Insights
Market volatility: how to stay on track

I understand that many investors are feeling uncertain due to the recent political and market volatility. It’s natural to experience a mix of frustration and caution as markets swing unpredictably. However, it’s important to remember that, over the long term, share markets have generally trended upward. In fact, it’s hard to find a 10-year period where this hasn’t been true. While short-term volatility, like what we’re experiencing now, can feel unsettling, history shows that markets can—and do—recover.

With that in mind, here are some tips to help you navigate through these uncertain times…

Finding the right fund type is about your risk tolerance and time horizon. If you need the money soon (for example you plan to buy a house next year) then it's unlikely you should be in a growth fund. But, if you have 20 years until retirement, then as a rule of thumb, you might want to do the opposite and be in a growth fund. Being in the right fund​ means you are appropriately placed when markets are volatile.

Once you’re sure you’re in the right fund, stick with the plan. If you have 20 years to retirement, don’t react to day-to-day movements. An impulsive decision can see you out of pocket (see 4 below).

It’s natural to want to act when things aren't going well. But checking your balance daily will heighten your desire to do something. My advice - check less. People are surprised to hear I only check my KiwiSaver balance approximately four times a year - that is consistent with my long-term investing mindset.

Over just two days (April 3–4), US shares (S&P 500) dropped a sharp 10.5%. But on April 9, they’d bounced back 9.5% in a single day. Markets can swing fast - selling on a bad day means you risk missing the recovery. Stick to your plan.

Active managers like Pathfinder can adjust or "tilt" portfolios to help soften the impact of market declines. For example, at the end of March, Pathfinder’s KiwiSaver Growth Fund had 9.7% in cash and 16.7% in defensive sectors—such as communication services, consumer staples, and healthcare—that tend to be less affected by economic cycles. While this can't eliminate the impact of down days, it aims to help reduce their severity.

Financial advisers can help you plan for the goals in your life that involve money. A good one will help you feel empowered about your future and help you with feelings of uncertainty. Reach out to a financial adviser in your area or get in touch with our customer services team if you'd like some help.

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At Pathfinder our mission is to generate individual wealth and collective well-being by investing ethically. On the ‘individual wealth’ side, we don’t try and ‘time’ international markets, and nor do we simply focus on current headwinds or headlines. However, our investment team monitor events and may take action accordingly for our investors.

On the ‘collective well-being’ side of our mission you can rest assured that even in these difficult markets we focus on our investing remaining aligned with our ethical investment approach. As always, you should contact our knowledgeable team if you have concerns or questions.

View our performance data here

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Pathfinder recommend all investors receive financial advice before making an investment decision. Pathfinder Asset Management Limited is the issuer of the Pathfinder KiwiSaver Plan and Pathfinder Investment Funds. Product Disclosure Statements for the offers are available at pathfinder.kiwi. Learn more about how we invest ethically by reading our Ethical Investment Policy here.