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How to compare KiwiSaver fees, performance and peer groups using Morningstar

Every few months, the folks over at Morningstar, who eat, breathe and live investment stuff, put together a report on KiwiSaver. The newest one just came out for the period ending June 30, 2023. 
Now, not everyone’s heard of Morningstar outside of the finance world, but if you’re curious about how different funds and their managers are doing, this report is a treasure trove of info that’s hard to resist.
The exciting part is that more investors are catching onto Morningstar and finding these reports super handy.
What to expect
The report starts with a general overview of what went down in the markets, what factors played a role, which sectors did well, or not, and why and highlights the best and not-so-great-performing funds during that time.
Quick heads-up, though: remember the old saying that “past performance doesn’t predict future outcomes”? Yeah, that’s worth keeping in mind before diving into the nitty-gritty.
There’s a good reason for that. If you’re always chasing the highest earner every quarter by constantly switching funds, you might actually end up in a worse spot than if you just stuck with a steady, middle-of-the-road fund manager.
Here’s another one: “This year’s superstar might be next year’s dog.” Yup, trends can change quickly in the investing world, so don’t get too caught up in short-term wins and losses.
Morningstar keeps hammering home the point that long-term results are what truly matter. That’s why their report gives you the lowdown on performance spanning from three months to 10 years. It’s like seeing the big picture of how things are going down the line.
And remember, KiwiSaver is all about the long haul. It’s like the vehicle that’s gonna give you a smooth ride to financial awesomeness when you retire. Well, that’s the hope anyway.
Believe it or not, KiwiSaver isn’t that ancient. It kicked off in 2007, just around the time of the Global Financial Crisis. It might seem like old news in New Zealand, but compared to other countries with way more history in retirement savings, it’s basically a blink of an eye.
Don’t expect a 16-year performance history in Morningstar’s report. Lots of the KiwiSaver funds you see today weren’t even a thing when KiwiSaver first started.
Now, if you’re itching to check out how your fund’s been doing since day one, most fund manager websites have that info. Just look for the performance since inception bit.
Morningstar breaks down fund performance into different timeframes like three months, one year, three years, five years, and even a decade. Plus, they group funds by types, like default funds, peer averages, and then go all-in with the risk categories: Conservative, Moderate, Balanced, Growth, and Aggressive.
The numbers they dish out are after fees but before taxes.
They even rank the funds within each group so you can compare your fund against the others.
Zoom out from the research and it’s important to make sure you have the basics in place when it comes to KiwiSaver:

1) Know your provider
2) Know your fund type
3) Understand how you’re tracking for retirement or that first home deposit
4) Review your PIR and contribution rates
5) Hold the course

It never fails to shock me how little people understand about their investment, even those people who you think have it sorted. i.e. changing KiwiSaver providers to support your mate’s kid because Jessie just started working there? Not a great idea. Changing again five times for other reasons?! Nooooo.
That’s not to say you won’t end up with a decent provider, or outcome, but it’s not exactly the way you want to manage what could be the most significant investment of your retirement future.

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