KiwiSavers shielded from worst of falls

Photo / APN

Investors in KiwiSaver pension schemes are unlikely to see the impact of the extreme volatility on world financial markets because most are involved in conservative or balanced products, fund managers said yesterday.

As most KiwiSaver investors were in for the long term - from 10 to 30 years - the impact of the meltdown was unlikely to be felt in the long run, they said.

Of Tower Investments' KiwiSaver investors, about 20 per cent had their savings in conservative funds, 60 per cent in balanced funds and 20 per cent in the higher risk growth funds.

"The large majority are in conservative or balanced funds which will see a relatively small impact from this," Tower Investments chief executive Sam Stubbs said. "Most people will not see much difference," he said.

As a fund manager, Stubbs said he was in no great rush to park money in cash. "In the last few days we have actually been buyers of equities," he said.

"We are relatively comfortable about what we are seeing here. We think this is more of a short-term correction rather than a medium- or long-term trend," he said.

Lower share prices gave investors the opportunity to use "dollar cost averaging", which involves continuing to buy shares at lower prices so as to reduce the average cost of entry in the long run.

"KiwiSavers are basically net investors - they keep on buying - and we are very comfortable at continuing to buy at these levels," Stubbs said. "I think people will look back and realise that this was a good time to keep on buying shares."

Shane Solly at Mint Asset Management said only a small proportion of New Zealanders had their KiwiSaver funds in the high risk or growth end of the market. "Inherently New Zealanders are conservative, that's probably stood them in good stead for the last six months," he said.

John Body, who heads up the major KiwiSaver provider, OnePath, said events on global markets were cause for concern, but that during the course of a 20 or 30 year lifespan in KiwiSaver investors were likely to experience periods of market volatility.