Investment Update. 30 September 2012 Contents. Longer-term credited interest rates. Declared interest rates for the Scheme year to date

Transcription

1 Investment Update 30 September 2012 Contents Declared interest rates for the Scheme year to date Cumulative monthly interest rates (after tax and expenses) for the Scheme year to date Longer-term credited interest rates Credited interest rates over 1, 3, 5 & 9 years (pa) Investment objectives a guide to longer-term returns Investment fund returns achieved and targets over different periods depending on the nature of the investment fund Manager performance Performance of each asset class against its index over one and three years Fund returns compared to KiwiSaver Fund returns compared to the median (middle) KiwiSaver scheme over 1, 3 and 5 years (pa) Investment fast facts Scheme s top 10 share holdings Declared interest rates for the Scheme year to date Each month we (the Trustees) declare a monthly interest rate after allowance for tax and expenses (which may be positive, negative or zero) for each of the seven investment options, based on the actual investment performance in that month. Once audited financial statements have been prepared, we may adjust the rate for June to take into account the actual income tax and expenses and determine the rate to be allocated to members accounts for the Scheme year. The interest rate for each investment fund option after allowance for tax and expenses for the Scheme year-to-date is shown below. 5% Cumulative monthly interest rates (after tax and expenses) for current Scheme year 3% Growth 4.6% Balanced/Growth 4.3% Balanced 3.9% Conservative/Balanced 3.1% Conservative 2.3% Cash/Conservative 1. Cash 0.6% 1% Longer-term credited interest rates Start of Scheme year Jul-12 Aug-12 Sep-12

2 Your Scheme account balances are long-term savings intended for your retirement, so it s important to look at returns on a longer-term basis. The credited interest rates after tax and expenses for the previous Scheme year (to 30 June 2012) and one, three, five and nine years (p.a.) to 30 September 2012 are shown below. Credited interest rates % 12.9% 1 9.1% 8% 6% % 5.3% % 4.8% 4.7% 4.6% % 4.3% % 3.6% 3.1% % 2.9% % 1.7% 0.7% % Cash Cash/Conservative Conservative Conservative/Balanced Balanced Balanced/Grow th Grow th Scheme year to 30 June 2012 Year to 30 September Years Ended 30 September 2012 (p.a.) 5 Years Ended 30 September 2012 (p.a.) 9 Years Ended 30 September 2012 (p.a.) As the graph shows, longer-term returns (5 years +) from the Balanced and Growth funds in particular continue to reflect the impact of the global financial crisis.

3 Investment objectives a guide to likely long-term returns As Trustees, we set objectives for each of the investment funds to provide members with a guide to the likely longterm return that a typical fund with a similar mix of investments could be expected to achieve. Remember this is a guide to what you might expect from each investment fund, not a set target. The following chart shows the increase in inflation as measured by the Consumers Price Index (CPI), each investment fund s objective and the returns achieved, over different periods depending on the nature of the investment fund. Increase in inflation, objective & actual average annual return to 30 September % 6% Average increase in cpi over period Objective Average annual return (after tax & expenses) over period 6.7% 5.6% % 2.7% 2.6% 2.7% 2.9% Grow th Balanced Conservative Long-term investment objective To exceed inflation by pa after tax and expenses over rolling 15 year periods (As the Growth fund only started in 2003, data is only shown for nine years.) Long-term investment objective To exceed inflation by 3% pa after tax and expenses over rolling 10 year periods Long-term investment objective To exceed inflation by pa after tax and expenses over rolling 5 year periods Note: *The Scheme s Growth fund only commenced in 2003, so data is only shown for nine years. The fund returns continue to reflect the difficult investment environment that has existed globally for the last 10 years. The target for the Scheme s Cash fund is to achieve a return close to the 90-day Bank Bill rate before tax and all expenses. For the year to 30 September 2012, the Cash fund earned 2. after tax and all expenses, compared to a 90-day Bank Bill rate before tax of 2.7%.

