KiwiSaver investors seem to have adopted the motto of "Keep Calm and Carry On" in the face of financial market volatility caused by the pandemic and geopolitical crises, according to a new survey.
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ASB bank's latest survey showed the level of fund switching falling back to more historic pre-pandemic levels as investors ignored volatile markets, stuck with their funds and maintained their contributions.
The initial Covid outbreak in 2020 prompted a spike in the number of investors switching to conservative funds thinking they could reduce the impact of falling markets, although many were then caught by a rapid rebound in markets which effectively locked in their losses.
"Over the last few volatile months, the number of people switching has remained at normal levels. This is really pleasing to see and it contrasts with the spike in switching that we saw in the early days of the pandemic in 2020," ASB senior economist Chris Tennent-Brown said.
"Nonetheless, when markets are volatile like they have been, those that switch tend to move towards more conservative options."
However, he said investors could expect more headwinds, which would mean they might need to increase their retirement savings.
"This is likely to be compounded in coming quarters as high inflation, rising interest rates and volatile investment markets put pressure on returns."
Tennent-Brown said the reduction in panic could be seen as a sign of the growing maturity of investors, and the greater levels of engagement and advice from financial advisers and KiwiSaver providers.
Barely a quarter of those surveyed said they had a high understanding of KiwiSaver, but Tennent-Brown said more people had taken the opportunity of softer markets to make extra contributions to improve long-term returns, while many had made sure they invested enough to get the full government contribution.
The survey also showed support for employers continuing to make contributions for investors over the age of 65, and close to three-quarters expecting to work past 65.
Tennent-Brown said the slowing and possible retreat of house prices might tempt more investors to look to tap their KiwiSaver accounts for house deposits.