Foreign currency movements have again been in the news with the United States Treasury labelling China a currency manipulator. These movements can also have an impact on clients’ KiwiSaver returns. This is dependent on how a Scheme’s manager treats the foreign currency exposure they get when purchasing international assets. To understand how different KiwiSaver Schemes manage foreign currency within their international share exposure, we reviewed 77 KiwiSaver funds which have an international share exposure of greater than 40%. Information on these funds was sourced from their Fund Updates and their Statement of Investment Policy and Objectives (SIPO). KiwiSaver Scheme managers treat foreign currency exposure in one of four ways. First, they can do nothing and when they purchase international assets, just hold those assets in foreign currency until they are sold. This is what the industry refers to as unhedged international assets. The downside of this approach is evident. If ...

Our thoughts shape our lives, particularly those thoughts which recur. Which is fine if those thoughts are all positive and inspirational, but not so good if they are negative and undermine our ability to grow our lives. People often have self-limiting beliefs with money. “There’s no such thing as an honest rich person”, for instance. Isolated examples don’t make that belief true though. There are many well- off individuals who have gained their wealth by solving problems, helping others, while looking after the environment and who then generously donate their time and money back to the community. Tied into this false belief is that ‘no-one will like me if I have money, that others will judge me as different from the person I really am.’ So, better to not have much or work hard to earn more. Anyone with these beliefs has a barrier to retirement success. They are less likely to seek out opportunities to invest and grow their wealth or to seek advice. Their...

In recent years investors have become accustomed to relatively benign market conditions. Last week’s market sell-off was an important reminder that this degree of stability is an abnormality, not the new norm. We could be entering a period where we may experience more ‘normal’ levels of market volatility. During such periods investors often ask the question; should I continue to make regular contributions to my portfolio? For investors whose objective is to maximise the long-term growth from their investments the answer is “Most definitely, yes!” In fact, as counter-intuitive as it may seem, extended periods of market decline provide the ideal situation for long-term regular investors. The reason for this is that as markets decline, so do the unit prices of the investments being purchased. Effectively, more units can be acquired for the same amount of money. As long as the fluctuating markets' overall direction of growth is upwards, by continuing to invest regularly, ove...