Gareth Morgan’s marketing spiel in the New Zealand Herald this week made for a very entertaining read.
Morgan excels at scaremongering and he did not disappoint with his ‘KiwiSavers could be next victims‘ rant.
But while he raised some valid points – he always does – I think his text should be viewed in the commercial context in which the Gareth Morgan KiwiSaver (GMK) scheme operates.
In his article Morgan singled out the Huljich KiwiSaver scheme for criticism. Admittedly, Huljich has been caught out indulging in some unsafe marketing practices but it’s a huge stretch of the imagination to compare the savings scheme to some recently-defunct finance companies on the back of that.
More to the point Huljich is probably GMK’s most fierce rival in the particular KiwiSaver niche they operate in – both trade on their ‘Kiwiness’ and self-proclaimed high-performance abilities.
And the two schemes have been very successful in attracting members with GMK, in particular, getting off to a flying start when KiwiSaver launched in 2007. Of late, however, Huljich – in member numbers at least – has overhauled GMK.
According to the Workplace Savings NZ (formerly known as ASFONZ) website , Huljich boasted just over 54,000 members as at September last year compared to the 44,581 members reported by GMK in November 2009.
This represents spectacular growth for Huljich, which claimed only 14,123 members in March 2009 versus the 35,095 members on the GMK books.
It’s difficult not to conclude that Huljich might be cutting a bit of Morgan’s grass.
In a short-term performance sense both Huljich and Morgan have also lost some of their shine, which shouldn’t really matter to KiwiSaver members facing 10 to 40 years of investing. It’s also why fund managers who have just experienced a bumper year should report it with a dose of humility- a quality neither Huljich nor Morgan suffer from.
However, Morgan, in particular, has toned down his performance rhetoric recently after a disappointing year.
According to the GMK website, in the 12 months to January 31, 2010: its growth fund lost 6.61 per cent; the balanced fund dropped 2.51 per cent, and; the conservative fund returned 1.75 per cent.
While it’s not an exact overlap in time, the recent Mercer KiwiSaver survey 2009 annual performance data serves as a proxy benchmark to measure GMK against. In the Mercer survey the average conservative KiwiSaver fund returned 8.1 per cent in 2009; the average balanced fund returned 12.1 per cent, and the average growth fund grew by 16.5 per cent.
Steve of Wellington takes up the story here in one of the responses to Morgan’s article: “I’ve got my Kiwisaver with you Gareth and all I seem to do is lose money – thousands at the moment. How about less spin and more time trying to recover some of my money you have lost?”