Financial Market

Global market chaos knocks billions off KiwiSaver value

Financial market turbulence has wiped $5 billion from the value of KiwiSaver funds in the past three months.

A survey by investment research firm Morningstar shows the value of assets fell to $82.8b in the three months ended June from $87.7b in the previous quarter.

Morningstar Asia-Pacific director Tim Murphy said financial markets had fallen in the face of a litany of negative factors.

“Several shocks have rocked a global economy already weakened by the pandemic: Higher than expected inflation around the world, particularly in the United States and major European economies, causing financial conditions to tighten; a worse than expected slowdown in China, due to the Covid-19 outbreaks and lockdowns, and further negative fallout from the war in Ukraine.”

New Zealand’s sharemarket fell 10.2 percent over the quarter, while Australia’s market was down 9.7 percent, and global benchmark index dipped 6.2 percent.

The smallest average value drops were for conservative funds, which declined 4.2 percent while balanced funds averaged a fall of 7.1 percent, growth funds were down 9 percent, and aggressive funds, which typically invest in the high growth tech sector, were down an average 10.1 percent for the quarter.

However, Murphy said investors needed to look beyond short-term moves and judge KiwiSaver as the long-term retirement savings scheme it is designed to be.

Over three-, five-, and 10-year time frames the annual returns had been positive ranging between 4.5 and 10 percent.

“I’d challenge anyone to say that hasn’t been a good investment over the long term.”

ANZ remained the largest provider with $17.2b although its market share has fallen, with ASB slightly increasing its share to $13.3b and a 16 percent market share, followed by Westpac, and Fisher Funds.

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