Memory gain: What investors learnt in a year to forget
Article written by InvestNow
By any definition, 2020 has been an unforgettable year.
But we won’t remember much about it, according to popular economist, Tim Harford. Harford, who found fame writing for the Financial Times as ‘The Undercover Economist’, penned an article this September speculating that despite a year chock-full of historic – or as the most-used word of 2020 has it, ‘unprecedented’ – events, most of us will have deposited little into our memory banks over the last 12 months.
“Covid-19 may be as significant an episode as any, but it will not trigger the same sharp memories,” he says. “Where were you during the pandemic? At home. For months.”
If the year blurred into one monotonous zoom call (set against a fake bookshelf backdrop) in many personal versions of 2020, outside the screen the ‘real world’ offered plenty of dramatic highlights, including:
- January 1 – the Huanan Seafood Wholesale Market in Wuhan closes for “remediation”, according to Chinese state media. The next day 41 confirmed cases of a novel coronavirus (yet to have acquired the COVID-19 acronym) are admitted to hospital in Wuhan – most patients were associated with the seafood market. As at December, almost 72.6 million cases of COVID-19 have been recorded worldwide with over 1.6 million deaths;
- March 23 – global equity markets sink to a low of about 30 per cent compared to record February highs; by August share indices were back at pre-COVID peaks, moving rapidly higher since;
- October 17 – Jacinda wins the, slightly delayed, NZ election;
- November 3 – Donald loses the, totally insane, US election;
- November 14 – Argentina beat the All Blacks.
Rates, snakes, votes and fees: On-trend in 2020
Despite the predominance of such world-shaking incidents in the news cycle, one other long-running background issue remained top of the agenda for investors in NZ (and everywhere else).
Even prior to COVID-19, interest rates appeared stuck at historical lows before central bank pandemic emergency measures took them even lower – close to zero and, possibly, below.
In fact, the most-read InvestNow Magazine article of 2020 to date focused on what negative interest rates could mean for the local market. An apparently buoyant local economy late in the year has perhaps lowered the odds on the Reserve Bank of NZ taking the official cash rate into the red next year – but no-one has ruled out the possibility.
The impact of low rates on NZ investors looking for income also featured among the most popular stories of 2020. Low returns on traditional ‘safe’ assets such as bank term deposits have put income investors in a dilemma – but, as the article explains, those hunting for yield in riskier assets do need to take some simple precautions.
Aside from interest rates, our readers showed interest in how to avoid investment scams (clue: watch out for snakes) and what elections mean for markets (answer: not very much in the long term).
Finally, this analysis of KiwiSaver fees rounds out the InvestNow 2020 top-five article list. KiwiSaver fees have been targeted this year by the Financial Markets Authority – which compiled a special ‘value for money’ report on the sector – as well as the Ministry of Business, Innovation and Employment (MBIE) through its review of the current default scheme arrangements.
Launched in October amid this regulatory scrutiny, the InvestNow KiwiSaver Scheme offers amongst the lowest-cost and tax-efficient diversified funds (among a large selection of options) while also dispensing with, what we consider to be unnecessary, fixed-dollar member ‘administration’ fees.
Mike Heath, InvestNow general manager, says the InvestNow KiwiSaver Scheme was running ahead of expectations.
“We’ve been very pleased with the response,” Heath says. “The InvestNow KiwiSaver Scheme was designed to offer members great choice at a great price – and New Zealanders know a great deal when they see one.”
Post zoom gloom: Why normal screening should resume in 2021
While 2020 might have kicked off with a surprise beginning, it seems to be headed for a happy ending. Many global economies (including NZ) have come through the pandemic in better shape than expected – albeit that the virus continues to ravage large parts of the world.
As at December, three COVID-19 vaccines have proven effective with inoculation programs already underway in the UK and US.
Global equity markets, already running at record highs, spiked up further on this dose of vaccination news. The investor optimism, however, is laced with a few nagging concerns.
For instance, whether shares can sustain the late 2020 momentum through next year remains moot. Experts are divided on whether markets have already ‘priced in’ a global recovery or if shares, fuelled by low interest rates and reopening of economies, have further to run.
Similarly, the post-COVID world could see different winners emerge with the year-end conversation already turning to talk of a rotation to ‘value’ stocks – typically, cheaply-priced established companies generating solid, if unspectacular, returns – from the ‘growth’ firms, mostly technology based, that have underpinned recent market performance.
At the same time, plenty of other financial, political and social risks remain in view including: ongoing coronavirus disruption; a ‘no deal’ Brexit; unrest in the US during a messy Trump exit; climate change; and, negative interest rates or not, the long-forgotten spectre of inflation.
But mostly there is a lot to look forward to next year for investors and citizens alike as we zoom out on 2020, watching dim memories fade to history.
The issuer and manager of the InvestNow KiwiSaver Scheme is Implemented Investment Solutions Ltd. For a Product Disclosure Statement click here.
