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Kiwis Losing Thousands By Being In The Wrong KiwiSaver Fund

BetterSaver’s first annual KiwiSaver review reveals that Kiwis have potentially missed out on thousands of dollars in returns by investing their savings in the wrong KiwiSaver fund.

It shows the fund with the best returns was Milford Asset Management’s Active Growth Fund, where $10,000 invested in 2013 would now be worth $21,719. At the other end of the scale, AMP’s LS Conservative Fund would only be worth $13,885.

BetterSaver founder, Joe Taylor, says that we need to understand the importance of having their KiwiSaver funds with the right provider.

“While each fund has a different risk profile, placing your money into a conservative fund instead of a growth fund means you’ve missed out on up to $8,000 in returns in just seven years. This is extra money that could be put towards your first home or supporting long-term retirement plans.

“Just because you’re in a growth fund doesn’t mean your money is performing better either. Our analysis shows the top performing conservative fund is delivering Kiwis nearly the same returns as the lowest performing growth fund.

“An investment of $10,000 in both AMP’s Growth Fund (Lifesteps) and Milford Asset Management’s Conservative Fund would now be worth $17,136 and $17,062 respectively.”

Joe says figuring out which fund is performing well and what one is right for your individual needs can be a minefield and too difficult to fairly compare since the scheme was launched.

“For example, one fund will say they have the best returns over a three-month period, while another will claim they are the best over a six-month period. Some funds break down fees and others make it difficult to find out how much tax Kiwis are paying on returns. All of this gets in the way of Kiwis navigating KiwiSaver to best suit their needs.”

“My recommendation is for every Kiwi to get independent financial advice to determine individual priorities and which fund can help you get there.

It’s free to go through BetterSaver’s Fund Finder advice process. Most KiwiSaver providers pay a standardised fee to use BetterSaver’s service*. The digital platform then makes it easy for Kiwis to identify which best fund meets their needs.

“Our new 100% independent, unbiased and personalised digital KiwiSaver advisory service aims to break down industry jargon and give Kiwis clarity on the options that they have.

“We believe financial advice has the power to change lives and that everyone deserves access to it. So, we make things easier for Kiwis by collecting information from reputable sources and present it in a way that gives personalised recommendations that align with their goals and risk tolerance, no matter their KiwiSaver balance.

BetterSaver initially launched in 2018 by giving KiwiSaver funds an ethical rating. But after no KiwiSaver provider ranked better than C+, Joe realised there was a much greater need to provide transparency to the sector.

“In the year ending 30 June 2020, New Zealanders funded $1.19 billion[1] towards first home deposits from KiwiSaver and retirees drew down $1.33 billion[2]. So, it’s a substantial resource driving people’s lives. Being in the right fund makes a huge difference,” says Joe.

“BetterSaver recommends that everyone reviews their KiwiSaver fund annually to make sure they are in the best fund for their current circumstances.

“While past returns do not necessarily indicate future performance, they provide a guide. It’s important you also look at what your fund invests in to make sure that you are investing in companies and assets you wish to be.”

The results:

Growth fund results
Average performance of growth funds for the three years ending December 31, 2020 was 8.77%.

Best performing, over three years ending Dec 31, 2020

 ReturnBetter than average
Fisher Funds Growth KiwiSaver11.24%24.7%
Milford KiwiSaver Active Growth10.60%18.9%
Generate KiwiSaver Growth10.59%18.8%

Worst performing, over three years ending Dec 31, 2020

 ReturnWorse than average
QuayStreet Growth6.13%35.4%
SuperLife KiwiSaver Growth6.37%31.7%
AMP KiwiSaver LifeSaver Growth7.11%20.9%

Conservative fund results
Average performance of conservative funds for the three years ending December 31, 2020 was 5.49%.

Best performing, over three years ending Dec 31, 2020

 ReturnBetter than average
Generate KiwiSaver Conservative7.30%28.3%
Simplicity KiwiSaver Conservative6.76%20.7%
Kiwi Wealth KiwiSaver Conservative6.21%12.3%

Worst performing, over three years ending Dec 31, 2020

 ReturnWorse than average
BNZ First Home Buyer Fund3.54%43.2%
AMP KiwiSaver Lifesaver Conservative Fund4.35%23.2%
AMP KiwiSaver Default4.35%23.2%

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