KiwiSaver members mature enough to ignore market volatility

KiwiSaver members expected to ignore market impact of Donald Trump's re-election.

Friday, November 8th 2024, 7:34AM

by Kim Savage

With US markets soaring on the back of President Donald Trump’s decisive election win KiwiSaver providers are cautioning against using it as a catalyst to switch fund types.

Speaking at Good Returns’ KiwiSaver Roundtable, Managing Director of ANZ Investments Fiona Mackenzie said Trump’s return to the White House is not necessarily the key driver of the sharp rally in US stocks overnight Wednesday.

“The media is focused on the markets rewarding Trump for a win, but I would say the majority of the move is about the markets getting a certain outcome, they hate unclear election outcomes.”

“There is definitely a little bit in there around Trump’s brand, around getting rid of regulation and making it easier for big business to do well, but all of that is a very short term thing, we’re thinking about our KiwiSaver balances on a 20-30 year view,” she said.

Mackenzie said the bank’s data shows customers have come to understand a market wobble does not mean they should switch funds.

“I do feel that New Zealanders have matured a lot because they don’t react or overreact,” she said.

Pie Funds chief executive Ana-Marie Lockyer expects to see markets bounce around over the next few weeks, but agrees KiwiSaver members are now better at taking a longer-term view.

“We see less and less people in these events now move and those that do move, we try to have a conversation with to make sure they’ve moved for the right reason and they understand the impact of moving,” she said.

Access to quality advice crucial in times of volatility

Past events have helped both advisors and members understand what not to do when big swings occur in markets, GoalsGetter’s head of distribution Sam Bryden told the Good Returns Roundtable.

“You look at March 2020 when people saw the global equity part of their portfolio fall 30% and a lot chose to go to cash, and there was one financial adviser who advised his entire book to go to cash at that time and obviously missed the bounce.”

“Because we’re long term investors in KiwiSaver, we should be providing more access and more availability to advice tools.”

“The likelihood is markets are going to be more favourable towards Trump with his low taxes but it could’ve gone the other way and it still could,” he said.

KiwiSaver members have proved they are more comfortable with volatile market movements, according to Fisher Funds’ general manager of KiwiSaver David Boyle, but providers could still do more.

“Are we doing enough to provide financial capability support either through the employer or directly to the members about how to manage that? Volatility is what we deal with everyday.”

Tags: KiwiSaver