Why Staying the Course Matters in Uncertain Times.

When everything feels uncertain, what should you do?

War in the Middle East. Oil prices moving. Markets reacting. It’s understandable that major world events might feel unsettling. When the news is changing by the hour, it’s natural to wonder:

• Should I switch funds?
• Should I move to cash?
• Should I stop contributing until things settle down?

Markets don’t always react the way we’d expect. Take the ongoing conflict in the Middle East. Many commentators expected a prolonged rise in oil prices and a significant market sell-off. Instead, markets responded in more complex ways. Oil prices initially rose before falling back, while sharemarkets have recovered (for now). It’s a timely reminder that predicting how markets will respond is hard.

What do global investors actually do during global events?

Interestingly, research by Vanguard1 looked at how investors behaved during periods of heightened geopolitical uncertainty. The study found that most investors stayed the course rather than switching funds/strategies. Among those who did make changes, investors were actually more likely to add money to their investments than withdraw it. That’s an important reminder that successful long-term investing isn’t usually about reacting to every headline. It’s about sticking to a well-considered plan.

Why our instincts can work against us

Our brains are wired to react to uncertainty. When markets fall, it can feel like we should ‘do something’. That’s a completely normal human response. But history has shown that some of the biggest investing mistakes happen when long-term decisions are driven by short-term emotions.

The reality is that no one can consistently predict:

• how long a conflict will last
• how governments will respond
• how interest rates may change
• or how investment markets will react.

By the time the outcome feels obvious, markets have often already moved. That’s why diversification matters. A diversified fund is designed with uncertainty in mind – including exactly these kinds of global events – so you don’t have to try to predict what happens next.

Rather than relying on any single company, country or asset class, diversified funds spread investments across different markets and investment types. As professional investment managers, we’re continually monitoring markets and adjusting portfolios where appropriate - within clear risk settings - so your investment stays aligned to its long-term objective.

While no investment is immune from market ups and downs, diversification is one of the key ways we manage risk for you over the long term. This means your KiwiSaver fund is already set up to manage uncertainty over time, without needing to switch in response to short-term news. We manage these funds on behalf of hundreds of thousands of KiwiSaver members, with a focus on consistent long-term outcomes.

Staying on track

If you’re investing for a goal that’s many years away, short-term market movements are only one part of a much bigger journey.

When markets dip, your regular KiwiSaver contributions buy more at lower prices. If markets recover later, those extra investments can benefit. That’s why sticking with regular contributions can pay off over time.

While everyone’s circumstances are different, changing your long-term fund choice because of short-term news isn’t always the best response. Remember that investing is a marathon - not a sprint.

When the world feels uncertain, sticking with your plan is often more valuable than trying to predict what happens next.

¹ Source: Vanguard, “Discipline prevails during geopolitical shocks”.