Growth funds plunge 13.2%, but savers hold nerve

People with their retirement savings in more than half of the most popular categories of KiwiSaver had funds deliver losses of more than 10% over a year.

The Morningstar KiwiSaver report for the 12 months to the end of September, shows 10% or greater losses in 84 of the 129 funds in the conservative, moderate, balanced, growth and aggressive fund categories.

Tim Murphy, Morningstar spokesman, said KiwiSaver fund returns reflected ‘‘challenging’’ market conditions in share, bond and property markets worldwide as the world economy faced recession, and absorbed the economic disruption caused by the war in Ukraine. The average loss over one year, after fund managers had taken their fees, was 8.1% on conservative funds, 9.7% for moderate funds, 10.5% for balanced funds, and 13.2% for growth funds.

Despite the falls, KiwiSaver members who have been in the retirement saving scheme over the long term have had positive returns. The average per annum return on growth funds was 8% in the 10 years to the end of September.

For balanced funds, it was 6.4%. Joe Taylor, founder of the BetterSaver online advice business, said the majority of people realised that short-term losses did not undermine the long-term benefits of KiwiSaver.

‘‘KiwiSaver for most is a longterm game,’’ he said. ‘‘Short-term volatility doesn’t matter.’’

People nearing retirement were hopefully in lower-risk types of KiwiSaver fund, he said.

He was seeing little panic amongst KiwiSavers, with only a minority switching to lower-risk funds.

Taylor said people worried about losses should seek professional financial advice to see whether they were invested in a fund that was suitable for them.