Download the most recent kiwisaver fund information discolsure data (December 20

Question

Download the most recent kiwisaver fund information discolsure data (December 2017) from the following website:

https://fma.govt.nz/news-and-resources/reports-and-papers/compare-kiwisaver-data/. Evaluate the performance of the NZ kiwisaver funds of 2017 by analysing the data. Address the following questions:

How many funds disclosed their information of December 2017? (10 marks)

Generate one column to calculate the difference between the fund’s last year return (%) net charges and tax and the market index return. (20 marks).

How any funds successfully beat the market and how many funds fail to beat the market after tax and fee are considered in 2017? (10 marks)

Overall, did the kiwisaver fund beat the market in 2017? (40 marks)

List the top five best-performed fund and the top five worst-performed fund using information from (2). (10 marks)

Other open comments. (10 marks)

Explanation / Answer

In the year to 31 March 2017 – the period covered by the statistics we receive from KiwiSaver providers – gross investment returns for KiwiSaver schemes more than doubled compared with 2016, up $1.4 billion (108%), from $1.3 billion in 2016 to $2.7 billion this year.

Scheme membership increased from just over 2.6 million to 2.7 million. This is a 4.4% increase during 2017.The number of contributing members rose from 1,494,231 to 1,572,693. New members joining a scheme for the first time was 154,531. Net new members after permanent withdrawals and other exits was 121,913.

All 146 KiwiSaver products offered by 16 providers generated a positive return for their investors in 2017, a year that delivered strong gains on equity markets with the local benchmark S&P/NZX 50 Index jumping 22 per cent.

he highest return in 2017 was 24.2 per cent after fees from OneAnswer International Share Fund, with $45.9m under management. That fund has delivered annual returns of 7.5 per cent for the past decade.

Other funds to post returns greater than 20 per cent in 2017 were the Generate Focused Growth Fund with $299m under management at 23.9 per cent, the Mercer Shares Fund with $16.8m under management at 21 per cent, the NZ Defence Force Shares Fund with $5.2m under management at 20.8 per cent, the OneAnswer Sustainable Fund with $7.2m under management at 20.6 per cent and the OneAnswer Australasian Share Fund with $28.3m with a 20.4 per cent return after fees. Four of the five Westpac Capital Protect Plans posted annual returns of about 21 per cent.

The best balanced fund was the AON ANZ Balanced with $29.6m under management, delivering annual returns of 7.7 per cent, while the top aggressive fund was Kiwi Wealth Growth, with $1.24b under management, with returns of 6.6 per cent.

Barring a big market correction, the value of all KiwiSaver funds will exceed $50 bln some time in 2018.

KiwiSaver investments grew +19% in 2017. Most of that was the rising tide of contributions ($5.9 bln) but 'earnings' (or the growth in the fund values over and above the contributions) touched almost +$2.4 bln in the year.

Who shared in these after-tax, after-all-fees gains varies widely. Much depended on the risk you were prepared to accept.

And within the various risk categories, the long term track record of the various fund managers is becoming clearer.

Overall, returns over the long term remain strong across the leaders. Members and managers with KiwiSaver funds in the bottom quartile will not be so happy as their returns continue to lag. The longer time goes on, the more clearly the track record is revealed. The gap between the top and bottom in each sector is still wider than you would expect from a competitive market.

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