4 Manager performance To measure the performance of the Scheme s investment managers, the Trustees compare the performance (before investment fees, Scheme expenses and income tax) for each of the Scheme asset classes against the appropriate index for the asset class. 4 Actual returns vs benchmark for each asset type Over 1 year & 3 years (pa) to 30 September 2012 (Before tax and expenses) % % 18.3% % 7.3% 6.8% 6.8% 17.1% 16.7% 12.5% 9.1% % % % 3.5% 3.8% 2.7% 2.9% Trans-Tasman shares International shares International property NZ fixed interest International fixed interest Cash 12 months - actual 12 months - benchmark 3 years (p.a.) - actual 3 years (p.a.) - benchmark The chart shows that trans-tasman shares underperformed its index by 2. over the past 12 months. Otherwise, all asset classes have performed in line with (plus or minus 1%) or outperformed their indices over both one and threeyear periods. Note: The Scheme s assets previously invested in trans-tasman property were transferred to listed infrastructure and natural resources in July As a result, returns are not shown for these asset types. Market indices used Asset type Trans-Tasman shares International shares Index Harbour - NZX50 with Imputation Credits OnePath ANZ 90 Day Bank Bill + 5% MSCI World International property UBS Global Real Estate Investors Only Index (139% hedged) NZ fixed interest International fixed interest Cash ANZ NZ All Government Stock Gross Barclay s Capital Global Aggregate (10 hedged) ANZ 90-Day Bank Bill

5 Fund returns compared to KiwiSaver We monitor the performance of each of the Scheme s investment funds to ensure returns remain competitive with (or ahead of) other similar funds. The following graph compares the performance (before tax and after investment fees) over one, two and three years (% pa) of each of the Scheme s main investment funds against the median (or middle) return of KiwiSaver as surveyed by Mercer. The survey measures investment returns before tax is deducted but after investment fees. As tax and administration expenses are not included in the survey, the returns will be different from the credited returns shown earlier in this update. The graph shows that the investment funds have outperformed the median over all periods measured other than the Balanced fund, which underperformed the median by 0.3% pa over five years. 18% 16% % 6% Returns (before tax and after investment fees) over 1, 3 and 5 years to 30 September 2012 for each investment fund v KiwiSaver median 16.7% 13.8% 1.1% 0.6% 14.5% 11.7% 9.8% % % 6.5% 6.5% 5.3% % 3.1% Growth Balanced Conservative Scheme 1 year Median 1 year Scheme 3 years (pa) Median 3 years (pa) Scheme 5 years (pa) Median 5 years (pa) Investment fund return exceeded KiwiSaver median Investment fund return below KiwiSaver median

6 Investment fast facts International shares The Scheme s investments in international shares are managed by AMP Capital Investors. Approximately 85% is invested in the AMP Capital Core Global Shares Fund and the balance in the AMP Capital Extended Markets International Share Fund. For the latest information about the performance of the Scheme s investments in international shares as well as the top 10 holdings and the investment managers utilised, follow the link to the quarterly factsheet on AMP s NZ website select Fact Sheets, then scroll down to the Emerging Markets Share Fund 1 (the only fund listed under the Emerging Markets heading). The Core Global Shares Fund is the first fund listed under the Global Shares heading. Trans-Tasman shares At 30 September 2012, the Scheme s trans-tasman shares portfolio was invested approximately 7 by Harbour Asset Management and 3 by OnePath. Top 10 Trans-Tasman share holdings at 30 September 2012 Harbour OnePath Fletcher Building Contact Energy Mainfreight Telecom Ryman Healthcare Chorus Auckland International Airport Fisher & Paykel Healthcare SKYCITY Sky Television Telecom Fletcher Building Ryman Healthcare SKYCITY Sky Television Contact Energy Auckland International Airport Mainfreight Guiness Peat Group Westpac The information above is provided for members interest only and is not an endorsement for individual investment in these companies. It should also be noted that the above listing is a snapshot. The investment managers have the discretion to change the companies and amount invested in any company from time to time. This document has been prepared by Mercer (N.Z.) Limited on behalf of the Trustees of the Fonterra Superannuation Scheme. The information in this document is intended for general guidance only and is not personalised to you. It does not take into account your particular financial situation or goals. It is not financial advice or a recommendation. We recommend that you read the Member Information Booklet and Investment Statement and take financial advice before making any investment decisions. In addition, past performance cannot be relied upon as a guide to future performance. 1 Previously known as the Extended Markets Fund