Active managers slip down KiwiSaver tables
A number of active KiwiSaver providers have failed to fire in the past year, while passive management has come to the fore.
Tuesday, July 28th 2026, 6:00AM
Managers have been navigating a volatile environment, with many tech stocks soaring in price and becoming increasingly dominant on indices.
Some active managers have reduced their exposure to some parts of the market they view as riskier, which has so far led to softer returns.
After a long period of outperformance, for example, Milford has slipped down the KiwiSaver growth rankings in the past year. It returned 11.12% in a year. Amova’s Global Shares fund has returned 1.2%.
In comparison, Kernel Wealth’s Global 100 is up 36.8% over a year, and 26.55% NZD hedged. ASB’s growth fund is up 16.32% over a year. Simplicity’s growth fund returned 17.56%.
Gertjan Verdickt, a senior finance lecturer at the University of Auckland, said part of the reason was the market structure.
“When index returns are concentrated in a handful of mega-caps, the cap-weighted benchmarks are hard to beat.
“Active managers are structurally underweight the largest names: diversification rules, mandate limits, and simple reluctance to hold a 7% single-stock position. If those names drive most of the index return, being underweight them is a large negative contribution regardless of how good the stock-picking is elsewhere. High correlation across stocks also compresses the dispersion managers need to add value.”
He said it was less likely that current market conditions were to blame.
“Higher volatility does widen tracking error and make skill harder to detect statistically, but it doesn't mechanically reduce average excess return; it just widens the distribution around zero”
He pointed to SPIVA data that showed under-performance by active managers over 10 and 15-year windows across most categories and most markets, including periods with wide dispersion and no concentration problem.
“Fees are the persistent drag: arithmetic, not conditions. ‘Conditions are unusual’ is what you'd expect managers to say in any period where they've lagged; the test is whether the same managers outperformed in the periods when conditions supposedly favoured them.”
Kernel founder Dean Anderson said active managers liked to say index funds would win when markets were calm but active would earn its keep in tough times.
“We've had a few of those moments over the last five years. Right now though, a few things are lining up that should, in theory, create more opportunity for active managers: concentration in the big index names has been high and those names have pulled back recently in performance, we've got renewed conflict in the Middle East driving inflation and volatility, and we've got dispersion.”
He said wide dispersion just meant bigger rewards for getting the active calls right.
“Several commentators have flagged 2026 as a stock picker's market on exactly this basis, with dispersion running well above historical averages and correlations between stocks falling to some of their lowest levels in years.
“But here's the catch. Wide dispersion cuts both ways. Get it wrong and you can get it really wrong. Seventy-four percent of actively managed global equity funds in New Zealand underperformed the S&P World Index in 2025, and over 10 and 15 year periods, all funds underperformed. That matters a lot, because global equities are a big chunk of a typical growth or high growth KiwiSaver fund.”
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