Many kiwis are in the bond market and just don’t realise it. Of the $15.167 billion in KiwiSaver, $10 billion is in either a default fund or conservative funds. Of this, 79% of these funds are invested in fixed interest assets. The result being these KiwiSaver funds are going to perform below average in a rising interest rate environment.
When interest rates increase, the bond market falls. Bonds, unlike shares don’t rally again, so you end up with lower returns.
Talk to us now BEFORE interest rates rise, to ensure your KiwiSaver is working optimally for you.