The value of KiwiSaver funds fell $1.5 billion to $87.3b as global sharemarkets, already battered by the Omicron outbreak, supply chain disruptions, and surging inflation, were further roiled by the Russian attack on Ukraine and the fallout on commodities, according to investment research firm Morningstar.
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"The shock reverberated through into markets, with equities declining and bond yields rising," Morningstar manager Tim Murphy said.
"Commodity prices soared given Russia is a key producer of several important commodities including oil, gas, and wheat. World shares had already been weak even before the invasion of Ukraine, and the news of Russia's attack sent them lower again in late February and early March."
Quarterly returns for various funds and types of investment were mostly negative, with average falls ranging between 3.9 percent for conservative funds through to 6.5 percent for the aggressive funds.
Annual returns to the end of March showed a fall of 1 percent for conservative and moderate funds, nearly 3 percent for growth funds, and 4 percent for aggressive funds.
One of the few bright spots in the survey was the performance of Australian shares which gained during the quarter on the back of high commodity prices for the resources sector.
Murphy said investors needed to look beyond the short-term volatility and evaluate KiwiSaver by the long-term returns.
Over the past 10 years annual returns had ranged from 5.1 percent for conservative funds, 8 percent for balanced funds to around 10 percent for growth and aggressive, he said.
ANZ Bank remained the biggest KiwiSaver provider with $18.5b in funds followed by ASB.
KiwiSaver was given a shake-up in December with the number of default providers reduced to six, while the default fund was lifted to balanced from conservative to improve long term returns.
More than 200,000 investors were shifted from one provider to another.
The average performance for default funds was a drop of 5.5 percent for the quarter.