Video: What women think about investing in a low interest rate environment.
The FMA has published a new guide to managed funds following research suggesting more New Zealanders are considering alternative investments because of low interest rates.
An FMA survey of 195 term deposit investors last month found that 43% of them were likely to invest less in term deposits because of low interest rates. Of these, a quarter of them were considering managed funds or exchange traded funds to get better investment returns.
The findings are in line with the May 2019 results of the FMA’s annual investor confidence survey, which found 56% of New Zealanders were considering making changes to their investments in the coming year.
With this in mind, the FMA has produced a guide to managed funds and exchange traded funds (ETFs) in time for World Investor Week (September 30-October 6).
FMA Investor Capability Manager Gillian Boyes said: “When interest rates fall, it’s natural that people start to look for alternatives to term deposits. With more people expressing interest in managed funds, we’ve developed a guide to these types of investment to help people make more informed decisions.”
The new guide “Funds for Everyone” provides simple explanations of how managed funds work, including an overview of the fast-growing ETFs market. The guide is a companion to the FMA’s “Share this” guide to investing in shares released earlier this year.
Ms Boyes said it was great to see investors thinking about how to diversify their investments, but it was important to ensure they did their homework and did not chase risky, unregulated investments promising high returns.
“With more people thinking about investing for the future, we want to ensure investors have access to good quality, independent information on how different investments work and what investors should consider,” said Ms Boyes.
“There are risks with all investments and we want to help ensure that investors understand these to help them make good decisions.”
Last month’s survey by Buzz Channel, found 58% of term deposit investors expressed concern that current low rates would impact their long term savings goals. While 44% still chose to invest in term deposits even if the interest rates are low, 47% said they weren’t satisfied with the current term deposit rates being offered and were looking elsewhere.
Beyond managed funds, investors were considering investing in shares, property, increasing KiwiSaver contributions, or providing a lump sum for a financial adviser to invest on their behalf.
Note: World Investor Week is a global initiative from the International Organization of Securities Commissions, IOSCO, including a programme of activities designed to promote greater understanding of financial markets and investing.