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It has not been the best year for KiwiSaver investors, but not too bad considering the market volatility driven by the highs and lows of the pandemic.
ASB senior wealth economist Chris Tennent-Brown said it had been a mixed year for KiwiSaver accounts, reflecting a sluggish New Zealand stock market, while a big increase in the movement of interest rates weighed down more conservative, bond-heavy porfolios.
“What’s offset that as the very strong performance we’ve seen from international shares,” he said.
“We’ve been a bit out of sync for the entire year,” Tennent-Brown said.
“We peaked in January and haven’t quite got back to that that level yet,” he said, adding he thought the year ahead would see an improved performance.
“I would definitely be expecting the New Zealand share market to continue to perform more in line with with global share markets than what we’ve seen this year, that’s for sure.”
The NZX Top 50 Index hit a record 13,644 points on 8 January, and dipped as low as 12,085 points on 8 March, before recovering a bit of ground, but struggling to stay above 13,000 points.
Craigs Investment Partners head of private wealth Mark Lister said the next year was likely to see a better performance out of the local market.
“I think it will be a solid year for a couple of reasons. I think the economy is in very good shape with very low unemployment and what’s likely to be the highest Fonterra payout that we’ve seen ever,” Lister said.
“On the other side of the ledger the big headwind is going to be rising interest rates. . . so there are definitely some pros and cons.”
Tennent-Brown said many KiwiSaver fund managers will have realised some gains from the Australasian and other international markets, as most were not 100 percent focused on the New Zealand share market.
“But it’s worth remembering that over the past 10 years, the New Zealand share market has gone particularly well,” he said.
“So I don’t think it’s something we need to lose lose sight of and hopefully over the next 10 years we’ll see a similar satisfying performance from the from the local market.”
Lister said a number of companies that had underperformed in recent years were expected to have a better year.
“There’s still lots of great companies that are growing their earnings doing really interesting things,” he said.
“And I think next year could be a year where you see, you know, the Fletcher Buildings and some of the other businesses that maybe haven’t always been great performance in recent years come into their own because of the way the backdrop is shaping up.”