Investors urged to keep faith

By DAVID HARGREAVES - BusinessDay.co.nz | Monday, 22 September 2008

Investors who have their money in managed funds, including through KiwiSaver, are being urged to not "lose faith" when they see the negative impact the recent volatility in markets has had on their funds, the Investment Savings and Insurance Association says.

Chief executive Vance Arkinstall said today that investors needed to keep a long-term perspective.

"It is expected that when investment performance results from the current quarter are calculated at 30 September, few funds will have escaped the decline," he said.

"Investment funds react as the value of the assets they are invested in fluctuate up and down. The recent turbulence in the share markets will have had a bad impact on funds with exposure to shares such as balanced funds. This is to be expected in times of such great volatility." he said.

The important point was for investors to remember they have or should have a long-term perspective for their investment, Arkinstall said.

He conceded thought that it was tough to hold that view when being bombarded with negative news from the market. 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," Arkinstall said.

"Share markets often over react. They go too high when times are good and dive too low when the going gets tough. The current share markets are probably too low and this will create many opportunities for KiwiSaver and managed funds as the recovery takes place."