate (4.6%), and conservative (4.1%), it said.
ANZ led the market share with almost $22b. ASB was in second position, with a market share of 14.6%.
Fisher, Milford and Westpac round out the big five.
The New Zealand equity market (S&P/NZX 50 Index) posted a 2.8% gain in Q2 2025, recovering from an initial dip.
“This performance, while positive, trailed stronger returns seen in international shares (+9.3% hedged to NZD) and Australian shares (+7.4%),” Morningstar said.
The Reserve Bank’s rate cuts and improving domestic sentiment were supportive factors for local equities, it said.
Both international and New Zealand fixed interest markets delivered positive returns in Q2, with gains of 1.2% and 1.3% respectively.
The general trend of lower interest rates has supported bond prices, although yield curves steepened marginally.
Morningstar said the residential property market, while still recovering, was showing increased activity among first-home buyers.
“The declining interest rate environment and recent government policy changes (such as restoring mortgage interest deductibility for rentals) are expected to bolster investor demand in the medium term,” it said.
“Investors may find opportunities as the market gradually gains momentum.”
Morningstar noted the weaker New Zealand dollar.
“Investors with international holdings should consider the impact of currency fluctuations on their unhedged returns,” it said.
Investment firm Jarden has given its seal of approval to the deal done by Genesis with the other big power generators to support the Huntly Power Station.
This week, Genesis Energy, Mercury, Meridian and Contact signed agreements to establish a strategic energy reserve centred on Genesis’ Huntly asset.
“This is positive for Genesis, as it supports the longevity of its Huntly assets and should reduce some of the political risk around the industry, managing dry-year risk without intervention,” Jarden said in a research note.
The initiative enables deferral of planned decommissioning of one of the Rankine units (originally scheduled for February 2026) through to 2035, and the establishment of a 600,000-tonne solid fuel reserve.
The strategic reserve has been developed in response to tight market conditions during winter 2024, where declining gas availability, low hydro storage and subdued wind output spurred concerns about security of supply.
Sir Michael Hill died holding 148.3 million shares (38.4%) in the company that bears his name, according to a notice filed with the NZX soon after his passing.
Separately, acting chief executive Andrew Lowe said in an update that despite retail trading conditions remaining challenging in all markets, the jewellery business had delivered full-year earnings and gross margin broadly in line with the prior year’s.
A “relentless” focus on store productivity brought a second-half lift in group same-store sales of 2.4%, Lowe said.
The company’s trading update for the 52 weeks to June 29 showed the jewellery retail chain’s earnings before interest and tax would be around $14m to $16m. For the 2024 period it was $15.9m.
Forsyth Barr has downgraded its rating of stock exchange operator NZX to “underperform” from “neutral”.
“We believe its sustainable growth level is lower than market expectations given: (1) increased competition in the low-fee passive funds industry has heightened fee pressure on NZX and softened net inflows to its high-value KiwiSaver product, and (2) our view that the headwinds to earnings growth in its capital markets segment over the last decade will persist rather than ease,” the broker said.
Over the last five years, NZX’s earnings before interest, tax, depreciation and amortisation had shifted from about 90% markets to around 40% funds management.
With funds management generating lower returns, more cyclical earnings and higher competitive pressures, it represented a lower-multiple earnings stream, Forsyth Barr said.
“Despite this shift, NZX is trading at a higher 12-month forward price earnings multiple today of 23 times than its pre-Covid average of 19 times.
“A sizeable valuation needs to be assigned to its wealth tech platform to explain the difference, which we believe is unjustified in light of historical merger and acquisition multiples,” the broker said.
Farm landlord NZ Rural Land (NZL) is to undertake a capital review of its strategic options.
Proposals to conduct the review for completion within the current financial year ending December 31 have been sought, the company said.
“NZL has been listed for coming up to five years. In that time the company has made strong progress in growing its asset and earnings quality and size.
“That has not been reflected in the share price.
“The board considers that the full range of strategic options on the capital structure requires review and input from shareholders.”
Shares in New Zealand Rural Land Company (NZRLC) debuted on the NZX at $1.31, a 4.8% premium to their $1.25 issue price, in December 2020.
The stock last traded at 99c, after spending much of last year at 85c.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.