KEY POINTS:
Retirement savings schemes took a hammering last year with the average balanced fund losing 14.4 per cent and the worst dropping close to 20 per cent, a survey by consultancy firm Mercer has found.
The quarterly survey of wholesale balanced funds found even the best performer - AMP
Capital Investors - lost 10.5 per cent.
Mercer's own superannuation fund was the worst performer over one year losing 19.5 per cent.
The 2008 year, which saw investment markets around the world plunge in the wake of the global credit crunch, pulled down the average return for investors over the last three years.
AMP and Tower's funds were the best performers of that period but even they could only produce an annual average return of 3.5 per cent.
Mercer remained at the bottom over three years with its average return the only one to be in negative territory at an average of -1.2 per annum. Mercer head of investments and the New Zealand business Martin Lewington said the falls in global investment markets had been unprecedented.
"The speed at which both the markets and economies have weakened has taken most by surprise, after all it was not long ago that concerns about high levels of inflation were at the forefront of many central banks' actions," he said.
Jeff Matthews, senior financial adviser for Spicers, which is owned by Arcus, said relative to the markets the performance of the New Zealand funds was probably not a bad outcome
"I think what might have helped, even though the markets were off, was the kiwi dollar has come off at the same time."
A lot of damage occurred after September following the collapse of Lehman Brothers, he said.
While it was difficult to predict how the funds would be affected this year Matthews said he believed performances would probably be flat. "Which is better - at least there is no more damage."
Matthews said there were bargains to be had in the market at the moment and in many cases investors could get a better return from dividends than putting their money in the bank now provided dividends held up.
History also showed markets often bounced back very quickly when they recovered with much of the gains made in the first six months before many investors even realised there had been a recovery, he said.
