Investment Returns at 30 June 2022

Investment Returns at 30 June 2022

Investment returns (before tax and fees) for the quarter ending 30 June 2022 are:

Fund 3 months 1 Year (p.a.) 3 years (p.a.) 5 years (p.a.) 10 years (p.a.)
Growth Fund -5.1% -1.0% 7.0% 8.3% 8.5%
Balanced Fund -4.4% -2.3% 4.7% 6.1% 6.9%
Income Fund -2.6% -4.6% 0.2% 1.5% 2.8%

Are we closer to an upward move in markets? Most major share markets fell, (between 10% and 20%), and bond (fixed income) markets fell (between 1% and 6%), in the quarter.

Market participants continue to fret about the outlook for inflation and growth. Many central banks around the world have begun (or are expected to) to raise their official cash interest rates. They continue to indicate that they will keep raising rates until they feel they have inflation expectations under control. Markets are concerned that central banks may raise interest rates too far and or too fast. This raising of rates will have an impact on economic growth. Some fear that the raising of rates could result in a recession, which is known technically as two consecutive quarters of negative growth. However some also think that central banks may not be far from finishing raising rates. They point to signs of a slowdown in economic activity and that inflation expectations are under control, and therefore growth may not be as negatively impacted as expected i.e. we are past the worst and the markets may be guilty of over-pricing in negative outcomes.

We remain cautiously invested, diversified and continue hold higher than normal amounts in cash. This is our defensive approach to the current situation.

Stay strong, do not panic (Psalm 31:24)

Stay strong, do not panic (Psalm 31:24)

It is potentially a confusing time right now for anyone with a KiwiSaver who is aware of how markets are currently performing. It may cause us to scramble and to think if there any quick decisions or actions we can make as a response. This is a message of assurance to not panic and that we are here for you.

What is important to remember is to stick with your plan and not to make sudden decisions like changing your fund as a knee-jerk reaction. Look at your own situation and determine whether you are in the right fund for your circumstances. If you need more information about our different fund types, click here.

Samantha Barrass, the Chief Executive of Financial Markets Authority New Zealand (FMA), recently spoke with NBR and reminded investors that markets do recover.

“If you’re investing for the medium to long term, it’s best you hold your nerve and not leap into more conservative funds because you will just crystallise your loss at the point… Hold the course, don’t panic”. (McNicol, 2022)

Recently, in June 2022, the FMA also published research around New Zealanders’ attitudes towards financial markets and investing. Here are some highlights which may help inform your thinking during this time:

  • “Eight in ten New Zealanders hold at least one investment product (82%). KiwiSaver is still the most commonly held among New Zealanders (64%).”
  • “Nearly three-quarters of investors (74%) feel slightly, fairly or very confident that New Zealand financial markets and financial service providers offer good long-term opportunities for investors.”

If you are interested in more information about this research from the FMA, click here. If you are seeking financial advice, we recommend you speak with a financial advisor.

Anglican Financial Care (AFC), the fund manager of Christian KiwiSaver Scheme, is an organisation with a long-standing experience. Established in 1972, AFC is celebrating 50 years of serving its members this year. We look forward to continuing to serve your KiwiSaver needs.

“Who is like you, Lord God Almighty? You, Lord, are mighty, and your faithfulness surrounds you. You rule over the surging sea; when its waves mount up, you still them.”

Psalm 89:8-9 (NIV)

 

Notes

McNicol, H. (2022, June 16). Biblical turbulence: Kiwis should hold nerve as confidence slips. NBR. Retrieved from https://www.nbr.co.nz

Investing ethically since 1972

Investing ethically since 1972

A KiwiSaver Scheme that invests ethically is important to many Kiwis. Christian KiwiSaver Scheme (CKS) has always had an ethical approach to its investments and is always seeking to participate in the good God is doing in the world.

In a recent survey, Consumer found that ethical investing is important to a large proportion of their respondents, “our survey found 45% said they wanted a fund that provides a good return and invests responsibly – both were equally important.” (Birdsey, 2022)

CKS has followed a robust ethical investing approach since its establishment in 2007 (shortly after the Government introduced KiwiSaver). Our ethical investing approach is at the heart of our investment activity, but did you know that our approach has existed since long before KiwiSaver was even created in Aotearoa?

Anglican Financial Care (AFC), the fund manager of CKS, has invested ethically since its inception in 1972 – that’s 50 years of investing with an ethical approach. In a sense, AFC boldly pioneered ethical investing in Aotearoa New Zealand long before other KiwiSaver Schemes. Other fund managers only started ethical investing in recent years.

As an overview, here are the sectors which our Ethical Investment Policy addresses:

  • Alcohol
  • Animal Welfare
  • Armaments and defence
  • Fossil fuels
  • Gambling
  • Pornography
  • Tobacco

To read more about our thoughtful approach to ethical investing please read our Ethical Investment Policy here.

