It's been a difficult year for investment markets with COVID-19, inflation, rising interest rates and Russia's invasion of Ukraine impacting performance. In this "Year in Review" for the Westpac KiwiSaver Scheme, our Head of Investment Solutions, Philip Houghton-Brown, looks at how funds have performed in the 12 months to 31 March 2022, and what he sees on the horizon.

Prior to the Russian invasion of Ukraine in late February 2022, we were seeing growth in the world economy with economic activity gradually returning to normal as most countries started to shed their COVID-19 restrictions despite the emergence of new variants. However, inflation has also risen sharply around the world and the cost of living is rising at the fastest pace in more than three decades, as availability of goods and services fails to keep pace with demand.

This is partly because of lingering COVID-19 related shortages of raw materials, labour and transportation while ongoing lockdowns in China are continuing to make it hard for factories to keep up with demand. The conflict in Ukraine has exacerbated the situation, pushing up the price of oil, gas, metals, and food related commodities.

Over the past year, in an effort to slow inflation, the world's central banks, including the Reserve Bank of New Zealand, have started to increase interest rates. As markets increasingly realised that this is only the beginning of a cycle of higher rates, the prices of both bonds and shares fell (see below). After many years of positive fund performance (over the long term), we are now experiencing low or negative returns because of the combination of all these market factors.

While this may be the first time many Westpac KiwiSaver Scheme members have seen negative returns in their annual member statement, it's important to remember:

  • Your KiwiSaver account is an investment - not a savings account - so your balance will tend to go up and down as markets do
  • When the market dips, if you sell your investment you will lock in those losses
  • It’s important to ensure you're in the right fund for your circumstances and investment timeframe.

How has your Westpac KiwiSaver Scheme fund performed?

This table shows how the different funds in the Westpac KiwiSaver Scheme have performed1,2 over the past 1 year and 5-year periods (to 31 March 2022). It shows that for the past year returns have been challenging, but when looking at the same funds the annualised five year return has been positive. It’s important to note that we can't predict what the returns are going to be in the future and that past returns are not indicative of future returns.

  Cash Fund Defensive Conservative Fund3 Conservative Fund Moderate Fund  Balanced Fund Growth Fund CPP Fund No 54
1-year returns (to 31 Mar 2022) 0.48% -1.61% -1.43% -1.17% -0.73% 0.07% -1.21%
5-year returns (annualised to 31 Mar 2022) 1.08% 3.03% 3.26% 4.36% 5.95% 7.29% 9.29%

Market insights.

Shares (also known as 'equities')

After reaching record highs at the end of 2021, international share markets went into reverse in the first quarter of 2022 due to the sharp rise in market interest rates and the Russian invasion of Ukraine. Higher interest rates can negatively affect the value of company shares even though those companies may be making a profit. Even with all these market disruptions international share markets still ended up with a positive return for the year.

After many years of being one of the strongest markets in the world the New Zealand share market was a relatively poor performer and ended the year in negative territory. It was affected by higher interest rates and significant price falls by some large companies.

Funds which hold more shares, such as the Westpac KiwiSaver Scheme Balanced and Growth Funds, have performed slightly better than the more conservative funds over the year overall.

Bonds (also known as 'fixed interest')

Bonds have seen uncommon volatility and negative returns over the year, and this is due to the unique relationship between bonds and interest rates. When interest rates are high and falling, bond returns are high, but when interest rates are low and rising (due to inflation) the value of bonds decreases. This has pushed returns down for funds which hold more bonds, such as the Westpac KiwiSaver Scheme Defensive Conservative and Conservative Funds.


Due to the nature of a cash fund and the low-risk assets held, this type of investment fund is not generally affected by market factors – you won’t see the balance go up and down due to market volatility. Over the course of the year, as New Zealand short term interest rates started to rise there was a positive impact on the return of the Westpac KiwiSaver Scheme Cash Fund. 


Economic outlook.

Economic activity should keep expanding across developed markets and in New Zealand, although at a slower pace. Labour markets around the world are strong, which helps drive economic activity. However, persistent inflation pressure and higher interest rates will continue to negatively impact the cost of living for New Zealanders.

We expect central banks to continue withdrawing the monetary support that helped economies during the pandemic. As a result, we continue to expect the returns from bonds to remain relatively low.

Share markets will continue to face headwinds due to rising interest rates, geopolitical tensions and slowing profit growth. Nevertheless, investment opportunities will arise in the cheaper segments of the market and in companies which can maintain profits in these conditions.

With our investment management approach, we will aim to mitigate the impact of rising interest rates and continue to look for sustainable investment opportunities across the asset classes.

Lower fees mean more money in your KiwiSaver account.

In September 2021, we reduced the annual fund charges for the Westpac KiwiSaver Scheme funds which were open to new investment and removed the annual $12 administration fee. This means more money in your KiwiSaver account to help you reach your goals faster.

