Why long-term performance matters

Posted by Generate Contributor in Investing News & Insights, Kiwisaver on

Why long-term performance matters

There is no doubt 2022 has been rough for markets, with covid-19, geopolitical tensions and inflation continuing to drive volatility.

And, while we know, it can be uncomfortable to see the impact of the current market volatility on your KiwiSaver account, it’s important to remember that market volatility is normal. And the best thing you can do is stay calm and stay the course.

Markets can go up and down for all kinds of reasons. And KiwiSaver funds are diversified across different asset classes, companies, sectors and countries, which don’t all move in the same direction at the same time.

Thankfully, history shows that over the long-term markets generally trend upwards - and any downturns tend to be short-term occurrences.

In fact over the last 30 years, the S&P 500 increased by 1,703%, (or 10% per year) despite many market dips and blips. That’s why all market commentators generally recommend that staying put and playing the long-term game will leave investors better off.

It’s also worth remembering that KiwiSaver is a long-term investment – and so, long-term performance is more important than any short-term returns (or losses).

How Generate funds compare for long-term performance

While all KiwiSaver and investment providers have been impacted by market volatility recently, we're proud to still be one of the best performing KiwiSaver providers for long-term performance (after all, KiwiSaver is a long-term investment).

The latest data from independent KiwiSaver observer, Morningstar, shows Generate funds have continued to rank as top performers in their respective categories to 30 March 2022:

Focused Growth Fund: 2nd for 5-year returns

Out of 11 funds
In the Morningstar KiwiSaver Multi-sector Aggressive category.

Growth Fund: 4th for 5-year returns

Out of 27 funds
In the Morningstar KiwiSaver Multi-sector Growth category.

Moderate Fund: 1st for 5-year returns

Out of 21 funds
In the Morningstar KiwiSaver Multi-sector Moderate category.
(Note: the Moderate Fund was previously called the Conservative fund, but changed names on 16 May 2022, when Generate launched new funds)

What's more, our Focused Growth Fund has consistently ranked in the top three Aggressive Growth KiwiSaver funds for 5-year returns, every quarter since it was first eligible in June 2018!

A volatile market presents both opportunities and risks. Because we are ‘active fund managers’, we research and study the markets every day and adjust our fund investments to take advantage of opportunities that a volatile market presents.

We're proud that this investment strategy continues to deliver strong long-term performance in comparison to other providers.

If you are comparing funds based on historical returns it is important to compare long-term returns, as these will give you a better assessment of how each KiwiSaver fund performs.

Disclaimers: No part of this blog is intended as financial advice; it is intended as general information only. To see our Financial Advice Disclosure Statement, please see Generate FAP Disclosure Statement. For more information about the Generate KiwiSaver Scheme please refer to the Generate KiwiSaver Scheme Product Disclosure Statement. For more information about the Generate Managed Funds see the Generate Unit Trust (Managed Funds) Scheme Product Disclosure Statement or the fund updates. The issuer of both schemes is Generate Investment Management Limited and the Product Disclosure Statements are available at generatewealth.co.nz/pds. Past performance is not indicative of future performance.

Morningstar KiwiSaver Survey June Quarter 2018 to March Quarter 2022. Generate Focused Growth Fund ranked second for 5-year returns in the KiwiSaver multi-sector aggressive category, the Generate Growth Fund ranked fourth for 5-year returns in the KiwiSaver multi-sector growth category, Generate Moderate (formerly Conservative) Fund ranked first for 5-year returns in the KiwiSaver multi-sector moderate category. Past performance is not a reliable indicator of future performance.

©2022 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘class service’ have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. View a copy of the Generate KiwiSaver Scheme Product Disclosure Statement, the Generate Unit Trust (Managed Funds) Scheme Product Disclosure Statement and the Generate Financial Advice Provider Disclosure Statement. The issuer is Generate Investment Management Limited. Please click for Advertising Disclosures.