6th September 2018
KiwiSaver members can prepare for investment storms by being in the right type of fund and continuing to contribute
through any downturn.
As part of the Sorted Money Week 2018 ‘Weathering the storm’ the Financial Markets Authority (FMA) is focussing on
helping younger KiwiSaver members prepare for when investment markets fall in value.
Simone Robbers, FMA Acting Director of External Communications and Investor Capability said: “Being in the right fund
for your needs is the best way to prepare.
Switching from a high risk growth fund to a conservative fund when markets tumble means you lock in any losses. So think
about your longer term investment horizon and when you need the money and stick with your plan.”
Lower risk funds such as defensive or conservative funds are better if you need the money to buy a first home in the
short-term (3-7) years, while growth or aggressive fund are better in the long term.
However, on the flipside, that performance comes with a lot more volatility. The average growth and aggressive funds
have recorded swings of around 20% in a calendar year in the last ten years.
In the five years to the end of March 2018, here’s how the average fund type performed.Fund TypeAverage Return (after fees, before tax)Defensive3.2%Conservative5.2%Balanced7.8%Growth9.6%Aggressive10%
The FMA has published a KiwiSaver risk quiz for Money Week, targeting younger KiwiSaver members. So far almost 10,000
people people have taken the quiz.
Many KiwiSaver members in the 18-30 age bracket have not experienced a major fall in the value of their investments in
their adult lifetimes. KiwiSaver is a long-term investment and members can best prepare for a downturn by choosing the
right fund for their goals and their attitude to risk.
ends