We think volatility is likely to continue and as an active manager we hope to capitalise on it i.e. buy more during the dips and take some profits during the peaks.
KiwiSaver is a long term investment which means investors typically have the time horizon to handle ups and downs. Investing in growth funds will have more ups and downs than conservative funds but over the long term growth funds will provide more to your KiwiSaver account. For example, KiwiSaver conservative funds have averaged 2.85% for the year ended 31 October 2018 and 4.85% p.a. over the past five years. (The Generate Conservative Fund returned 5.22% for the year and 6.34% p.a. over five years). KiwiSaver growth funds have averaged 3.44% for the year ended 31 October 2018 and 8.43% p.a. over the past five years. (The Generate Growth Fund returned 4.63% for the year and 9.56% over five years and the Focused Growth Fund returned 3.06% for the year and 10.17% p.a. over five years).
We recommend that KiwiSaver members choose a fund based on their time to retirement or withdrawal, like for a first home. Most experts agree that KiwiSaver members should not try to time the markets and switch from Growth to Conservative Funds after a large sell off in markets. Doing this means members will crystallise the loss and won’t be able to benefit from the eventual recovery in growth funds' prices.
Please note past performance is not necessarily a reliable indicator of future performance.