Global sharemarket woes impact KiwiSaver returns

Media Release

Global sharemarket woes impact KiwiSaver returns

Wednesday 11th August 2010

KiwiSaver diversified funds experienced their first negative quarter since March 2009, with negative returns across all fund types for the quarter to June 2010, mainly due to ongoing global stock market volatility.

The median KiwiSaver Growth fund returned -6.1% for the quarter, compared to the more conservative default fund median, which only fell -0.2% over the same period. The best performing fund for the quarter was the Mercer KiwiSaver Conservative fund, a default fund, with a return of 0.7%.

Share markets, which had risen strongly for 12 months, went into reverse during the past quarter as fears over European sovereign debt sparked concern about the outlook for the global economic recovery. Funds with the highest allocation to growth assets (shares and property) were affected the most.

Martin Lewington, Head of Mercer New Zealand said global sharemarket volatility had stalled the run of positive KiwiSaver fund returns achieved over the past year.

“Stock markets, which had risen strongly for the past 12 months and fuelled the run of positive returns for KiwiSaver, went into reverse during the past quarter as fears over European sovereign debt default sparked concern about the outlook for the euro and the global economic recovery. In particular funds with the highest allocation to growth assets (shares and property) felt the impact most severely,” Mr Lewington said.

“The choppiness in the markets could continue for some time, but we’re not expecting a repeat of the economic slowdown of 2008. We believe we are still heading in the direction of recovery, even if it is at a slow pace. Therefore shares and property still have a place in KiwiSaver funds,” he said.

About Mercer:
Mercer is a leading global provider of consulting, outsourcing and investment services, serving over 25,000 clients worldwide. Mercer consultants help clients maximise the effectiveness of their employee health, welfare and retirement programs, and optimise workforce performance while managing costs. The firm provides customised administration, technology and total benefit outsourcing solutions. Mercer’s investment services include global leadership in investment consulting, retirement plan design and governance, and multi-manager investment management. Mercer’s global network of 18,000 employees, based in more than 40 countries, ensures integrated, worldwide solutions for clients who wish to establish global policies and procedures while allowing for the flexibility to accommodate local cultural, legal and regulatory requirements. Our locally based professionals are also available to serve mid-size companies and to address country specific issues and opportunities.

In New Zealand, Mercer is one of the largest providers of corporate superannuation services and is also one of six government selected default KiwiSaver scheme providers. Mercer has been operating in New Zealand for more than 35 years and has offices in Auckland and Wellington.

For more information, visit www.mercer.co.nz

ENDS

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