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Investors being softened up for bad news

Investors are being softened up for impending news that their returns from KiwiSaver won’t be great in the period up to September 30.

Tuesday, September 23rd 2008, 6:56AM
Investment Savings and Insurance Association chief executive Vance Arkinstall says that the recent volatility of share markets will have had a negative result on the investment performance of KiwiSaver and managed funds.

He says “it is expected that when investment performance results from the current quarter are calculated, few funds will have escaped the decline.”

Arkinstall tempers the realism with some advice telling investors not to lose faith. They “must ensure they keep their long-term perspective”, he says.

“Investment funds react as the value of the assets they are invested in fluctuate up and down. The recent turbulence in the share markets will have had a bad impact on funds with exposure to shares such as balanced funds. This is to be expected in times of such great volatility.”

While he encourages investors to stick with their long-term plan he acknowledges that “it is tough to hold that view when being bombarded with negative news from the market.”

“For KiwiSaver investors, many of whom will be new to investing through managed funds, this will be a particularly testing time.”

“However, keep in mind that your contributions are being invested into markets that are at a low level. When markets recover and they surely will, you will benefit from the strong upward performance.”

Arkinstall suggests that investors in the conservative default funds, may consider moving to a balanced fund to ensure that they capture the upside as markets recover.

“We anticipate that many investment funds will over recent months have been building up cash reserves from incoming contributions. These institutions will determine the suitable time to re-enter the market and invest that cash which will provide a solid upwards push for the sharemarket for the benefit of their long-term investors.”

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