KiwiSaver balances slid by $3.6b in 2022, new data shows

Investors saw their KiwiSaver balances go backwards through 2022, even as they contributed money.

Data from research firm Morningstar shows there were $86.5 billion in KiwiSaver assets at the end of December, down from $89b at the end of 2021.

Over the year, KiwiSaver members contributed $9b. There was $1.1b withdrawn for first homes and to cover hardship and almost $2b taken out by people retiring.

Morningstar data director Greg Bunkall said the decline was due to the first three quarters of the year.

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Over the year, the average conservative fund had dropped 7.3% and moderate funds were down 9%. A typical balanced investor would have had their KiwiSaver portfolio drop 11%.

But he said there had been a big rally in the fourth quarter when the inflation outlook became more positive, and the market started to predict that central banks would not have to raise interest rates as much as had been expected.

“The inflation outlook is looking more positive than it was and that’s what’s really been driving the rally,” he said.

“Over the long term we know investments go up over the longer term and KiwISaver is a long-term investment. We have to look through that and focus on what’s going to happen over the long term which is that invariably markets go up and people make money – we invest in the future of positivity.”

The rebound had been particularly apparent in technology stocks, he said, and New Zealand and Australian equities.

“Those areas of the market have been particularly strong.”

Funds that had been able to be more nimble about their asset allocation had done better this time, he said.

“They were quick to go a bit more conservative and taking higher cash positions going into the market downturn, that protected some of their returns. A lot of the KiwiSaver funds are invested passively with a strict asset allocation profile. Those funds that could be nimble at least this year have shown they have been able to protect a bit more on the downside.”

The S&P/NZX 50 Index returned 3.7% over the December quarter but the market recorded a loss of 12.0% over the one-year period. Fisher & Paykel Healthcare Corporation Ltd, The a2 Milk Co, and Ebos Group were among the top contributors to the quarter performance, returning 23.1%, 20.6%, and 16.7%, respectively.

Top performing KiwiSaver funds over the quarter against their peer group includes QuayStreet Income 1.9% (multisector conservative), MAS Moderate 2.6% (multisector moderate), MAS Balanced 3.6% (multisector balanced), MAS Growth 4.5% (multisector growth), and MAS Aggressive 5.0% (multisector aggressive). Default options appointed in 2021 had a rough year: SuperLife KiwiSaver Default (negative 10.6%), Westpac KiwiSaver Default Balanced (negative 10.8%), and Booster KiwiSaver Default Saver (negative 12.1%) in 2022.

Over 10 years, the aggressive category average has given investors an annualised return of 8.4%, followed by growth (8.1%), balanced (6.4%), moderate (4.1%), and conservative (4.2%).