Returns for funds in the MAS KiwiSaver Scheme and the MAS Retirement Savings Scheme moderated after their very strong performance of the previous quarter. Leading international share markets, after reaching new highs during the quarter, gave up most of those gains in September as investors became concerned about the risk of stagflation – tepid growth but rising inflation. 

The quarter started with the general market view that the world economy was in a "Goldilocks" zone – not so strong as to lead to substantial increases in official cash rates any time soon, but not so weak as to risk lower company profits. This meant that most share markets performed well for much of the quarter.

Late in the quarter, however, financial markets began to worry that the persistent nature of the Delta strain of COVID-19 was hampering the recovery in many economies even after lockdowns had been removed. On top of this, the global supply chain is still severely disrupted. This has led to record breaking increases in shipping costs, which in turn is contributing to sharp jumps in the prices of many traded products. 

So, investor confidence in the Goldilocks scenario weakened due to the increased potential for slowing growth and higher inflation – a combination known as stagflation. This is a particularly poor combination for company profits and therefore share prices. 

The risk of this scenario eventuating is partially offset by the public commitment of governments and central banks to continue to underwrite a sustainable economic recovery from the pandemic. Consequently, while leading international share markets ended the quarter lower than the record highs they had reached, there was still enough investor confidence to generate healthy returns for the quarter. 

The fortunes of individual asset classes are illustrated by the example in the chart below. This shows returns for each asset class in the MAS KiwiSaver Scheme Balanced Fund before fees* and tax. Returns for other MAS funds are very similar. 


Fund Asset Class Returns to 30 September 2021


*Note: the return for international fixed interest is after third party manager fees.

Key points to note in the chart above are:

  • While the quarterly return from international equities was minor, previous quarters had been very strong such that the annual return is still outstanding.
  • The more concentrated nature of the New Zealand share market tends to make its return more volatile than many of its larger international peers. So, while the recovery in the share prices of a few larger companies in August that had previously been laggards helped boost the quarterly return, the return of the local share market still trailed well behind that of most international share markets over the year. 
  • The growing prospect of higher official cash rates, notably in New Zealand, led to higher long term market interest rates over both the quarter and the year. Consequently, because bond values typically move in the opposite direction to interest rates, returns from fixed interest were low and even negative in the case of New Zealand over both the quarter and the year. 

What this means for our funds

The stronger performance of growth assets (such as international shares and Australasian shares) compared with income assets (such as fixed interest and cash) was reflected in the relative performance of the funds.

The chart below shows the higher return over the quarter for the Global Equities Fund (with a target asset allocation of 100% invested in growth assets) compared with the Conservative Fund (with a targer asset allocation of 20% in growth assets). The relative position of the performance of these funds was the same over the full year. 


MAS KiwiSaver Fund returns to 30 September 2021


*Note: Returns are after total annual charges and before tax. The performance of the funds in the MAS Retirement Savings Scheme were very similar to the equivalent fund in the MAS KiwiSaver Scheme. 


The investment manager for the funds, JBWere NZ Pty Ltd (JBWere) assesses the share market risks over the coming months as more balanced than earlier in the year when they had a strongly positive view. Consequently, they believe after a run of strong equity market performance, having a mix of growth and income assets in line with each fund's long-term target mix is the best way of managing risks in the coming months (find out more here).

We can help

It's important to have a sound investment strategy and to stick to it. To help you formulate your own retirement investment strategy, arrange a free consultation with a MAS Adviser. To book an online or phone meeting, complete this form and we'll be in touch.

It's also important to make sure you're in the right fund for your risk appetite. You can use our online risk profile questionnaire to help see if you're in the right fund for your circumstances. 

If you decide to change your fund after reviewing your risk profile or meeting an adviser, you will need to complete an investment strategy change request form:

MAS KiwiSaver Scheme

MAS Retirement Savings Scheme

There is no fee for switching. 

Once you are comfortable with your investment strategy, you can see weekly updates on fund unit prices and returns on our website:

MAS KiwiSaver Scheme

MAS Retirement Savings Scheme


This article is of a general nature and is not a substitute for professional and individually tailored advice. Medical Funds Management, JBWere (NZ) Pty Ltd and Bancorp Treasury Services Limited, their parent companies and associated entities do not guarantee the return of capital or the performance of investment funds. Returns indicated may bear no relation to future performance. The value of investments will fluctuate as the values of underlying assets rise or fall.

The Product Disclosure Statement for the MAS KiwiSaver Scheme is available here.

The Product Disclosure Statement for the MAS Retirement Savings Scheme is available here.

Medical Funds Management Limited is the issuer and manager of each of the Schemes.

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