'KiwiSaver has become an adult': $135b milestone marks 18 years of growth.
As KiwiSaver turns 18, assets in the scheme rose by $5 billion in the September quarter to reach just under $135 billion, research firm Morningstar says.
In its latest quarterly survey, Morningstar said most multi-sector KiwiSaver funds produced positive returns compared with the June quarter.
As for the default funds, all funds made it to around 5%.
“KiwiSaver has become an adult,” Morningstar data director Greg Bunkall said, noting the quarter marked 18 years since the start of the scheme.
Bunkall said the $5b increase over the quarter was due to a combination of strong market returns across the board and fund inflows.
“We have our first $1 billion default fund, and more on the way,” Bunkall said.
KiwiSaver assets on the Morningstar database rose strongly during the September quarter to 135b.
ASB had a strong quarter with three of its funds at the top of their category and the other two multi-asset funds in the top five performers.
Other than ASB, no provider consistently has funds at the top of the category, although a couple of Kernel’s low-cost multi-asset funds had some strong showings, Morningstar said.
ANZ leads the market share with almost $23b.
ASB is in second position, with a market share of 14.9%.
Then goes Fisher. Milford and Westpac round out the big five.
The five largest KiwiSaver providers account for about 66% of assets in the Morningstar database, or around $88b under management.
“We estimate that KiwiSaver providers will charge more than $1.1b from KiwiSaver members in the next 12 months to manage their KiwiSaver funds, at an average fee of around 0.82 of a cent per dollar invested,” Bunkall said.
KiwiSaver performances needed to be evaluated over the long term.
Over 10 years, the aggressive category average has given investors an annualised return of 10.0%, followed by growth (8.3%), balanced (6.8%), moderate (4.1%), and conservative (3.4%), Morningstar said.
In its market commentary, Morningstar said the September quarter marked another constructive period for diversified investors.
Inflation pressures continued to ease, major central banks extended their rate-cutting cycles, and risk assets performed well.
Domestically, the Reserve Bank of New Zealand maintained its gradual easing stance that began in August 2024, while the NZ dollar traded in a relatively tight range against the US dollar.
Short-term interest rates declined modestly over the quarter as the effects of earlier official cash rate cuts flowed through to retail deposit markets.
Term-deposit and call-account rates have rolled off mid-2024 peaks.
“Cash continues to provide valuable liquidity, but its yield advantage is narrowing as monetary policy normalises,” Morningstar said.
Local bond markets delivered positive returns as yields declined across the curve.
Softer inflation data and confidence that policy settings are moving toward neutral supported demand for duration.
Ten-year government yields ended the quarter near 4.2%, down from mid-year levels.
“With inflation expectations contained and further incremental easing likely, the backdrop for core fixed income remains supportive,“ Morningstar said.
The domestic equity market posted modest gains through the quarter.
Rate-sensitive and income-oriented sectors benefited from the ongoing easing bias, while defensives held firm.
Export-exposed companies gained some tailwind from currency stability.
“Although earnings growth remains uneven, sentiment improved compared with the first half of the year,” it said.
Australian shares continued to outperform New Zealand peers, led by strong contributions from banks, healthcare, and selective resource exposures.
The Reserve Bank of Australia held rates steady, underpinning investor confidence.
For unhedged New Zealand investors, mild exchange-rate moves had only a marginal effect on overall returns.
Global equities advanced as the US Federal Reserve delivered its first rate cut in September 2025, reinforcing confidence in a soft-landing scenario.
Technology, industrials, and European luxury sectors led performance, while Asia ex-Japan benefited from renewed investor interest, Morningstar said.
Hedged global portfolios recorded solid gains, and unhedged exposures were broadly neutral given limited currency movement, it said.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.