QUESTION: I joined KiwiSaver a few years ago. Because I am self-employed I just put in the minimum each year to get the full Government top-up. I'm in the OnePath Conservative fund. I am pleased to see that my balance has grown to $6773.
Where do I go to find out how well my fund is doing compared to other funds? And how do I know if it is the right fund for me? I am 61 now.
ANSWER: If you buy a Sunday Star Times, you will find a performance update in their business section, with information supplied by Morningstar, an independent investment research company.
There are also a number of websites that show the performance of the various KiwiSaver funds. My favourites are at www.interest.co.nz and www.morningstar.co.nz. They are both well laid out and easy to view on your screen.
Morningstar's quarterly KiwiSaver Performance Survey has an overview, commentary, interesting "quick stats" and comparative performance data. The interest.co.nz website provides up to date information on interest rates and other data as well as financial news from managing editor Bernard Hickey and his team. I have put links to both of these on my website for easy access.
Performance reports sort the KiwiSaver funds into groups such as conservative, moderate, balanced and growth. You should note that the returns quoted will not be exactly the returns that you will get. Firstly, they are before investor tax which varies from 10.5 per cent to 28 per cent depending on your "prescribed investor rate" or PIR (this is a special tax rate for PIE investments including KiwiSaver). Secondly, you will get a slightly higher or lower return depending on the timing of your investment, as the unit price fluctuates from day to day.
Morningstar says your OnePath Conservative Fund ranks second (out of 13 funds) over the four years to December 31, 2011, with a return of 5.2 per cent per annum. At interest.co.nz, it is ranked fourth equal over the past three years with 5.9 per cent pa.
Your Conservative fund is ranked near the top of its sector and you should be pleased with that. Investors shouldn't try to hunt out the top-performing fund and switch from fund to fund every few years. Why not? Because past performance is no guarantee of future performance, and a great year can often be followed by a disappointing one.
Is it the right fund for you? That depends on your risk profile and timeframe. A good start is to complete the "risk recommender" questionnaire at www.sorted.org.nz. This website - entitled "The Kiwi Guide To Money" - is a great resource put together and maintained by the Commission for Financial Literacy and Retirement Income. The website has had a new makeover, and is well worth a visit.
Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 8703838. The information contained in this article is of a general nature and is not intended to provide specific or personalised advice. If you have any KiwiSaver questions, go to www.peak.net.nz or email shelley.hanna@peak.net.nz