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Simplicity KiwiSaver gets a podium finish first up


Simplicity KiwiSaver gets a podium finish first up

In its first reporting period, Simplicity KiwiSaver's flagship growth fund was ranked third amongst 16 funds, according to fund survey analysis by Meville Jessup Weaver.

Simplicity’s managing director, Sam Stubbs, said it’s an impressive stand for the challenger brand.

"It’s like winning a bronze medal in your first event, something that’s great for our members. It should also surprise some of our actively managed competitors. They are supposed to outperform the market, (and index tracking funds like ours), by picking winners. In most cases this hasn’t happened. " said Stubbs.

“This is particularly embarrassing in the last quarter, when there was lots of volatility, and markets that should be favourable to stock pickers”.

""We don't get caught up on short-term performance, but the fact that our passively managed index fund did so well, so early, says something for our model and our challenger brand."

In the three months from Sept.30, 2016 to Dec.31, 2016, the growth fund returned 1.9% after fees but before tax. The average return was 1.1%.

KiwiWealth came in first place with a three month return of 4.3%, followed by Mercer's High Growth fund at 2.0% then Simplicity with 1.9%

"Although some costs were incurred when we switched to the new Vanguard Ethical Fund, the overall performance of the international and Australian shares more than offset the negative performance of bonds that make up a minor part of the fund."

Stubbs said the individual funds performance was a reflection of their asset allocation and what happened in the markets over that period of time.

"Bonds produced negative returns over the quarter, due mainly to the increased inflationary pressures that are anticipated following Donald Trump’s election win. Inflation is bad for bonds because they pay a fixed rate of interest.

Simplicity's Conservative fund, over the three months ending Dec.31, 2016, returned -1.5%, 10th of 13th funds in the sector, due to bond market sector's performance’.

"The average (cash holding) for Conservative Funds is over 20%, while we aim to keep our allocation below 5%. This is because we are focussed on investing for the longer term and we expect bonds to perform better than cash over time."

The Balanced fund return 0.2% slightly better than its peer group.

Past performance is no indication of future returns, so it's important to bear in mind this is only a snapshot of a short period of time in an investment vehicle that for most will run decades.

Simplicity will be included officially in the Melville, Jessup, Weaver survey once it has a one year track record, with the same methodology showing Simplicity performing very strongly on it’s debut.

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