Welcome to your investor update. This series is to keep you up to date on the scheme, the markets, and investment topics to help you get the most out of your KiwiSaver investment.
In this edition we are talking about investor behaviour styles and how they impact your approach to financial decisions.
Investor Behaviour Styles
Everyone approaches investment a little bit differently. Your approach is a function of many interrelated factors – life experiences, age, stage, comfort with risk, and many more. Together they help form your personal investor behaviour style.
Preservers are focused on financial security and wealth preservation, rather than risk-taking for growth. Followers are more passive and often follow the lead of trusted friends and colleagues. Independents are the opposite, having strong (sometimes unconventional) views about their investments. And Accumulators; they tend to be growth oriented and risk seeking in their approach with the view to maximize returns. You can read more about these common types of investor behaviour styles in our full blog post here.
Understanding your style can help ensure you are in the right investment option. Followers may be better off in the Lifestages auto option which automatically adjusts your mix of investments based on your age. Preservers and Accumulators may instead want to actively choose their mix of funds to be tilted towards the lower risk Income Fund or higher risk High Growth Fund respectively. For Independents, KiwiSaver is likely only a part of your overall strategy so your ideal mix may be totally unique.
If you ever need help deciding which Lifestages option is right for you, you can always get advice from one of our financial advisers – it’s no additional cost for members. Contact us here if you would like to get advice from one of our experts.
Performance Overview
The Lifestages Auto Options invest in combinations of the Lifestages High Growth Fund and the Lifestages Income Fund in proportions that vary in accordance with pre-selected age bands. These options automatically adjust the risk profile of your investment by altering the proportions invested into the funds based on your age.
Performance as at 31 August 2023.
| Fund Option | 1M | 1Y | 5Y |
| High Growth Fund | -0.85% | 12.10% | 6.17% |
| Auto 0-49 Option | -0.85% | 12.10% | 6.17% |
| Auto 50-54 Option | -0.75% | 9.82% | 5.13% |
| Auto 55-59 Option | -0.64% | 7.53% | 4.01% |
| Auto 60-64 Option | -0.54% | 5.25% | 2.84% |
| Auto 65+ Option | -0.49% | 4.08% | 2.04% |
| Income Fund | -0.33% | 0.77% | 0.39% |
For more information about how performance is calculated and more performance periods, click here.
Market News
This year, most of the Scheme’s performance has come from the High Growth Fund’s investment in shares. This fund is up 12.10% for the past 12 months, thanks to standout performance from the “Magnificent 7” (Nvidia, Meta, Tesla, Amazon, Alphabet, Apple, Microsoft).
August, however, has seen a bit of a slowdown as the market starts to focus on the potential of higher interest rates for a longer time period. This has seen the Scheme’s performance in August cool off with some modest losses. Despite this, we still had excellent performance from some of our stock selections – Nvidia (up 10%) and Novo Nordisk (up 20%).
Computer gamers may recognise them for their market-leading graphics cards, but the US-based Nvidia is also a big player in the AI space. The ongoing AI boom continues to see the stock outperform, even as the broader market slows down.
Novo Nordisk is a Danish global healthcare company whose purpose is to tackle issues such as diabetes and obesity. Growing popularity for two of their treatments, Ozempic and Wegovy, has seen Novo Nordisk’s share price buck the August trend.
For New Zealand-based companies, it was a tough month on the back of mixed company earnings results and political uncertainty. Companies like Fletcher Building, Precinct, F&P Healthcare suffered more than others. The Reserve Bank has stopped raising the official cash rate, suggesting the worst may be over. Business confidence is slowly improving, as is inflation, which is widely expected to have peaked.