KiwiSaver investors largely lost out as higher interest rates saw equity markets sell off in the September quarter. Photo: 123RF
The total value of KiwiSaver funds fell by more than $2 billion in the third quarter as the prospect of interest rates staying higher for longer saw equity market values fall.
Morningstar's quarterly KiwiSaver Survey for the three months ended 30 September found almost all KiwiSaver funds produced negative returns from -1 percent for the conservative category to -3.1 percent for the aggressive category.
Morningstar data director Greg Bunkall said equity markets sold off in the September quarter as prospects for higher interest rates set in, which also saw a sharp repricing in bond markets.
"As for default funds, Super Life fared the best during the quarter, losing the least," the report said.
"Over longer periods, Quay Street, Milford, and Generate all continue to perform well across the categories in most periods."
However, the report also highlighted the long-term returns offered by KiwiSaver schemes.
The report said aggressive investment category gave investors an average annualised return of 8.0 percent over 10 years, followed by growth (7.6 percent), balanced (6.1 percent), moderate (4.3 percent), and conservative (3.9 percent).
"Locally, in the near term, upside risks from migration and fiscal policy could add to domestic demand and slow the expected pace of disinflation," the report said.
"This is somewhat countered by downside risks to global growth. These risks are being accentuated by geostrategic and geopolitical shifts.
"Some have been positive for US growth, such as reshoring at the expense of China.
"However, recent Middle East tension and higher oil prices add complexity to the required disinflation process."