Superannuation funds on both sides of the Tasman will have been undermined by the recent sharemarket turmoil which has wiped billions of dollars from share values around the world.
In New Zealand, the KiwiSaver fund and managed funds were expected to show a decline when investment performance results from the current quarter were calculated on September 30, the chief executive of the Investment Savings and Insurance Association,Vance Arkinstall, said yesterday.
In Australia, the Australian Super fund, which had about 1.4 million members and more than $A28 billion ($NZ34 billion) in funds under management, was expected to be down 2%-2.5%, the chief executive of Australian Super, Ian Silk, said.
However, both funds are urging investors to take long-term views on their investments.
"The recent volatility of sharemarkets will have had a negative result on the investment performance of KiwiSaver and managed funds. But investors should not lose faith and must ensure they keep their long-term perspective," Mr Arkinstall said in a statement yesterday.
Similarly, Mr Silk said most superannuation investors had, or should have, a long-term perspective of the market and expect some negative returns during economic cycles, AAP reported yesterday.
"Nobody likes to lose money. But balanced superannuation funds - and they're the sort of options that most Australians are in - should expect to see their balanced option have a negative return every five or six years," he said.
"We've had an extended period of quite exceptionally strong performance and we're seeing the market come back through the cycle," he said of the slowing since Australia's recent boom times.
Mr Arkinstall said that for KiwiSaver investors, many of whom would be new to investing through managed funds, this would be "a particularly testing time".
"However, keep in mind that your contributions are being invested into markets that are at a low level. When markets recover, and they surely will, you will benefit from the strong upward performance," he said.
For KiwiSaver investors in default funds which were very conservative, this might be a good time to seek advice and consider moving to a balanced fund to ensure that you captured the upside as markets recovered, he said.
"We anticipate that many investment funds will over recent months have been building up cash reserves from incoming contributions.
These institutions will determine the suitable time to re-enter the market and invest that cash, which will provide a solid upwards push for the sharemarket for the benefit of their long-term investors," he said.
