Clean energy KiwiSaver funds returned 88 percent over the year as the oil shock crushed a rival bitcoin offering
The oil shock that has rattled New Zealand household budgets since the Iran war broke out has produced an unlikely set of winners inside the country’s $130 billion KiwiSaver system. According to the latest Morningstar quarterly survey, two clean energy specialty funds posted the highest one-year returns of any KiwiSaver products on the market, while a fund built around bitcoin lost almost a fifth of its value.
Kernel’s Global Clean Energy Fund returned 87.9 percent in the year to 31 March, including a 16.8 percent gain in the quarter alone. Koura’s clean energy offering returned 59.3 percent over the same year. By contrast, Koura’s bitcoin fund finished bottom of the table, down 21.8 percent in the quarter and 18.9 percent over the year. The two specialty categories sit at opposite ends of the leaderboard despite both being marketed to the same risk-tolerant slice of New Zealand savers.
Kernel founder Dean Anderson told RNZ that “every spike in fossil fuel prices strengthens the economic case for solar, wind and storage”, and pointed out that thematic funds still represent less than one percent of his firm’s assets under management. Anderson also linked the broader Kernel performance to the firm’s investment philosophy, saying “that’s the pay-off of a data-led, low-fee, index-based approach showing up in the numbers KiwiSaver’s actually care about”.
Koura founder Rupert Carlyon, whose firm runs both the best-returning clean energy fund and the worst-returning bitcoin fund, said the strength of the renewable thematic was no longer just about oil prices. “Clean energy goes into data centres, a lot of semiconductors,” Carlyon said, pointing to the link between the artificial intelligence buildout and the demand for additional generation capacity. “The AI story has got so much stronger in the last six to 12 weeks.” Carlyon said his bitcoin fund had been “one of the few positive funds over the last quarter” before the recent slide and added that “the S&P 500 returned to a new record last week, which would have dealt with most of it”.
Underneath those headline-grabbing thematic numbers, the bulk of the KiwiSaver system spent the March quarter in the red. Morningstar’s peer-group averages showed conservative funds down 1 percent in the quarter, default funds down 2.7 percent, moderate funds down 1.8 percent, balanced funds down 2.6 percent, growth funds down 3.5 percent and aggressive funds down 4 percent. Annual returns held up better, with conservative funds returning 4.5 percent for the year and aggressive funds 12.1 percent.
The category leaders varied across the risk spectrum. ASB topped both the conservative and moderate categories with one-year returns of 6.5 and 8.1 percent respectively. Fisher Funds led the default category with 10.1 percent. Pie Funds led both balanced and growth, returning 12.3 and 15.5 percent. Kernel High Growth led the aggressive category at 17.6 percent. Over a longer 10-year horizon, Milford’s active growth fund led aggressive peers with 9.8 percent annually, against an aggressive peer-group average of 8.9 percent.
The geopolitical shock running through these numbers is the same one driving petrol prices at the pump in suburban Auckland. Brent crude has stayed elevated for months and the lift in fossil-fuel revenues has reset the discounted cash-flow assumptions for solar, wind and grid-scale storage names that dominate clean energy benchmarks. Kernel’s fund tracks an index built on those companies, which is why a year that has been bruising for many cheap oil-dependent industries has been unusually kind to its unit holders.
The bitcoin story is more straightforward. Koura’s fund mirrors the bitcoin price and bitcoin has been on a sustained slide as risk appetite globally weakened in the face of war, sticky inflation and a US Federal Reserve that has held rates higher for longer. Some of that loss may have unwound in late April when the S&P 500 hit a new record, but the official Morningstar figures stop at the end of March and Carlyon’s own commentary suggests the recovery in his fund came after the cut-off.
For ordinary KiwiSaver members, the most useful read across the report is not in the specialty winners or losers. The default category average of 8.8 percent over the year and the aggressive category average of 12.1 percent represent what most New Zealanders are actually earning on their retirement savings. Fund choice still matters at the margin, with Fisher Funds beating its default peer group by more than a percentage point and Kernel High Growth beating its aggressive peers by more than five percentage points. But for almost everyone in the system, the wider economic story, oil prices, geopolitics and the AI capital cycle, sets the tone.
The last bit of context worth holding onto from the report is the structural one Anderson hinted at. Thematic funds remain a tiny fraction of KiwiSaver. The vast majority of the country’s retirement money still sits in diversified funds that are along for the same ride as global share markets, which is exactly why even the best-performing default and balanced funds had a quarter they would rather forget.
What does an 88 percent return on a KiwiSaver clean energy fund tell you about how the oil shock is reshaping where New Zealanders should be putting their retirement savings, and would you switch funds based on a single quarter of numbers like these? Leave a comment below or join the conversation on the Newswire Facebook page.