Despite the majority (60%) of investors experiencing losses as a result of COVID-19, the outlook on investing remains positive, according to a Financial Markets Authority (FMA) survey. Most Kiwis (71%) were optimistic that the pandemic will pass eventually and markets will recover with time. Nearly a quarter (23%) were planning to increase existing investments or make new investments in the year ahead.
However, 45% of those surveyed were concerned about the impact from COVID-19 on their personal financial situation.
The FMA has today released the second part of its annual Investor Confidence Survey, which focused on the impacts of COVID-19. The survey was conducted between 5 and 14 May 2020, when New Zealand was in Level 3 lockdown and by which time the NZX50 had recovered some of the losses from its lows at the end of March.
Gillian Boyes, FMA Manager – Investor Capability, said the survey showed more New Zealanders are now taking greater interest in their finances and investments, which is positive, although making big changes should be considered carefully. “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.”
KiwiSavers making changes
In the past 12 months, 21% of KiwiSaver members made a change to their KiwiSaver. While some have increased their contributions, the biggest change was changing fund type. 12% of all KiwiSaver members switched fund in the last year, with over 1 in 5 of these moving from growth to conservative or cash funds. Of all KiwiSaver members who switched fund in the past year, 43% did this after COVID-19 began impacting the markets.
Overall, around half of investors made a change to their investments around or after COVID-19 and of those 78% said they were influenced by volatility.
KiwiSaver investors more engaged
“The FMA and KiwiSaver industry urged KiwiSaver investors not to panic and stay the course. 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,” said Ms Boyes.
KiwiSaver members took a greater interest in their investment due to the market volatility caused by COVID-19, with nearly one-quarter (23%) indicating that they now check their fund balance more frequently.
Over one-third of investors reported using an online resource to understand how their fund had been impacted and this was mostly a provider resource. In total, 62% of KiwiSaver members check their balance at least once a month, with 25% checking weekly or more often.
Looking forward, around a quarter of those surveyed are planning a new investment or changing their current settings.
“There’s no doubt the current circumstances are raising real concerns for a large portion of New Zealanders, but we can still see rays of light from some of those surveyed. 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. There is even a small portion of people (about 4% of the survey) considering investing for the first time this year, or joining KiwiSaver,” said Ms Boyes.