New Zealand
Auckland, 11 August 2010

KiwiSaver diversified funds experienced their first negative quarter since March 2009, with negative returns across all fund types for the quarter to June 2010, mainly due to ongoing global stock market volatility.

The median KiwiSaver Growth fund returned -6.1% for the quarter, compared to the more conservative default fund median, which only fell -0.2% over the same period. The best performing fund for the quarter was the Mercer KiwiSaver Conservative fund, a default fund, with a return of 0.7%.

Share markets, which had risen strongly for 12 months, went into reverse during the past quarter as fears over European sovereign debt sparked concern about the outlook for the global economic recovery. Funds with the highest allocation to growth assets (shares and property) were affected the most.

Martin Lewington, Head of Mercer New Zealand said global sharemarket volatility had stalled the run of positive KiwiSaver fund returns achieved over the past year.

“Stock markets, which had risen strongly for the past 12 months and fuelled the run of positive returns for KiwiSaver, went into reverse during the past quarter as fears over European sovereign debt default sparked concern about the outlook for the euro and the global economic recovery. In particular funds with the highest allocation to growth assets (shares and property) felt the impact most severely,” Mr Lewington said.

“The choppiness in the markets could continue for some time, but we’re not expecting a repeat of the economic slowdown of 2008. We believe we are still heading in the direction of recovery, even if it is at a slow pace. Therefore shares and property still have a place in KiwiSaver funds,” he said.