[GRTV] Managing KiwiSaver in a pandemic

Fund managers have been faced with market declines happening at a rate never seen before, ANZ's chief investment officer Paul Huxford says.

Friday, April 24th 2020, 5:23PM

When the impact of Covid-19 began to be felt around the world in March, markets reacted sharply. In the United States, it took the S&P500 just 22 days to fall 30%, although prices have since recovered.

"The complexity in terms of what we've seen and what is in front of us, I guess to state the obvious, has been pretty large," Huxford said.

"The speed of the declines that we've seen in some markets is almost unprecedented. And I guess in terms of the bounce, if you think about the US equity market that's been pretty interesting. We've kept very focused during this time in terms of directing our own research effort into the key issues that we think that we need to be thinking about. And also, taking research from the various research providers that we pay for and other sources as well."

He said KiwiSaver managers had to look sufficiently long term to "filter out all the noise" and stay true to investment philosophies. But its investing strategies had changed.

"At the end of Q3 we moved to an underweight position in terms of international equity. So we did that very, very swiftly.

"We recognised what was happening globally in terms of Covid-19, but I guess, like a lot of people the speed of that has had an impact across portfolios. And we haven't lost sight of the long term, but we continue to also focus a reasonable amount of effort on our tactical asset allocation. So we have been quite busy from that perspective as well, but both in equities and in foreign exchange and fixed income as well.

"So where we are now, we're relatively neutrally positioned in equities. We're slightly underweight fixed income and carrying good levels of cash, looking for opportunities as they may arise."

He said all of ANZ's KiwiSaver funds had "done what they said on the tin" in terms of their performance. The conservative fund was down about 1.5% and growth about 15% over the past three months.

"Our focus on holding quality fixed income assets, I think, is really coming to the fore at the moment which we are pleased about.

"The GFC was very, very different. It was quite slow moving. It was financial ... started with a financial leverage problem. This was a direct hit to consumption, but really the speed has meant there has been many, many light bulb moments, I guess, as we've gone along."

There had been sleepless nights, he said.

"Yeah, quite a few. There's a number of us up at all hours. That's just what we do.

"We take the responsibility and the privilege of managing a large amount of money for many New Zealanders very, very seriously, so the teams and myself don't mind. That sacrifice is just part of what we do."

Read the full interview here.

Tags: ANZ GRTV KiwiSaver Paul Huxford