Since the launch of KiwiSaver in 2007, we have monitored the returns of each of the main KiwiSaver providers Balanced Funds every quarter.
The Morningstar Survey covers all of the main providers with the exception of the Gareth Morgan KiwiSaver scheme (as he refused to participate in the comparison survey).
Moneyworks NZ Ltd's comments from the survey for the quarter ending 31/03/2013.
Fees and Returns - an inverse relationship?
There does not seem to be the anticipated relationship between the Total Expense Ratio and returns. Based on the rhetoric from some journalists, all that you should be looking at is the level of fees charged by the fund manager. You should then choose the lowest fees, and this will lead to you getting the highest returns.
Well, KiwiSaver has been going for over 5 years now and this does not seem to be working. As an example, here are four providers, with their fees, fund size and returns for the last 1, 3 and 5 years according to the Morningstar research. As you can see, this has been sorted by the highest Total Expense Ratio of this sample to the lowest.
Therefore, based on the commentaries, you would expect to see the 1 year, 3 year and 5 year returns increase as you go down the table. Interestingly, this appears to be the opposite. The ANZ and OnePath SIL KiwiSaver schemes continue to consistently outperform the lower fee ASB, Westpac and Tower funds over all time horizons.
Interesting food for thought - it appears that there is more to choosing a suitable fund manager than just heading for the lowest fees and being able to see your balance on your bank account statement...
| Balanced PIE KiwiSaver | Total Expense Ratio (%) | Member Fee $pa | 12 month return to 31/03/2013 | 36 month return (per annum) to 31/03/2013 | 60 month return (pa)to 31/03/2013 | Fund Size ($million) |
| ANZ KiwiSaver Balanced Fund | 1.15 | 24.00 | 13.6 | 8.5 | 6.5 | 186.3 |
| OnePath SIL KiwiSaver Balanced Fund | 1.11 | 24.00 | 13.7 | 8.6 | 6.6 | 205.3 |
| Tower KiwiPlan Balanced | 1.09 | 33.00 | 12.1 | 6.7 | 5.2 | 281.8 |
| AMP KiwiSaver Balanced Fund | 0.96 | 36.00 | 11.2 | 6.9 | 4.8 | 218.8 |
| Westpac KiwiSaver Balanced Fund | 0.91 | 31.08 | 12.0 | 7.6 | 5.9 | 414.8 |
| ASB Scheme KS Balanced Fund | 0.65 | 30.00 | 11.1 | 6.5 | 3.0 | 279.2 |
| ASB FirstChoice KS Tracker Balanced Fund | 0.56 | 36.00 | 11.2 | 6.9 | 4.9
| 22.9 |
The Morningstar Survey is available free to download to the public here.
Relevant comments from Morningstar in their survey:
Morningstar - Some Pointers for those Impacted by KiwiSaver Provider Changes
If you have any thoughts or opinions that you would like to share, visit us at our Twitter, Facebook or Linked In pages, and comment.
For more blog entries that you might be interested in:
KiwiSaver Performance – how do you measure? – Fund Type
Are you breaking the law as a KiwiSaver Employer?
By Peter Church
