Each month, InvestNow invites our investment managers to share their thoughts on our monthly theme. This month, we’ve asked AMP and Fisher Funds to discuss navigating market volatility – specifically, how Kiwi investors can think about risk and the role of safe‑haven assets during uncertain times. Below, they offer their insights on the key risks, opportunities, and portfolio considerations shaping today’s environment.

Q1: Given the recent bouts of market volatility and geopolitical tension, what are the main risks and opportunities you’re watching right now and how might these affect every day NZ investors?

It feels like not long ago markets were reacting to US President Trump’s tariff announcements and now, once again, we’ve been reminded how strongly geopolitics can move markets, even when events are unfolding on the other side of the world. Tensions in the Middle East have pushed oil prices higher, lifting inflation risks and shifting expectations for interest rates. These forces ultimately flow through to KiwiSaver and personal investment balances and retirement portfolios.

The main risk is a sustained period of higher oil prices. That tends to feed into inflation and reduce the likelihood of near-term rate cuts, increasing the chance borrowing costs stay elevated while growth slows modestly. For everyday New Zealand investors, that can translate into more market volatility and pressure on interest-sensitive sectors such as consumer, travel and transport businesses.

At the same time, there are opportunities. Energy and commodity companies typically benefit from higher oil prices, and exporters can gain support if global uncertainty pushes the New Zealand dollar lower. Because most KiwiSaver and personal investment portfolios invest across regions and sectors, these areas of strength can help offset weakness elsewhere.

So far, market moves have been relatively contained, suggesting investors see this as a shock rather than a structural shift. For everyday investors, the key takeaway is that diversified portfolios are designed for exactly these environments. While headlines can drive short-term swings, long-term outcomes are still driven more by asset mix and time horizon than any single geopolitical event.

Q2: Recent volatility often triggers emotional ‘panic selling.’ What is one practical rule of thumb you’d give a KiwiSaver member who is feeling anxious about seeing their balance dip due to global headlines, and are there any lessons from past crises that are relevant for investors in today’s environment?

Market volatility often creates the temptation to act, but one practical rule of thumb is to only change your KiwiSaver or Managed Fund settings if your timeframe or goals have changed. If neither has shifted, short-term market moves are usually noise rather than a reason to switch funds.

Trying to move to cash after a drop could lock in losses and risk missing the recovery. In practice, some of the strongest market gains occur soon after periods of stress. Staying invested also means ongoing contributions are often buying at lower prices, which can improve long-term outcomes.

Recent history reinforces the point. During the 2008 global financial crisis and the 2020 COVID sell-off, markets fell sharply but recovered over time. Investors who stayed aligned to their risk profile generally fared better than those who moved defensively at the height of volatility.

Diversification also plays a role. KiwiSaver portfolios typically hold a mix of growth and defensive assets, so not everything moves in the same direction. That balance helps smooth returns and reduces the need to react to individual headlines. For most members, the more effective approach is to ensure the fund matches their time horizon, then allow the portfolio to work through the cycle.

Q3: Safe haven assets like gold and the US dollar tend to attract attention during turbulent periods – how do you see their role in a diversified portfolio, and when do they add the most value?

Safe-haven assets such as gold and the US dollar tend to attract attention during periods of uncertainty, but their role in a diversified portfolio is primarily as stabilisers rather than return drivers. They often add the most value when growth assets are under pressure.

Currencies are one example. The US dollar typically strengthens during global stress, which means unhedged international investments can rise in New Zealand dollar terms even if underlying markets are weak. That currency effect can help cushion portfolio returns during volatile periods.

High-quality government bonds serve a similar purpose. When growth expectations fall, bond prices often rise, providing balance against equity market declines. Inflation-linked bonds can also help when price pressures increase, as their payments adjust with inflation and support purchasing power.

These assets may lag in strong equity markets, but they tend to prove their worth when conditions become more challenging. In practice, most diversified KiwiSaver portfolios already include a mix of currency exposure, bonds and other defensive assets. Together, they act as built-in shock absorbers, helping smooth returns without requiring investors to make tactical calls during periods of uncertainty.

AMP’s diversified funds do not hold gold directly, but we include other defensive assets that serve similar roles. Our funds are built with a mix of growth investments and protective elements, so our customers’ savings have built-in shock absorbers. Below is a summary of key safe-haven and inflation-fighting assets in a typical diversified portfolio, and how they help in times like these:

The information included in this communication is of a general nature only and does not constitute financial or other professional advice. Before taking any action, you should always seek financial advice or other professional advice relevant to your personal circumstances. For financial advice, we recommend you contact your Adviser.

