Volatility and Illiquidity to become KiwiSaver norm

Advisers will need to do plenty of client hand-holding as balances increasingly battle volatility and managers delve into more illiquid assets, according to research house Morningstar.

As global markets have reacted to the uncertainty of US President Trump’s tariff war, the message to members has been to keep calm and carry on, and advisers play a key role in delivering the message to clients, says Morningstar Global Data Director Greg Bunkall told advisers at the QPR Monsters in March roadshow.

“It’s really important you stay on top of why that’s happened, why they should stay invested in a particular strategy and manage their behaviours around switching and withdrawing,” he told  participants in a recent adviser event. 

The size of invested capital in KiwiSaver now outweighs the amount of money coming into the scheme, says Bunkall, and overall, portfolios have become riskier with the move to make “balanced” the default fund, and with more aggressive funds on offer in the market.