What is Volatility?
Volatility is how much a KiwiSaver scheme fund's returns swing up and down over time — the basis for the FMA risk indicator.
Detailed Explanation
Measured as the standard deviation of returns, usually over the past five years. Higher volatility means larger short-term moves in either direction. Growth funds are more volatile than conservative funds; this is the cost of higher long-term expected return.
Example
Illustrative example — A growth fund might have a one-year volatility of 12% — meaning returns of 8% ± 12% in any given year are normal.
Frequently Asked Questions
Can low-volatility funds still lose money?
Yes. Even a conservative fund can post a negative year, especially when bond yields rise quickly.
Related Terms
Compare every fund on the FMA Disclose register. Refreshed quarterly. Independent — FundCompare is not a Financial Advice Provider; general information only.
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Investing involves risk. The value of your investment can go down as well as up, and you may get back less than you put in. Past performance is not a reliable indicator of future returns.
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