Memory gain: What investors learnt in a year to forget
Article written by InvestNow
By any definition, 2020 has been an unforgettable year.
But we won’t remember much about it, according to popular economist, Tim Harford. Harford, who found fame writing for the Financial Times as ‘The Undercover Economist’, penned an article this September speculating that despite a year chock-full of historic – or as the most-used word of 2020 has it, ‘unprecedented’ – events, most of us will have deposited little into our memory banks over the last 12 months.
“Covid-19 may be as significant an episode as any, but it will not trigger the same sharp memories,” he says. “Where were you during the pandemic? At home. For months.”
If the year blurred into one monotonous zoom call (set against a fake bookshelf backdrop) in many personal versions of 2020, outside the screen the ‘real world’ offered plenty of dramatic highlights, including:
- January 1 – the Huanan Seafood Wholesale Market in Wuhan closes for “remediation”, according to Chinese state media. The next day 41 confirmed cases of a novel coronavirus (yet to have acquired the COVID-19 acronym) are admitted to hospital in Wuhan – most patients were associated with the seafood market. As at December, almost 72.6 million cases of COVID-19 have been recorded worldwide with over 1.6 million deaths;
- March 23 – global equity markets sink to a low of about 30 per cent compared to record February highs; by August share indices were back at pre-COVID peaks, moving rapidly higher since;
- October 17 – Jacinda wins the, slightly delayed, NZ election;
- November 3 – Donald loses the, totally insane, US election;
- November 14 – Argentina beat the All Blacks.
Rates, snakes, votes and fees: On-trend in 2020
Despite the predominance of such world-shaking incidents in the news cycle, one other long-running background issue remained top of the agenda for investors in NZ (and everywhere else).
Even prior to COVID-19, interest rates appeared stuck at historical lows before central bank pandemic emergency measures took them even lower – close to zero and, possibly, below.
In fact, the most-read InvestNow Magazine article of 2020 to date focused on what negative interest rates could mean for the local market. An apparently buoyant local economy late in the year has perhaps lowered the odds on the Reserve Bank of NZ taking the official cash rate into the red next year – but no-one has ruled out the possibility.
The impact of low rates on NZ investors looking for income also featured among the most popular stories of 2020. Low returns on traditional ‘safe’ assets such as bank term deposits have put income investors in a dilemma – but, as the article explains, those hunting for yield in riskier assets do need to take some simple precautions.
Aside from interest rates, our readers showed interest in how to avoid investment scams (clue: watch out for snakes) and what elections mean for markets (answer: not very much in the long term).
Finally, this analysis of KiwiSaver fees rounds out the InvestNow 2020 top-five article list. KiwiSaver fees have been targeted this year by the Financial Markets Authority – which compiled a special ‘value for money’ report on the sector – as well as the Ministry of Business, Innovation and Employment (MBIE) through its review of the current default scheme arrangements.
Launched in October amid this regulatory scrutiny, the InvestNow KiwiSaver Scheme offers amongst the lowest-cost and tax-efficient diversified funds (among a large selection of options) while also dispensing with, what we consider to be unnecessary, fixed-dollar member ‘administration’ fees.
Mike Heath, InvestNow general manager, says the InvestNow KiwiSaver Scheme was running ahead of expectations.
“We’ve been very pleased with the response,” Heath says. “The InvestNow KiwiSaver Scheme was designed to offer members great choice at a great price – and New Zealanders know a great deal when they see one.”
Post zoom gloom: Why normal screening should resume in 2021
While 2020 might have kicked off with a surprise beginning, it seems to be headed for a happy ending. Many global economies (including NZ) have come through the pandemic in better shape than expected – albeit that the virus continues to ravage large parts of the world.
As at December, three COVID-19 vaccines have proven effective with inoculation programs already underway in the UK and US.
Global equity markets, already running at record highs, spiked up further on this dose of vaccination news. The investor optimism, however, is laced with a few nagging concerns.
For instance, whether shares can sustain the late 2020 momentum through next year remains moot. Experts are divided on whether markets have already ‘priced in’ a global recovery or if shares, fuelled by low interest rates and reopening of economies, have further to run.
Similarly, the post-COVID world could see different winners emerge with the year-end conversation already turning to talk of a rotation to ‘value’ stocks – typically, cheaply-priced established companies generating solid, if unspectacular, returns – from the ‘growth’ firms, mostly technology based, that have underpinned recent market performance.
At the same time, plenty of other financial, political and social risks remain in view including: ongoing coronavirus disruption; a ‘no deal’ Brexit; unrest in the US during a messy Trump exit; climate change; and, negative interest rates or not, the long-forgotten spectre of inflation.
But mostly there is a lot to look forward to next year for investors and citizens alike as we zoom out on 2020, watching dim memories fade to history.
The issuer and manager of the InvestNow KiwiSaver Scheme is Implemented Investment Solutions Ltd. For a Product Disclosure Statement click here.