- LATEST UPDATE - 5 APRIL: ASB is in the process of divesting all Russian assets from its investment funds, in response to the Ukraine invasion. Various legal (including NZ and overseas sanctions laws) and practical restrictions (e.g., trading suspensions, existence of willing buyers) mean some assets are not able to be sold immediately. We continue to work to exit as soon as it is legally permissible and reasonably practicable to do so.
- Russia has declared war on Ukraine, and the world markets appear to be reacting to any news headline related to it, driving market volatility and impacting both KiwiSaver and Investment Funds. This is at the same time as inflation and the interest rate environment is making markets concerned.
- Volatility is nothing new and we continue to manage investors' money knowing there will be periods of volatility.
- From time to time your goals, circumstances, and attitude to risk may change. If so, or if you are wondering about what this volatility means for you, our blog summarises what is going on, what it means for your investments, and ways to get guidance and advice from ASB.
In the past few days we have seen another round of volatility, which is affecting markets across the world. This in turn, is impacting KiwiSaver and Investment Fund balances.
It's not just isolated to the past few days. Since the start of the year, this increased volatility has been fairly persistent. With interest rates rising throughout the world, along with rising inflation, ongoing COVID-19 impacts, and the potential conflict on the Ukraine-Russian border this has been putting pressure on both growth and income asset values.
So, what is driving this market reaction?
- Russia has declared war on Ukraine, and the world markets appear to be reacting to any news headline related to it. While there are ongoing discussions between international leaders to try and deescalate the situation, Russian forces are advancing. Countries are still advising their citizens and representatives who are still in Ukraine, to leave as soon as possible.
- Along with any impact this has on the people of Ukraine and Russia and their lives, geo-political events (as investors tend to label them) like this can affect different parts of the markets around the world. Oil and energy prices, global growth fears, economic sanctions – all lead to uncertainty amongst investors, which then can weigh on asset prices for periods of time.
- ASB partner, BlackRock's Chief Investment Strategist Ben Powell says that this evolving situation warrants near-term caution. Yet we are also mindful that geopolitical tensions tend to cause short-term gyrations like the ones we're seeing rather than become ongoing market drivers.
- Volatile events like this happen more regularly than you'd think. Our recent blog on January's market volatility features a chart showing major events throughout history and their impact on US index, the S&P 500. From a market standpoint, these events brought about volatility at the time; looking back now, the impact seems a lot less significant.
What does this mean for your investments?
- As we wrote in our recent blog, seeing your balance fluctuate can create understandable concern.
- Volatility is part and parcel of investing in products such as KiwiSaver or Investment Funds. Our teams continue to manage your investments and make adjustments to the changing market environment, while maintaining a medium to long term horizon. As an individual investor, the best plan remains the same: sit tight, don't check your balance every day and keep to your long-term goal or strategy.
- From time to time your goals, circumstances, and attitude to risk may change - if so, or it's been a while since you last checked in - periods like this are another reason to get some guidance or advice. That advice can be talking to a specialist, using any of our tools, or getting guidance from articles and blogs.
Advice: talk to your ASB Wealth Manager or check in with one of our KiwiSaver Specialists to go through our KiwiSaver Explorer tool. Call on 0800 272 738. They're available from 8am to 6:30pm during the week, or 8:30am to 5pm on Saturdays.
Tools: if you'd prefer to do it yourself, you can use our simple and easy digital tools. Our KiwiSaver Calculator to revisit your long term savings projection and goal, or our Help me Choose tool to be reminded of your fund choice and why it's right for you.
Articles: our blog above might be a helpful place to start. Another of our recent blogs on the power of advice is recommended reading during times like this. And if you'd prefer to listen in, start with episode 41 of the ASB Investment Podcast.
Interests in ASB KiwiSaver Scheme and ASB Investment Funds (Schemes) are issued by ASB Group Investments Limited, a wholly owned subsidiary of ASB Bank Limited (ASB). ASB provides Scheme administration and distribution services. No person guarantees interests in the Scheme. Interests in the Scheme are not deposits or other liabilities of ASB. They are subject to investment risk, including possible loss of income and principal invested. For more information see the ASB KiwiSaver Scheme and ASB Investment Funds Product Disclosure Statement available from asb.co.nz and the register of offers of financial products at http://www.business.govt.nz/disclose (search for ASB KiwiSaver Scheme or ASB Investment Funds).