skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus

Managing market volatility

One of the main differences between investing in a term deposit and investing in a managed fund like KiwiSaver or investment funds is volatility – in other words, fluctuations in the value of your investment. With term deposits, you earn a fixed interest rate over a fixed time period which doesn’t change. KiwiSaver and investment funds, on the other hand, are exposed to market volatility, which means your investment can go up and down in line with changes in financial markets.

What causes volatility?

KiwiSaver and investment funds invest in assets like shares and bonds, which are bought and sold on markets (e.g. the share market). As with any market, prices can go up or down for a number of reasons, including:

  • Events in the economy – for example, if the economy is doing well, financial markets tend to rise, or vice versa
  • Political and regulatory environment – for example, new regulations or trade barriers could create difficulties for businesses, which could drive down their share price
  • Investor sentiment – markets are ultimately driven by people. That’s why sometimes, swings in markets could be driven by emotions rather than objective data.

Responding to market volatility

Fluctuations in the value of your investment can be unsettling. But it’s crucial to understand that these are an inevitable part of investing. It’s also important to understand that over time, these ups and downs tend to even themselves out. History has shown that markets recover from downturns, and the long-term trend is up.


At ANZ Investments, we take an active management approach. This means using all our experience, research capabilities and connections to select and manage investments. We believe this allows us to offer our investors a better opportunity for downside protection when market conditions are challenging, while also taking the best advantage of upwards swings in markets.

Volatility, risk and returns

In investing, there is typically a trade-off between risk and returns. Investments that have higher potential returns, such as shares, also have higher potential risk and volatility – which means their value can fluctuate significantly over the short term.

If you’re seeking higher long-term returns, you need to be willing to accept more risk and volatility. If you’re seeking lower risk and volatility, you need to be willing to accept potential lower returns.

It’s important to assess your tolerance for risk before deciding what to invest in.

Need help?

Find out your risk profile

Understanding your tolerance for investment risk may help you choose the right fund for you.

Take our Risk Profile Questionnaire

Free financial advice

If you need help choosing the right investment option for you, talk to one of our financial advisers. They can provide free advice tailored to your individual situation.


Find out more


ANZ New Zealand Investments Limited is the issuer and manager of the ANZ KiwiSaver Scheme, ANZ Default KiwiSaver Scheme and ANZ Investment Funds. Important information is available under terms & conditions. Download the guide and product disclosure statement.