12 month returns - a bad relationship waiting to happen.
I’d like to say that I was surprised to see yet another KiwiSaver provider pick a date at random and highlight that they’re the best.
NZ Funds recently announced that they had 107% returns for their Growth strategy. Firstly, congratulations to the team at NZ Funds for achieving these outstanding returns for their customers over this particular period of time!
Should they be leveraging this to obtain more customers?
Absolutely not.
We have been watching funds and their marketing campaigns very closely for the last 12 months. Claims of having ‘the number one fund’ across a cherry-picked time period appear almost weekly. This behaviour is a classic tactic either from ignorant marketing teams who are unaware of the context in which they operate, or it’s willful negligence from the wider organisation preying on unsuspecting investors
Advertising KiwiSaver fund performance has become like a tinder profile, you cherry-pick the best parts about yourself and find a photo that hides the worst and accentuates the best. A short term time frame such as 12 months is NOT a good way to measure the success of a fund, it’s highly misleading and causes confusion for those who are not financially confident.
Let’s take a quick snapshot of NZ Funds Growth Strategy’ performance over some 12 month periods:
_* The NZ Funds Growth Strategy has an asset allocation that would place it in an aggressive category._
The data shows exceptional performance last year. What if we look back to 2018 and 2019? Not so flash. I’m not here to criticise short term performance dips, it’s all part of the investing journey. Past returns are absolutely no guarantee of future success. However, if KiwiSaver providers want to use their past returns to market to new customers, why not look at three or five-year returns? Surely this is a far better gauge of fund performance rather than cherry-picking your best moments.
Why do fund providers think they can get away with this nonsense?
They’re profiting, while potentially preventing clients from reaching their goals and being with a provider that really suits their requirements. I’m happy to call this what it is, BS. It’s unethical, it’s manipulative and it’s not in the best interest of New Zealanders.
I started BetterSaver because I saw the need for accessible, expert and independent advice. This week our team got further validation for the work we are doing. If you want to find a fund that is going to help you reach your goals, please don’t buy into the cherry-picking, tinder-like BS, get good financial advice.