Share Markets bounce back

Report on Investment Performance

World share markets started 2019 on a far more positive note than how they ended 2018. As a result, for the March 2019 quarter MAS KiwiSaver Plan and MAS Retirement Savings Plan Funds have performed strongly – in most cases more than recovering the losses suffered in the December 2018 quarter. The chart below illustrates Fund returns for the quarter.

Fund returns for quarter ended 31 March 2019

Notes:
* Returns are after total annual fund charges and before tax
** Prior to 30 November 2018 Conservative was called Defensive and Moderate was called Conservative

The sharp rebound in world share markets was primarily due to a significant change in strategy by the US Federal Reserve. In the December quarter, investors thought that the Federal Reserve was raising official interest rates too high. The fear was that this would derail not only US economic growth but also world economic growth. Confronted by the slump in world share markets and mounting evidence of a slowing US economy, in early 2019 the US Federal Reserve all but abandoned any further interest rate hikes.

With the risk of US monetary policy error removed, and share prices lower after the sharp falls of the December quarter, investors regained confidence.  As a result, world share markets rose sharply during the quarter.  There were also significant falls in market interest rates and the New Zealand government 10-year bond fell to a record low – below 2%.

The strong performance of financial markets during the quarter means fund returns for the year ended 31 March 2019 are comfortably positive – see the chart below.

 

Fund returns for the year ended 31 March 2019

Notes:
* Returns are after total annual fund charges and before tax
** Prior to 30 November 2018 Conservative was called Defensive and Moderate was called Conservative

Outlook

Our investment manager, JBWere, is cautious on the potential returns from international share markets for the remainder of the year. But they are not fearful. They judge the risk of global economic recession, at least over the next 12 months, as relatively low so they currently don’t plan to increase the allocation of Funds to defensive asset classes like cash and fixed interest.

In determining which share markets to invest in, JBWere modestly favour the local share market.  They consider that with interest rates in New Zealand low and potentially going lower, the share market here should do relatively well as investors continue to favour its income-generating characteristics.

We can help

To see monthly updates on Fund unit prices and returns, please visit our website using the links below:

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Disclaimer

The Trustees of the Medical Assurance Society KiwiSaver Plan and the Medical Assurance Society Retirement Savings Plan are the issuer and manager of each of those Plans.

The Product Disclosure Statement for the Medical Assurance Society KiwiSaver Plan is available here.

The Product Disclosure Statement for the Medical Assurance Society Retirement Savings Plan is available here.

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