Investor outlook “optimistic” despite COVID crash

by Ksenia Stepanova22 Jul 2020

New Zealanders’ outlook on investment has managed to stay positive despite 60% of Kiwi investors losing money during the COVID-19 pandemic, according to a new survey released by the FMA.

The vast majority of investors (71%) retained an optimistic outlook, believing that the pandemic will pass and the markets will eventually recover with time. Almost a quarter (23%) planned to increase their existing investments, or to make new investments in the coming 12 months.

Read more: Mum and dad investors eager to return to the market

Nonetheless, a significant amount (45%) were still concerned about the impact of COVID-19 on their personal finances. FMA manager - investor capability Gillian Boyes says the pandemic has pushed Kiwis to be more active in managing their finances, which is a good thing - however, she warned that major changes such as switching KiwiSaver funds always need to be considered carefully.

Over the past 12 months, 21% of KiwiSaver members made a change to their KiwiSaver, whether by increasing contributions or changing fund type. Of all the fund type switchers, 43% did this after the impact of COVID-19 on markets took a turn for the worse - something advisers have urged investors not to do without careful consideration or consultation with a financial adviser.

“The FMA and KiwiSaver industry urged KiwiSaver investors not to panic and stay the course,” Boyes said.

“We saw providers ramp up their communications to members throughout the height of market volatility. Half of people said they received communication about the impacts of COVID and the majority of these were satisfied with their providers’ efforts.

Read more: COVID-19 has increased demand for financial advice

“It’s encouraging to see two-thirds of KiwiSaver investors view their fund as a long term investment, and almost 80% were confident that KiwiSaver would be there for them at retirement.”

Boyes says the survey results have revealed “real concerns” from many New Zealanders about the state of the markets and their personal finances, however, the results still hold “rays of light.”

“Half of those planning a new investment this year are considering shares which points to the new appetite for direct shares among a younger part of the population,” Boyes commented.

“There is even a small portion of people (about 4% of the survey) considering investing for the first time this year, or joining KiwiSaver.”

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