The mood of Kiwi investors has taken a downturn as volatile performances continue to plague the global stock market.
New Zealand's NZX has suffered a 21.2 percent loss since 2021.
In the third quarter of this year, KiwiSaver funds took a hit of more than $2 billion due to falling equity markets amid "higher for longer" interest rate expecations, according to a three-monthly survey by Morningstar.
Milford Asset Management portfolio manager Mark Riggall said global shares were down 10 percent in the last quarter, with "high flying" tech stocks also falling.
He said this was all linked to long-term bond prices.
"Bond yields have been going up, right? So, investors have been demanding higher returns from bonds because governments are spending and financing with debt, issuing lots of bonds to finance their spending and investors are saying, 'Hey, I just need a higher rate of return on that,'" Riggall told AM.
"Everyone's going, 'Hang on, maybe I'll own a little bit less shares and have a little bit more bonds' - they're making that decision, taking their money out of shares and putting it into bonds."
In its October Global Outlook, Auckland investment firm Salt Funds Management said the "slightly stagflationary" nature of New Zealand's economy meant equities were unable to fulfil being "a reasonable inflation hedge". Stagflation is the combination of a stagnant economy and high inflation.
"While there is certainly potential for a sharp rebound at some point, this will require lower inflation outcomes and thence lower interest rates," Salt Funds managing director Matt Goodson said in the report.
The report warned investors to interpret the "improving relative attractiveness of bonds" carefully.
"Unlike the case for much of the last half century, the rising yields on Sovereign (Government-issued or backed) debt securities is this time reflecting mounting concern about the long-term sustainability of many countries' fiscal settings. Put simply, there is insufficient projected tax revenue to adequately cover the projected track of government expenses."
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