(file image) Photo: 123RF
Kernel's Global 100 fund, which owns 100 blue chip companies across major equity markets, was the best performing KiwiSaver fund of the June quarter, returning 8.9 percent.
Morningstar has released its latest KiwiSaver survey, which shows KiwiSaver assets up $3.5 billion over the quarter, and average fund returns ranging from 0.3 percent to 0.8 percent.
Kernel founder Dean Anderson said the result was the reflection of strength in international equities compared to the New Zealand market over the past couple of years.
"It is also telling that many actively managed funds struggled to beat a global index fund. The difference in fees is a big hurdle, and managers who failed to hold some of the large tech names failed to capture the full returns."
The survey noted there were mixed results on equity markets in the second quarter.
The MSCI World ex-Australia Index, unhedged, rose by 8 percent in New Zealand dollar terms, benefiting from strong performance in US technology stocks and positive earnings reports from a number of major global companies.
Morningstar noted New Zealand's NZX50 underperformed, posting a modest gain of 2.5 percent as domestic companies faced pressures from rising costs and a cautious consumer environment.
The data predates the volatility of recent days but Morningstar data director Greg Bunkall said the markets bounced back pretty strongly on Tuesday and most KiwiSaver members had limited exposure to Japan and Taiwan, the most heavily impacted.
"There will have been some impacts to some US technology heavy KiwiSaver funds, but generally most of the large diversified funds will have seen immaterial impact during this period. Considering the time horizon of KiwiSaver investors, this was largely a non-event."
Morningstar said the second quarter was a period of cautious navigation for New Zealand investors.
"While global growth dynamics offered some positive signals, domestic challenges persisted. The equity market delivered moderate gains, primarily supported by international exposures, while fixed income provided some stability amidst fluctuating yields.
"The weakening NZ dollar underscored the importance of currency diversification in investment portfolios. Looking ahead, investors will need to remain vigilant, balancing opportunities in global markets with the evolving economic landscape at home."
Milford Asset Management recorded the best for performance over the past 10 years in the conservative, balanced and growth fund categories. Generate's focused growth fund was the top of the aggressive funds over that period of time.
Milford head of KiwiSaver Murray Harris agreed much of the difference in performance in recent times had been driven by different funds' exposure to the tech and AI space in the United States - but he said for many managers, that was a deliberate decision as a result of weighing up the risks versus potential opportunity.
"All those big tech plays have all done very well. Those [passive] managers by default have bigger exposure to those companies. In our case we haven't chased that story because the valuations got so high in some of those companies that it's not a compelling investment.
"The risk is a lot higher in something like Nvidia now than it was 12 months or two years ago. As an active manager you're going to assess that and go is the potential future upside worth the additional risk and for us we've said no."
Koura's carbon neutral cryptocurrency fund has been a strong performer in recent months due to the growth of cryptocurrency but fell 15.3 percent in the latest quarter.
ANZ is the country's biggest KiwiSaver manager but had relatively lower returns in the past year, ranked 23 out of 25 growth funds and 32nd out of 33 balanced funds.
Over the past year, Fisher Funds had the best-performing conservative fund, Westpac had the top moderate fund, Pie Funds the top balanced and growth funds, and Generate topped the table for aggressive funds.
For the 12 months, default funds had returned an average 10 percent, growth funds 11.1 percent and aggressive funds 13.8 percent.
Harris said markets could remain volatile in the short term but KiwiSaver member should largely ignore it.
"We saw people switching out of the growth and aggressive fund into the cash fund [when markets fell this week]... human nature is still that people panic and they shouldn't.
"People who moved yesterday might now be thinking about moving back today but the market's already moved overnight so they're going to pay a higher price to go back to the fund they were in."