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Investment returns

2011 was a year where returns from shares were negative particularly in the second half of the year and this affected anyone with shares in their mix. This was seen from what happened in the NZ sharemarket.

There are lots of explanations for why the 2011 year returns were negative. Many relate to the outlook for global economic growth and problems with the debt levels of developed countries. However, in many cases, it simply reflected that after a decade of poor returns from shares and given the mess in Europe, the UK and the US, investors did not want the risk of shares. They preferred the certainty of cash and government bonds. If fewer investors want to buy shares, the price goes down.

It is ironic that bonds, that are backed by no more than a government promise (such as Greece) are perceived as being "safer" than a company making profits from selling real products that people want to buy. We do not know whether in 2012, the values of shares will continue to go down but note that dividend yields are higher than cash rates in many cases. Remember, shares should probably be bought by investors who can wait, and will wait, 10 to 12 years before they intend to spend the money.

Investment seminars

The first seminar for 2012 is in Dunedin on 20 March. The seminar's education focus is on "managing risks" and the seminar includes a general investment market update. The seminars are free and you can bring a friend or a family member. To attend, please register your preferred date/location.

UK pensions

The UK government is changing the rules on UK pension transfers on 6 April 2012. The new rules will apply to transfers from this date. Remember, if you have a UK pension, you can transfer it to your SuperLife account and take advantage of the SuperLife options.

Australian super transfers - still no news

There is still no word on when transfers from Australian superannuation schemes will be allowed. We continue to wait for Australia to change its laws to let the transfers take place. If you have an Australian superannuation scheme, email your name and contact details to info@superlife.co.nz and we will keep you informed.

KiwiSaver - first retirement benefits

The first retirement benefits under KiwiSaver will be paid from 1 July 2012. When you become eligible for a benefit, you do not have to take it immediately. Many will simply transfer it from their KiwiSaver Account to their SuperLife Superannuation Account and continue to invest it until they choose to spend it. Have a read of 'Thinking about Retirement' or contact SuperLife for a booklet – email info@superlife.co.nz or phone 0800 27 87 37.

Beneficiaries - a good time to review

If you are in SuperLife's superannuation scheme, January is a good month to make sure that we have your correct beneficiaries recorded for payment of your benefit on death. You can change your beneficiaries at any time. Make sure we know who to pay your benefit to, on your death.

January is also a good month to review the amount of life insurance you have (i.e. is it too much or too little).

After-tax returns 

>> View the latest after-tax returns.

Investment strategy - Managed³⁰ and Managed⁶⁰ Pools

The current allocations for Managed³⁰ and Managed⁶⁰ Pools are:

"My future strategy"

If I reviewed my investment strategy (i.e. asset mix) today and was concerned mainly with performance over the next 2 - 3 years, I would be thinking about:

• reducing my cash down to the lowest level I felt comfortable with, given the importance of my savings, the uncertainty of the markets and when I intend to spend the money. This is because cash rates are low.
• holding more bonds and favouring corporate over government bonds. Yields of investment grade corporate bonds are higher than cash rates and are locked in for a longer period.
• favouring Australian and New Zealand shares over overseas shares to benefit from the higher dividends of these markets. In addition, to gain an exposure to the expected growth in the Asian economies.
• building an exposure to emerging markets to about 20% of any overall share exposure.
• maintaining the currency hedge on my overseas shares above my neutral position.
• beginning to rebuild the exposure in the property sector.  This would be the start of a slow build up back towards a neutral weight.

The above strategy does not take into account an individual’s personal situation. Also, as with all investment decisions, what might be the right strategy over the medium term, may not be right over the very short-term. We really don’t know what will happen over the short-term.