Headlines can shake investor confidence, but discipline and long-term view remains the most reliable, deliberate strategy for investors.<\/p>\n
We\u2019re only a third of the way through 2026, but it feels like we\u2019ve already had a full 12 months\u2019 worth of alarming headlines.<\/p>\n
\n It\u2019s enough to make many of us look
\n nervously at our KiwiSaver balance or investment portfolios and wonder if we should make changes.\n <\/p>\n
But generally, we shouldn\u2019t.<\/p>\n
This is the view of Frank Jasper, ASB Chief Investment Officer who says: \u201cIt is challenging to read the headlines; the market tends to be myopic, focusing on one thing at a time and getting obsessed with the topic of the day. This is particularly true in the midst of crises like the conflict in Iran.\u201d<\/p>\n
\u201cBut we\u2019ve looked at a whole series of events over time, and they do blow over. Generally speaking, in volatile times, holding steady is the right strategy.\u201d<\/p>\n
It\u2019s particularly tough, he notes, because in almost every market correction it\u2019s easy to think of a number of realistic scenarios where things could get a lot worse, for example the oil crisis. <\/p>\n
\u201cI do think about those worst-case scenarios a lot, and how they would play out, and what the world would look like \u2013 that\u2019s part of my job,\u201d Jasper says. \u201cBut understanding the history of events like this helps calibrate and ground my thinking, holding true to the key investment principles of a long term focus , diversification and discipline.\u201d<\/p>\n
Jasper says volatility and change are normal features of investing, and understanding these movements helps shape better investment decisions \u2013 preparation matters more than prediction \u2013 and ASB\u2019s team of both local and global experts is well equipped to ride the waves.<\/p>\n
On average, markets recover from dips in just 47 days<\/p>\n
Since the Global Financial Crisis (GFC) in 2009, there have been 32 events where share markets have lost at least 5% of their value. Each one was a huge worry at the time: the \u2018flash crash\u2019 of 2010; slowing growth in China in 2015; trade tensions in 2018; tariffs in 2025. Markets recovered from each one and continued on to reach new highs. <\/p>\n
\u201cLooking at conflicts, like the Iran crisis – on average the markets recovered from these selloffs in 47 days,\u201d Jasper says. \u201cOne year later, there\u2019s a 68% probability that the market will be back above its valuation on the day before the event. Volatility is the cost of doing business in the share market, and the extra return you can potentially make from owning shares compared to holding cash or bonds is compensation for that volatility.\u201d<\/p>\n
For Jasper and his expert team at ASB, global events are carefully considered and might lead to some adjustments in their various funds. <\/p>\n
With a general election ahead and more global shifts likely, they\u2019re looking at market dynamics and aiming to find opportunities to buy well-priced assets or add global diversification. <\/p>\n
\u201cWorking alongside and getting good insights from the world\u2019s largest fund manager BlackRock helps us make informed decisions.<\/p>\n
\u201cWe take a considered approach, adjusting portfolios in a balanced way, shifting a few percentage points of a total portfolio in a way that responds to megatrends rather than headlines. We don\u2019t whipsaw back and forth with large chunks of capital \u2013 the real value is created by responding in a sensible and balanced way,\u201d Jasper says.<\/p>\n
Frank Jasper, ASB Chief Investment Officer<\/p>\n
\u201cElection cycles and global events may create uncertainty, but sound principles outlast any single moment in time.\u201d<\/p>\n
KiwiSaver provides valuable diversification and inflation protection<\/p>\n
For the 3.4 million New Zealanders who have a KiwiSaver account, choosing the right fund means considering both your timeframe (how soon you need your money) and your personal appetite for risk.<\/p>\n
Global events can cause your balance to take a temporary tumble, particularly if your fund holds a large proportion of international shares. But this is all part of the expected ups and downs of the markets, and those growth-focused funds typically achieve higher returns over time than more conservative funds. <\/p>\n
Owning shares in other countries is one of the major advantages of a KiwiSaver fund, Jasper adds, particularly due to the average Kiwi\u2019s typically high exposure to New Zealand assets and the New Zealand dollar \u2013 this just by being a Kiwi and owning property in New Zealand and getting income in New Zealand dollars. Kiwis also historically tend to rely on property as their only investment strategy.<\/p>\n
\u201cDespite recent ASB research into investor confidence (this shows Kiwis are looking at other options like shares or managed funds for best returns on investment), there\u2019s still a big portion of most people\u2019s wealth that is highly dependent on property,\u201d Jasper says.<\/p>\n
\u201cYour investments are a lot more resilient if you don\u2019t have all your money in New Zealand (and in the New Zealand dollar) and are globally diversified, because not every country is affected the same way by disruptive events.<\/p>\n
\u201cFor example, with the oil crisis, the US is the biggest energy producer in the world, so it\u2019s set up relatively well to weather this kind of storm. But here in New Zealand we are very dependent on offshore oil. So having that international diversification is really valuable. That also applies to inflation: assets like gold, infrastructure and shares, in general, do better in inflationary environments. The diversification you get with a KiwiSaver investment is so valuable for building your total lifetime wealth.\u201d<\/p>\n
Find a risk strategy you can live with, even on the worst days<\/p>\n
If you\u2019re someone who finds it distressing to see your KiwiSaver balance fall, and the headlines keep you awake at night, Jasper says a lower volatility strategy could be better for you.<\/p>\n
\u201cThe best risk strategy is one you can live with on the best days and the worst days.\u201d<\/p>\n
On the flipside, if you can withstand the dips and stay the course in uncertain times, you will typically be rewarded with higher long-term returns. <\/p>\n
\u201cIt\u2019s tough, because the biggest selloffs come during recessions when you\u2019re worried about your income and your job. But you will likely earn an extra return as compensation for handling that volatility over time. Look at history and let that guide your thinking.<\/p>\n
\u201cYou may also be thinking whether now is the right time to start investing \u2013 the truth is there is no one right time. You also don\u2019t need a big amount to start as every little bit adds up,\u201d Jasper says.<\/p>\n
\u201cIf recent volatility has you questioning your approach, it may be worth taking the time to review your strategy and seek guidance if needed. The ASB team is here to help.\u201d<\/p>\n
For more information: asb.co.nz\/invest<\/a><\/p>\n