We believe God is active in restoring the world and it is important for us to express this by way of investing ethically, while being responsible with your finances.

And whatever you do, whether in word or deed, do it all in the name of the Lord Jesus, giving thanks to God the Father through him.”

Colossians 3:17 (NIV)

 

Notes

Birdsey, N. (2022, June 8). KiwiSaver satisfaction survey 2022. Consumer. Retrieved from https://www.consumer.org.nz

Investment Returns at 30 June 2022

Investment Returns at 31 March 2022

Investment returns (before tax and fees) for the quarter ending 31 March 2022 are:

Fund 3 months 1 Year (p.a.) 3 years (p.a.) 5 years (p.a.) 10 years (p.a.)
Growth Fund -1.7% 9.2% 10.8% 10.2% 9.6%
Balanced Fund -1.8% 5.5% 7.7% 7.5% 7.7%
Income Fund -1.6% -1.3% 1.8% 2.4% 3.4%

The last quarter was all about the increase in uncertainty. Markets dislike when there is an increase in doubt. Uncertainties increased with the dreadful Russian invasion of Ukraine and with regard to the future level of interest rates. The outbreak of conflict only further inflamed inflation fears. Many central banks around the world (Japan excepted) raised their official overnight cash rate and inferred that further increases were likely. Talk of the unwind of policies that were implemented to counter the expected COVID impacts also spooked some market participants. All of this increased uncertainty led to falls in both share and bond prices (bond prices fell as interest rates rose) over the quarter.

What happens now very much depends on expectations with regards to the Ukraine situation and inflation. Central banks are expected to keep raising rates in an effort to control inflation. Inflation can have a nasty effect on the economy. The question then may become whether central banks have raised interest rates too far or too fast. Will this (raising of interest rates) lead to a slowdown in the economy, and by how much?

The International Monetary Fund (IMF) has downgraded its global growth forecast to 3.6% (from 4.4%) in response to the Ukraine situation and the lockdowns in China. The 2023 projection was lowered to 3.6%, from 3.8%. The IMF has also bumped up its inflation forecast for advanced economies to 5.7% and for emerging and developing countries to 8.7%.

As readers will be aware we have been cautious in recent times as we believed both share and bond prices may have been too high given the uncertainties that existed. However, we have and still remain cautiously invested and diversified. In this environment we held and continue to hold a higher than normal cash level. This cash will, and has been used as and when we see opportunities.

Investment Returns at 30 June 2022

Investment Returns at 31 December 2021

Investment returns (before tax and fees) for the quarter ending 31 December 2021 are:

Fund 3 months 1 Year (p.a.) 3 years (p.a.) 5 years (p.a.) 10 years (p.a.)
Growth Fund 4.0% 15.2% 14.3% 11.6% 10.4%
Balanced Fund 2.8% 9.8% 10.5% 8.7% 8.4%
Income Fund -0.2% -0.4% 3.0% 3.1% 3.9%

A positive quarter for funds, particularly those with exposure to shares. Long term returns were good across all the funds. COVID news continued to dominate but despite the markets being concerned at times shares carried on with their upward track, with some share performances in international equity markets performing strongly. Fixed interest (bonds) investments however were mixed with concerns around the inflation and interest rate outlook holding back returns in that sector.

Investment Outlook for 2022

Investment Outlook for 2022

The themes that may dominate in the next year (a continuation from late 2021) are inflation, interest rates and growth. Growth enhancing policies may recede, spare capacity in the economy is minimal and the re-opening growth surge is probably over. There is a lot of uncertainty as to how supply issues and labour shortages (and how long each may last) will affect outcomes. A fear is that labour shortages could result in wage growth which then results in higher inflation. These and other factors may determine how high inflation goes and how long it persists.

The inflation outlook may influence how quickly Government Central Banks raise official cash rates. Many expect major Central Banks to increase their respective cash rates this year. The level of interest rates in turn could impact on share prices (and other asset prices). We believe how far and fast interest rates rise will have a significant bearing on returns. Concerns around COVID continue to linger. Any geo-political developments could also surprise and affect returns.

The broad theme to start 2022 appears to be one of more optimism in the global economic recovery. Some research suggests the Omicron variant is much less deadly than Delta, giving markets confidence that the hit to growth from recently imposed COVID restrictions in some places (and more restrained consumer behaviour more generally) will be fleeting and the recovery will resume after a few months of disruption. There is little doubt though that whatever eventuates the markets could fluctuate, wildly at times. Rest assured, as we have mentioned previously, we are doing our best in these times of heightened uncertainty. The portfolios remain diverse and we focus on investments that we believe are more at the quality end of the spectrum.