Check your fund type below to see the difference this could make for someone with a balance of $20,0005,6:

  • Cash Fund – Annual fees reduced from $70 to $50
  • Defensive Conservative Fund – Annual fees reduced from $92 to $80
  • Conservative Fund – Annual fees reduced from $130 to $80
  • Moderate Fund – Annual fees reduced from $144 to $80
  • Balanced Fund – Annual fees reduced from $158 to $100
  • Growth Fund – Annual fees reduce from $172 to $110
  • CPP Fund No.5 – Annual fees reduce from $300 to $288.

SuperRatings Platinum Rating for 2022.

The Westpac KiwiSaver Scheme has been awarded a "Platinum" rating by third-party ratings agency SuperRatings. This signifies a "best value for money" KiwiSaver scheme and is the highest rating possible.

In the judges' words: "The Westpac KiwiSaver Scheme is well balanced across all key assessment criteria in a robust, secure and proven risk framework. The Scheme provides features that should assist most individuals to meet their retirement savings goals."

We are proud to be rated as Excellent for Fees and Charges, Member Education, and Compliance & Risk.

Find out more about our SuperRatings rating at www.westpac.co.nz/kiwisaver

Things you should know.

1Returns shown are as at 31 March 2022 and are calculated after the deduction of all fees and charges and tax at the highest prescribed investor rate.

2The Default Balanced Fund opened for investment on 1 December 2021, so 1- and 5-year returns are not yet available.

3The Defensive Conservative Fund was formerly known as the Default Fund.

4CPP Fund No.5 is closed to further investment.

5Comparing a $20,000 balance held for one year from 1 October 2020 to 27 September 2021 (applying the below administration fee and estimated annual fund charge) with the same balance held from 28 September 2021 to 30 September 2022 (at the new annual fund charge). Calculations are rounded to the nearest $1 and assume the balance does not change over the year (e.g. the fees might be more or less if the account balance increased or decreased over the year).

Westpac KiwiSaver Scheme fund

Fees from 1 Oct 2020 to 27 Sep 2021

Fees from 28 Sep 2021 to 30 Sep 2022


Administration fee

Estimated annual fund charge

Annual fund charge

Cash Fund

$12 p.a.



Defensive Conservative Fund (formerly known as the Default Fund)

$12 p.a.



Conservative Fund

$12 p.a.



Moderate Fund

$12 p.a.



Balanced Fund

$12 p.a.



Growth Fund

$12 p.a.



CPP Fund No.5

$12 p.a.



6The Default Balanced Fund is not shown as it opened for investment on 1 December 2021

BT Funds Management (NZ) Limited (BTNZ) is the manager and Westpac New Zealand is the distributor of the Westpac KiwiSaver Scheme (Scheme). A copy of the Product Disclosure Statement for the Scheme is available at www.westpac.co.nz/kiwisaver.

This year in review is provided by BTNZ for general commentary and market colour. It is provided for information purposes only and has been prepared without taking into account the financial situation or goals of any person. Because of this, before acting, you should consider the appropriateness of the information, having regard to your particular financial situation or goals. You should contact a Westpac Financial Adviser if you would like further information or any financial advice regarding your particular financial situation. Any views or opinions expressed in this market update are not necessarily those of Westpac or any related companies of BTNZ or Westpac. They are based on information current at the time from sources which BTNZ believes to be reliable, but may involve material elements of subjective judgement and analysis. No representation is made as to the accuracy or currency of the information contained this update and none of BTNZ, Westpac or their related companies accepts any liability for any loss or damage related to the use of any information contained in it. Past performance is not a reliable indicator of future performance.

Investments made in the Scheme do not represent bank deposits or other liabilities of Westpac Banking Corporation ABN 33 007 457 141, Westpac New Zealand Limited or other members of the Westpac group of companies. They are subject to investment and other risks, including possible delays in payment of withdrawal amounts in some circumstances, and loss of investment value, including principal invested. None of BT Funds Management (NZ) Limited (as manager), any member of the Westpac group of companies, The New Zealand Guardian Trust Company Limited, or any director or nominee of any of those entities, or any other person guarantees the Westpac KiwiSaver Scheme’s performance, returns or repayment of capital.

SuperRatings disclosure:

The ratings issued by SuperRatings Pty Ltd ABN 95 100 192 283 AFSL 311880 (SuperRatings) for Westpac KiwiSaver Scheme ('Platinum' rating), are as of 23 November 2021. SuperRatings does not guarantee the data or content contained herein to be accurate, complete, or up-to-date, and it will not have any liability for its use or distribution. Ratings are not financial advice for the purposes of the Financial Markets Conduct Act 2013. Consider your personal circumstances, read the product disclosure statement, and seek independent financial advice before investing. SuperRatings uses objective criteria and receives a fee for publishing awards. Visit superratings.com.au for ratings information and to access the full report. © 2021 SuperRatings. All rights reserved.