Read about why SuperLife does not participate in the different gross return surveys.

 

Where do I find out details of SuperLife’s returns?

SuperLife formally publishes its returns each quarter on its website (www.SuperLife.co.nz).  The focus is on net-of-tax returns as they are the best indication of what a member receives.  We also publish the KiwiSaver returns under the KiwiSaver tab and in the periodic disclosure statements.

Members can access details of their specific returns daily over the Internet, by looking at their accounts.  The website lets them choose a particular period.  We also send out to each member their specific return quarterly in their statement and the general returns in the quarterly news.

SuperLife does not submit its data to any KiwiSaver survey.

 

Why does SuperLife not participate in the different surveys?

There are a number of surveys.  Some KiwiSaver providers like Mercer and AON each publish a survey.  Likewise non-KiwiSaver providers like Morningstar publish surveys.  In each case SuperLife does not participate or provide data.  There are several reasons for this.

  1. As a rule we treat active participation in surveys like any SuperLife advertisement.  Under the Act where we publish an advert we need to certify that the ad (in this case the survey) is not misleading. With external surveys,  we cannot do that, as we believe that some other provider returns are not always accurate and where they are accurate the different strategies adopted make them not always comparable.  We therefore think that if we actively participated and actively supplied our data, we would be guilty of breaching the spirit of the Act.  While technically we may not have breached the Act, we prefer to set a higher standard than the bare legislative minimum.
  2. We don’t believe that returns should be compared on a gross-of-tax basis.  The returns that matter most are the returns net-of-tax and net-of-administration and other costs.  By participating, we would be encouraging the continuation of a practice we believe to be wrong.  Comparing gross returns has limited value.
  3. The returns are not always calculated correctly.  The returns in the surveys are typically based on a unit pricedivided by a unit price.  They are not subject to any form of audit and independent check.  Differences in unitpricing policies will lead to differences in the calculated return, if not the actual return.  Also many quote theirreturns as being calculated in accordance with the international QIPS standard, implying that this standard isaccurate, relevant for New Zealand and not misleading.  We don’t accept that is the case.  Therefore it just adds to the reasons the comparisons are misleading.
  4. The investment strategies of “comparable” funds are often not like with like.  The groupings often compare results on an apples-with-oranges basis. It is pointless and actively misleading to compare returns from, say, a cash fund with returns from an overseas shares fund.  It is equally pointless to compare a 60% shares/40% cash/bonds fund with one that is 40%/60%.  In fact, the only comparison that comes close to comparability is one that looks at just cash but even then, some managers call their funds “cash” when they are not.

Overall, we conclude that the current surveys are potentially misleading and can easily give the readers a false sense of security and comfort.  We also suspect that some of the quoted returns are wrong.  When analysed back to the published financial statements, there appears to be a disconnect in some cases.  Part may be explained by the unusual cash flows in the first three years, but the more likely explanation is the inconsistency in way the returns are calculated.  Overall we think that the surveys are misleading and therefore if we were required to, we could not sign an advertisement certificate under the Act.  We therefore do not actively participate.

We recognise that many members still want to see comparable returns.  We therefore extract the quoted returns of different providers from their websites and publically available information and set ours along side.  While showing our returns against these returns means we could also be criticised, we do so in a way that clearly does not endorse the other returns and clearly states that the returns are the returns quoted by the other providers and may not be their true returns.  Most are unlikely to understate their returns and so when SuperLife looks good against these, it probably means that SuperLife is very competitive.

We encourage the current survey providers to create a single credible survey that is independent and accurate and focuses on what is important.  We also encourage the financial reporters to look beyond the surveys and question both the returns and the comparisons themselves.  New Zealanders deserve better information than they currently get.