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Markets may be volatile, as US President Donald Trump continues to make waves, but investors are being told they shouldn't let it put them off making sound decisions.
More upheaval is likely around the US's 'Liberation Day' as Trump prepares to announce tariffs on Tuesday (US time).
KiwiSaver members are frequently told to stay the course, when the markets are volatile, and not panic and move their investments to more conservative assets, but one fund manager says advice to stick it out might stop some people from making decisions when they actually need to.
Koura Wealth founder Rupert Carlyon said fund switches slowed right down when markets were moving. That was positive, if it meant people weren't moving out of growth funds for the wrong reason, because moving in those circumstances could mean locking in losses - but he said some people actually did need to move.
"It's difficult to get the message across to say don't panic and switch to conservative, but still look at what's right for you and, if you are in the wrong type of the fund, now is the time to switch."
He said people who were in funds that were too aggressive should switch, if they needed the money soon.
"If you're going to buy a house in the next 12 months and you're in a growth fund, it is a potential issue," Carlyon said. "If you're young and you're saving for retirement, and you're not in a growth fun, it is a good time to switch.
"It's more important than ever now to get your KiwiSaver sorted."
He spoke to a KiwiSaver investor recently, who logged into their KiwiSaver app, and saw a message telling them not to touch their settings and to wait for the market to recover.
"It's well meaning, but it means people are locked where they are."
When markets were unpredictable, it was even more important that people had their settings right. It was hard to predict how long the current volatility would last and waiting it out would not be right for everyone.
Carlyon said there was still a bit of a "game of chicken" being played on the markets, because many people still expected Trump to back away from tariffs at the last minute.
"What's priced is in the economic impact of uncertainty, not tariffs."
He said, even on Wednesday in the US, any decision would probably just be "kicking the can down the road".
Kernal Wealth founder Dean Anderson said a small number of people planning to buy a first home soon were still in an aggressive fund.
"As that need for the money comes closer, they should have moved down the risk profile towards a more conservative or cash fund," he said. "If that is the case, while it may be mentally harder to do now that the balance may have fallen, if you are reliant on that deposit soon, then a change is prudent.
"I think more generally, when balances are down, Kiwis may be less inclined to move providers, as they don't like the idea of selling at a loss.
"However, it's like the housing market. If you are selling and buying in the same market, it doesn't matter, especially if the move is for a factor that is important to you - for example, moving to a lower fee provider, shifting to someone that offers values that better align to yours.
"The biggest warning is not to shift for a short-term incentive, such as a promotion. Chasing a $100 top-up is not a rational reason to switch KiwiSaver providers."
Pathfinder founder John Berry agreed people need to make sure they were in the right fund for their risk profile.
"If you're not, you should make that move," he said. "It's down to people understanding how KiwiSaver works.
"If you're in the right fund, staying in the right fund. Also be mindful that your fund manager will be taking some action within a fund, if there are headwinds in the economy."
He said about 9% of Pathfinder's growth fund had been moved from high-growth assets into more stable investments this year, like utilities.
"Fund managers can do a bit of that rotation, it depends on the type of fund."
Berry said Trump was not only making fundamental changes to the world economy, he was doing it in an unconventional and unpredictable way. It was not clear how long the impacts would go on for, but for most people, their KiwiSaver balance would still be up on 12 months ago.
"We shouldn't just focus on the last quarter. There will always be quarters that go down, especially when it's off the back of a couple of strong years, like we've just had.
"The first important decision is to be in KiwiSaver, the second is what is the right risk profile. If you find you're not in the right fund, have that conversation with your fund manger about an approach for switching.
"Whether the market is going up or down, it doesn't change the fact that if you're in wrong risk profile, you need to solve that."
ANZ Investments managing director Fiona Mackenzie said, if people were investing for the long term and their investment goals had not changed, doing nothing was often the best option - but not always.
"It is really important that investors check they are in the right fund for their life stage and investment objectives," she said. "This is important, if they are planning to soon use their money for a deposit on their first home or for their retirement.
"It also applies to someone who would be best suited to a growth fund, but is currently in a more conservative fund.
"We think it's best people focus on what they can control and, if possible, they should continue making regular contributions into their investment account. Investing through a market downturn often means investors can pick up quality investments at lower prices.
"In early March, we saw a small increase in customers contacting us about switching funds. However, the numbers were low compared to March 2020 and have now settled back to our typical levels.
"We see this as a sign that investors are becoming more knowledgeable about investing for the long term."
What do you need to do?
Here are three things to do now if you're worried about your KiwiSaver.
- Check what your risk profile should be, using online tools. Generally, the longer your investment horizon, the more risk you can afford to take.
- Check whether your fund type aligns with your risk profile.
- Get in touch with your provider or an adviser if you have any questions.
