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kiwisaver, investing, financial advisers

Just Looking at a Fund's Performance Isn't Enough

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Some people are happy to do KiwiSaver research themselves. However, most times that research stops at just comparing what the past returns and current fees are. This is not enough.

KiwiSaver is a large investment for most Kiwis and getting professionals to research and present you with options can make a big difference to your final KiwiSaver balance. 

At National Capital, our research and knowledge of the KiwiSaver market goes beyond just looking at past returns and fees. For example, recently there was an industry discussion around how MorningStar’s rankings for the best performing five and ten-year growth funds could be misleading. The fund in question was the Milford Active Growth Fund, which reported a five-year return of 9.8% a year and a 10-year return of 12.4%, topping MorningStar’s KiwiSaver growth category for the period ending June 2020 (Source: Morning Star KiwiSaver Report).

However, it was pointed out that this fund was not in the KiwiSaver growth category throughout the entirety of that time.

Before being called the Milford Active Growth Fund, the fund was classified as an Australasian equity fund with 62.2% in NZ assets and 21% in Australian assets (Source: GoodReturns).

In the second quarter of 2017, Milford reclassified the fund to a growth fund. In the quarter after being reclassified as a growth fund, Milford’s Active Growth Fund topped MorningStar’s rankings for the highest 3 and 5-year return.

If a fund has significant changes to its investment strategy or asset allocation, the returns quoted in reports should reflect this.

Milford’s Response

Murray Harris, the head of wealth management at Milford, said while the fund had previously been categorised as another type of fund, it had always met the growth fund criteria in terms of its growth-to-income assets allocation.

He said that as the fund became more diversified, with more global investments, it moved out of the specialist category of being an Australasian equity fund and into the KiwiSaver growth fund category.

Milford says that even before the fund was classified as a growth fund, it always had a 75/25 or 80/20 growth to income mix, meaning it has always met the requirements to be called a KiwiSaver growth fund.  

Looking at Fund Comparisons Online is Not Enough! 

When choosing and comparing KiwiSaver funds and providers, it is important to look at more than just headline fees and past performance. It’s important to take a deeper dive into both fees and performance to ensure you are in a suitable KiwiSaver fund.

National Capital specialises in KiwiSaver and Investment research and looks at instances such as the one we’ve described in this article. By looking at and comparing KiwiSaver funds and providers through many different lenses, National Capital can advise you on how you can be maximising your KiwiSaver account to prepare for either retirement or buying a first home

Even if you’ve already done your own research, it makes sense to use the professional advice you receive from us as a second opinion. Start by taking the KiwiSaver HealthCheck – it’s online, easy, and free.

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