ANZ, New Zealand’s largest KiwiSaver provider, has been identified as one of the worst-performing managers in the latest KiwiSaver survey by Morningstar. Despite holding the largest market share, with $22 billion of the total $121.9 billion under management, ANZ’s returns have consistently lagged behind its competitors, raising concerns for investors relying on the scheme for their retirement savings.
Disappointing Rankings Across All Fund Categories
According to the Morningstar report, ANZ’s KiwiSaver funds ranked near the bottom across multiple investment categories over both short and long-term periods. Over the past 10 years, ANZ ranked 12th among conservative funds, sixth in moderate, 14th in balanced, and 10th in growth. Its one-year performance was even weaker, placing 18th among conservative funds, 21st in moderate, 32nd in balanced, and 25th and 26th in growth categories.
Financial expert and Kernel Wealth founder Dean Anderson called the results “astoundingly poor,” noting that “New Zealand’s biggest KiwiSaver provider was last in all the core diversified funds during 2024, except one where it was second-to-last.” He warned that more than half a million New Zealanders are seeing diminished returns due to ANZ’s underperformance, with many either unaware of the issue or reluctant to switch providers.
ANZ Acknowledges Challenges in Investment Strategy
In response to the findings, an ANZ spokesperson defended the bank’s KiwiSaver performance, stating that all of its schemes had positive returns in the past year, even after fees. However, they admitted that performance relative to benchmarks had been “challenging.”
“This was primarily driven by our external manager lineup in international equities,” the spokesperson explained. “Market performance has been unusually concentrated in a small number of large international technology stocks in recent times. For our actively managed portfolios our underlying managers hold only part of the market, so have not benefited from all of the performance of those stocks.”
They also cited stock-specific risks in some of their underlying investments, emphasising that investment markets are evolving rapidly.
Market Dominance vs. Investment Performance
ANZ’s underperformance highlights a key issue in the KiwiSaver market: size does not necessarily translate to superior returns. While ANZ dominates the industry in terms of funds under management, its investment strategies have not yielded competitive returns compared to smaller providers.
Experts point to several possible reasons why larger funds may struggle. Size can limit flexibility in investment decisions, making it more difficult to adjust to changing market conditions. Additionally, ANZ’s reliance on external managers and active stock selection strategies may have contributed to its lacklustre performance, particularly as global markets have been increasingly driven by a small number of high-growth stocks.
Broader Financial Strength and Fitch Ratings Outlook
Despite KiwiSaver concerns, ANZ remains financially stable. Fitch Ratings recently affirmed ANZ’s ‘AA-’ credit rating with a stable outlook through 2025, noting solid underlying earnings despite margin pressures from the bank’s acquisition of Suncorp Bank. ANZ’s core financial position remains strong, suggesting that KiwiSaver performance issues are isolated from the bank’s broader financial health.
What This Means for Investors
Financial advisors are urging KiwiSaver members to closely monitor their fund performance rather than assuming larger providers offer the best returns. The latest survey results suggest that investors may benefit from considering alternative KiwiSaver providers with stronger historical returns.
Anderson emphasised the importance of making informed decisions, stating, “Many [people] are too complacent to review and look elsewhere or simply believe the big brands can be trusted.”
For ANZ KiwiSaver members, potential next steps include assessing whether their fund aligns with their long-term retirement goals, comparing fees and investment strategies, and exploring other providers with more consistent track records. Some may choose to diversify their KiwiSaver investments across multiple funds to mitigate risk.