KiwiSaver funds went backward for the first time in over a year in the June quarter, with negative returns across all fund types, according to Mercer’s latest KiwiSaver survey.

Since share markets bottomed out last March KiwiSaver funds have experienced strong returns, with growth funds rising rapidly after suffering big losses during the peak of the financial crisis in late 2008 and early 2009.

A string of financial scandals has put a dent in New Zealand’s reputation in Australia, as one fund manager found out during a trip across the ditch.

Martin Lewington, head of Mercer in New Zealand, was meeting colleagues in Australia when the topic of the Serious Fraud Office investigation into alleged dodgy property deals by a former ACC staff member came up.

A week after a survey found many New Zealanders think KiwiSaver is government-guaranteed, another survey has revealed the lack of a guarantee is one of the main concerns people have about the scheme.

Last week a UMR Research poll found that nearly half (48%) of people in KiwiSaver thought their fund was government-guaranteed and 35% were unsure.

But Mercer’s KiwiSaver Sentiment Study has found that the lack of a guarantee is one of the major concerns about KiwiSaver.

KiwiSaver growth funds have had another strong quarter but they still lag behind default funds in performance over the last two years, according to Mercer’s latest KiwiSaver survey.

Growth funds led all categories in the quarter to December 31 with a median return of 3.4%.

Balanced funds came in next with 2.5%, followed by conservative funds (1.8%) and default funds (1.7%).

Investors risk being caught out again if they fail to make the necessary adjustments to their portfolio, a visiting expert has told a New Zealand business audience.

Russell Clarke, Mercer’s chief investment officer for Australia and New Zealand, is in New Zealand this week to present the latest in the Mercer Investment Series.

The latest topic, Re-thinking Portfolio Construction Following the Global Financial Crisis, examines the lessons that investors can learn from the recent financial meltdown.