Trump, Key, Biden or Luxon? The politicians who are good for your KiwiSaver

KiwiSaver members in aggressive funds have done better under Democrat US presidents and National governments in New Zealand.

Morningstar has compiled data showing typical returns in various time periods.

KiwiSaver launched in July 2007, when Helen Clark's Labour government was in power, and George W Bush was the US president.

In the period of Bush's tenure, conservative funds had an average return of 8.37 percent a year. Balanced funds lost 2.36 percent a year, growth funds lost 8.88 percent a year and aggressive funds 14.33 percent.

During the period of Clark's time in office, conservative funds made 7.54 percent a year, balanced funds lost 4.18 percent a year, growth funds lost 10.87 percent a year and aggressive funds 16.63 percent a year.

It should be noted that this was the period when the global financial crisis was affecting markets, but most people had small balances so might not have noticed the falls so much.

From US President Barack Obama's tenure on, all funds returned positive per annum returns on average.

Conservative funds returned 5.06 percent a year by Morningstar's calculation, balanced funds 7.34 percent a year, growth funds 8.35 percent and aggressive funds 8.85 percent.

Good times (for the markets) continued in Donald Trump's first tenure.

Conservative funds returned 4.79 percent on average a year, balanced funds 8.4 percent, growth funds 10.14 percent and aggressive funds 11.75.

Under US President Joe Biden, conservative funds' return dropped to 1.06 percent a year, balanced funds 5.64 percent, growth funds 7.93 percent and aggressive 11. 1 percent.

Things picked up again when Trump returned to office. So far, conservative funds have returned 3.97 percent a year, balanced funds 8.13 percent a year, growth funds 10.13 percent and aggressive 12.91.

"There is an argument that Trump has been quite good for markets," Koura founder Rupert Carlyon said.

"Tax breaks, deregulation all that kind of stuff... the end of his [first] term was impacted by Covid.

"Generally the markets would prefer a Republic administration it's just really hard to get the data on that because there's always a crisis, particularly if you're there for four or eight years."

University of Auckland senior finance lecturer Gertjan Verdicket said the average aggressive return under Republican US administrations was 3.44 percent a year.

Under Democrats it was 9.97 percent. But for conservative funds, the average under Republicans was 5.67 percent and under Democrats 3.06 percent.

In New Zealand, Labour governments had a much lower return for aggressive funds than National governments.

Verdicket said: "In the US, under Democrat presidents, the return is significantly higher for the [aggressive funds]. The return on the conservative portfolio is higher under the Republicans. The latter could point to a 'light-to-safety' effect, where people shift from equities to bonds. It's more a risk-off principle. If you are looking for an explanation: increased economic uncertainty and disaster risk - especially over the longer-term.

"If we compare this to NZ, the flip happens when you look at NZ prime ministers. Labour has a significant underperformance in the most aggressive portfolio, whereas the difference between the two in the conservative portfolio is way smaller. This, to me, could also point to a flight to safety, but then toward the different political ideology - relative to the US. Under Labour, they switch from equities to bonds, that's why you see the increase in returns of the conservative portfolio."

He said other literature showed evidence of higher market performance under Democratic than Republican presidencies.

Under John Key's government, between 2008 and 2017, conservative funds returned 5.39 percent a year, balanced funds 8.14 percent, growth funds 9.32 percent and aggressive funds 10.18 percent.

Under Jacinda Ardern's Labour government between 2017 and 2023, conservative funds returned 1.53 percent a year, balanced 4.41 percent a year, growth funds 5.84 percent and aggressive 7.44 percent.

So far, under the National government, conservative funds have returned 5.83 percent, balanced funds 11.75 percent, growth funds 14.58 percent and aggressive 18.38 percent.

Carlyon said, with so much of KiwiSaver money invested offshore, New Zealand politicians were largely irrelevant.

The settings they applied to KiwiSaver were more important, he said,

"I'm not a supporter of either party, by the way... but Labour were the ones that brought in KiwiSaver and also set up the superannuation fund.

"John Key under National, they are the ones that then cancelled contributions into the super fund. They're the ones that also dropped [contributions] from 4 plus 4 to 3 plus 3, got rid of the kickstart, got rid of half the government contribution.

"The last Labour government left it alone and didn't touch anything. But we've seen continual kind of weakening by the National Party. And probably the most damaging thing that the John Key government did for retirement savings, was the total remuneration rules.

"I think they brought that in in 2009, and that was like, that was probably, was the biggest thing that undermined KiwiSaver of all.."

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