Bank Collapses! Don’t Let The KiwiSaver Scaremongers Get To You

In recent news, there have been reports of KiwiSaver funds losing a significant amount of money due to the downfall of Signature Bank. This news can be alarming for those who have invested their hard-earned money in KiwiSaver funds, but it's important not to panic.

Sensationalist media headlines

In today's fast-paced world, getting caught up in the hype of sensational news stories is easy. The media is flooded with stories about market crashes, economic downturns, and financial losses that can cause panic and anxiety among investors. However, it's essential not to let the scaremongers get to you.

Many of these sensational news stories are often exaggerated or taken out of context. They are designed to grab people's attention and increase viewership rather than to provide accurate information. Taking a step back and evaluating the situation objectively is important before making any decisions.

The truth

The truth is that KiwiSaver funds are well-diversified and typically have less than 1% of their funds invested in any company, including Signature Bank. As quoted by Fisher Funds chief investment officer Ashley Gardyne, Fisher Funds had reduced its Signature Bank holdings since the last disclosure statements in October; KiwiSaver funds shouldn’t have more than 0.6 per cent exposure now.

Sam Stubbs, who founded competing KiwiSaver provider Simplicity, is quoted in the same NewsHub article as saying the indexing of most funds to the S&P 500 means most KiwiSavers will have some Silicon Valley Bank or First Republic Bank in their portfolios. The loss to the average KiwiSaver member in a growth fund will be about $20 per $100,000; those in conservative funds will lose about $10 per $100,000.

What are the KiwiSaver fund managers doing?

Diversification is a key strategy in managing investments and minimising risk. By investing in various companies across different industries and countries, KiwiSaver funds can spread their risk and reduce the impact of any one company's downfall.

Moreover, KiwiSaver funds are managed by professional fund managers who continuously monitor the performance of their investments and make changes accordingly. If a company's performance deteriorates, the fund managers will likely reduce their exposure to that company and invest in other opportunities that offer better returns.

It's also important to note that The government regulates KiwiSaver funds, and fund managers are required to act in the best interests of their investors. This means that they must make decisions that benefit their investors and maximise returns while minimising risk.

In conclusion, while the news about KiwiSaver funds losing money due to the downfall of Signature Bank may be concerning, it's important not to panic. KiwiSaver funds are well-diversified and typically have less than 1% of their funds invested in any company. Fund managers continuously monitor and manage their investments to maximise returns and minimise risk. As always, it's important to research and understand any investment's risks and benefits before making a decision.

What should you do?

It's also essential to keep in mind that investing is a long-term strategy. Markets will inevitably have their ups and downs, but history has shown that they tend to recover over time. Investors can often weather short-term fluctuations and achieve their financial goals by staying invested and sticking to a long-term strategy. Ultimately, it's important to remain calm and rational and not let sensational news stories dictate your investment decisions.

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