Disclaimer: AMP Wealth Management New Zealand Limited is the issuer and manager of the AMP KiwiSaver Scheme.  For a copy of the AMP KiwiSaver Scheme Product Disclosure Statement, please visit amp.co.nz or contact Customer Services on 0800 267 5494.

Q1: Given the recent bouts of market volatility and geopolitical tension, what are the main risks and opportunities you’re watching right now and how might these affect every day NZ investors?

Right now, the dominant risk shaping markets is the war in Iran and its cascading economic effects. With roughly 20% of the world’s oil supply blocked from transit through the Strait of Hormuz, oil prices have surged over 40% since late February — and that feeds directly into inflation through fuel, transport and manufacturing costs. For everyday New Zealanders, this is already showing up at the pump, with petrol prices breaching $3 a litre and potentially heading higher.

The broader risk is a stagflation dynamic: higher prices at the same time as weaker global growth, which complicates the path for central banks. The RBNZ now has an even more difficult decision deciding if and when they might increase interest rates this year.

If the Iran war is prolonged, there is increased risk of stagflation and further downside for markets that are currently only c.5% off their highs. All of that said, there are also plenty of scenarios where we see a de-escalation in the conflict, lower oil prices and a relief rally in markets in the coming months.

While the headlines may focus on short-term uncertainty, long-term trends such as technological innovation, healthcare advances, and global consumption growth remain more important determinants of returns. For most KiwiSaver members, staying invested and diversified remains the most effective way to navigate these periods. Trying to time an exit and re-entry around geopolitical events is a strategy that rarely works in an investor’s favour.

Q2: Recent volatility often triggers emotional ‘panic selling.’ What is one practical rule of thumb you’d give a KiwiSaver member who is feeling anxious about seeing their balance dip due to global headlines, and are there any lessons from past crises that are relevant for investors in today’s environment?

One simple rule of thumb for KiwiSaver members is: don’t make long-term decisions based on short-term headlines. Market volatility is uncomfortable, but it’s also a normal part of investing.

History provides plenty of examples. During the early stages of COVID-19, global markets fell around 30% in just a few weeks. Yet those declines were followed by a strong recovery as supply chains and economies adapted, and companies continued to grow.

We saw the same at the start of the Ukraine war. Energy prices initially spiked materially, which contributed to weakening global share markets throughout 2022. While the war in Ukraine continues, energy markets rebalanced reasonably quickly, oil and gas prices came down, and global equity markets are now 50% higher than at the start of the war. Investors who stayed invested were rewarded, while those who sold in panic may have locked in losses.

For KiwiSaver members, this is particularly relevant because retirement savings are typically invested over decades. Short-term fluctuations tend to matter far less than the long-term compounding of returns.

Q3: Safe haven assets like gold and the US dollar tend to attract attention during turbulent periods – how do you see their role in a diversified portfolio, and when do they add the most value?

Safe haven assets such as government bonds, gold and the US dollar often attract attention during periods of uncertainty. Their role in a portfolio is not necessarily to generate strong long-term returns, but to provide diversification when other assets are under pressure.

Gold, for example, has historically performed well during periods of geopolitical stress or elevated inflation expectations. Because it is not tied to corporate earnings, it can behave differently from shares and provide a hedge when confidence in financial markets weakens.

Similarly, the US dollar tends to strengthen in times of global uncertainty as investors seek liquidity and stability in the world’s largest financial market.

That said, these assets are usually most effective as a complement rather than a core holding. Over long periods, equities and productive assets have generally been the main drivers of wealth creation. Also, these ‘safe haven’ hedges don’t always work. Gold had an exceptionally strong run over the last two years – but has fallen 10% since the start of the Iran conflict.

The real value of safe havens comes when they are part of a well-diversified portfolio, helping smooth returns during turbulent periods while allowing growth assets to drive long-term outcomes. For KiwiSaver investors, diversification is one of the most reliable tools for navigating uncertain markets.

Disclaimer: Fisher Funds Management Limited is the issuer of the Fisher Funds KiwiSaver Plan and you can find a copy of the Fisher Funds KiwiSaver Plan PDS at fisherfunds.co.nz.

Disclaimer

The following commentaries represent only the opinions of the authors. Any views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement or inducement to invest. All material presented is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice.

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