{"id":124139,"date":"2025-11-08T05:41:08","date_gmt":"2025-11-08T05:41:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/124139\/"},"modified":"2025-11-08T05:41:08","modified_gmt":"2025-11-08T05:41:08","slug":"wall-street-jitters-kiwisaver-managers-trim-tech-exposure-amid-ai-bubble-fears","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/124139\/","title":{"rendered":"Wall Street jitters: KiwiSaver managers trim tech exposure amid AI bubble fears"},"content":{"rendered":"KiwiSaver providers generally have exposure to US stocks because they account for about 60% of the world market.<\/p>\n
And the so-called \u201cMagnificent 7\u2033 tech stocks have become an increasingly dominant part of the global market.<\/p>\n
Murray Harris, head of KiwiSaver and retail at Milford Asset Management, said the markets were nervous.<\/p>\n
\u201cThe longer the market keeps rising like it has done, the more nervous you do get,\u201d Harris told the Herald.<\/p>\n
The tech sector amounts to a 36% weighting in the S&P 500, more than in the dot-com era of the late 1990s, he said.<\/p>\n
Leading the charge in the American sharemarket has been chip maker Nvidia, which has become the world\u2019s first US$5 trillion ($8.8t) company.<\/p>\n
\u201cThere are some very highly valued companies and, of course, Nvidia is one of them that stands out,\u201d Harris said.<\/p>\n
\u201cFrom our perspective, we\u2019ve just taken a slightly more cautious approach because things don\u2019t go up forever.<\/p>\n
\u201cBut we can use things, particularly with our active investment strategy, like derivatives to protect the downside when things do fall as they inevitably will.<\/p>\n
\u201cWe\u2019ve got pretty flexible mandates so that we\u2019re able to raise cash when we want to, and we\u2019ve actually been doing that just a little bit recently \u2013 taking profits and just holding that in cash.<\/p>\n
\u201cWe don\u2019t want to put more money into companies that are highly valued.<\/p>\n
\u201cAnd so then we\u2019ve been able to diversify and invest in other markets like Europe, and other sectors like property, consumer, communication services, consumer discretionary, healthcare, which are all quite large exposures in our funds as well.<\/p>\n
\u201cThat\u2019s opposed to the passive and index tracking managers who, for every dollar that they get in, they\u2019ve just got to put more and more money into those highly valued companies because they\u2019re buying the index.\u201d<\/p>\n
Active fund managers are often at loggerheads with exchange-traded funds (ETFs), which invest solely based on a company\u2019s weighting on an index.<\/p>\n
Harris said it would be healthy if the market had a pullback.<\/p>\n
\u201cIf you think of it like a pressure cooker, the pressure builds and builds until something blows.<\/p>\n
\u201cIf the pressure cooker can let off a little bit of steam, I think it\u2019s actually often quite healthy,\u201d he said, adding a 10% retracement would be healthy.<\/p>\n
\u201cWe\u2019ve been taking profits on companies and diversifying elsewhere so that you reduce that risk, and we\u2019ve got derivative cover in place as well.\u201d<\/p>\n
For KiwiSaver investors, much rests on whether people are in the right fund for their situation, he said.<\/p>\n
Harry Smith, Fisher Funds\u2019 portfolio manager \u2013 global value, said there was a huge amount of \u201cchat\u201d about a possible AI bubble.<\/p>\n
He said it was important to separate the technology from the hype.<\/p>\n
\u201cThe technology in itself we are very bullish about what that\u2019s going to mean for productivity and GDP growth over the long term,\u201d he said.<\/p>\n
The hype, as in what\u2019s happened to share prices, is a different subject.<\/p>\n
\u201cThe crux of the issue is how AI is going to be monetised and where is this revenue or profit going to come from to support the investment that\u2019s being made.<\/p>\n
\u201cWe\u2019ve seen a lot of hype, but outside of the AI space, a lot of companies have been left behind and are looking quite attractive.\u201d<\/p>\n
Smith said sharemarket investors should expect to get a 10% pullback every couple of years and a 20% decline every six years.<\/p>\n
\u201cIt\u2019s the price of admission for being an equity investor and getting access to those attractive long-run returns.\u201d<\/p>\n
ASB Bank\u2019s chief investment officer Frank Jasper said he was a big believer in AI.<\/p>\n
\u201cAI and digitalisation is something that we\u2019ve been positively predisposed to for some time.<\/p>\n
\u201cDespite what\u2019s going on with valuations, we remain a big believer that space is going to facilitate a lot of change and there will be significant shareholder value creation over the next five, 10 or 20 years,\u201d he said.<\/p>\n
\u201cThat doesn\u2019t mean to say that the assets can\u2019t get overpriced from time to time.<\/p>\n
\u201cWe were heavily exposed in that space but have been progressively reducing our exposure to the very large cap tech stocks and moving our focus in AI away from what I\u2019d call the primary beneficiaries to the secondary beneficiaries.<\/p>\n
\u201cWe have reduced our total global equity exposure, which these days means you are reducing your exposure to those mega cap tech stocks, and we\u2019ve been diversifying more within our global share portfolio.\u201d<\/p>\n
Jasper said the infrastructure stocks \u2013 data centre providers and the electricity utilities \u2013 looked like the secondary AI beneficiaries.<\/p>\n
He said KiwiSaver would have already benefited strongly from the Wall Street tech boom to date.<\/p>\n
\u201cThat\u2019s a good thing, but like all good things, if they keep going on in one direction for too long it creates a little more risk.<\/p>\n
\u201cWe\u2019ve reduced our exposure a little bit to shares, so taking some direct risk off the table.<\/p>\n
\u201cWe\u2019ve diversified a little bit more within portfolios, and we\u2019ve put some downside protection in place,\u201d he said.<\/p>\n
\u201cThis will be a long-term theme, but we\u2019ll have periods where it\u2019s flavour of the month and then we\u2019ll have periods where it struggles a little bit more.\u201d<\/p>\n
Listen and subscribe to the Today in Business<\/a> podcast \u2013 the top headlines from the NZ Herald business team summarised and delivered by an artificial intelligence (AI) voice as an easily digestible recap.<\/p>\n","protected":false},"excerpt":{"rendered":"KiwiSaver providers generally have exposure to US stocks because they account for about 60% of the world market.…\n","protected":false},"author":2,"featured_media":124140,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[1443,365,534,42110,2836,138,8473,543,33014,28164,86649,6964,6093,13102,225,111,139,69,86650,43880,12975,51177,5424,370,145,1961,70932,13558,4518,14932],"class_list":["post-124139","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-about","tag-ai","tag-amid","tag-bubble","tag-burst","tag-business","tag-done","tag-driven","tag-exposure","tag-fears","tag-jitters","tag-kiwisaver","tag-little","tag-managers","tag-market","tag-new-zealand","tag-newzealand","tag-nz","tag-pullback","tag-rampant","tag-sector","tag-settle","tag-street","tag-tech","tag-technology","tag-this","tag-trim","tag-wall","tag-weeks","tag-worries"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/124139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=124139"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/124139\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/124140"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=124139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=124139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=124139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}