{"id":637047,"date":"2026-10-21T05:34:09","date_gmt":"2026-10-21T05:34:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/637047\/"},"modified":"2026-10-21T05:34:09","modified_gmt":"2026-10-21T05:34:09","slug":"milford-kiwisaver-returns-lag-rivals-as-manager-defends-cautious-tech-approach-simplicitys-growth-fund-takes-top-spot","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/637047\/","title":{"rendered":"Milford KiwiSaver returns lag rivals as manager defends cautious tech approach, Simplicity\u2019s growth fund takes top spot"},"content":{"rendered":"
However, looking back over the past 10 years, Milford\u2019s balanced and conservative KiwiSaver funds delivered the highest average annual returns of the funds assessed. <\/p>\n
Meanwhile, its growth fund was bumped from the top spot it had consistently held since at least 2017.<\/p>\n
It was unseated by Simplicity\u2019s growth fund, which delivered an average annual return over 10 years of 9.9% \u2013 a result above Milford\u2019s 9.6%. <\/p>\n
The September quarter was the first time Simplicity was included in the ranking. Founded in 2016, Simplicity had only just accumulated the 10-year record required to be counted.<\/p>\n
While MJW covered providers responsible for about 93% of the KiwiSaver market, it didn\u2019t include some smaller fund managers and fast-growing newcomers like Kernel and Sharesies. <\/p>\n
Speaking to the Herald, Milford\u2019s general manager of KiwiSaver and investment funds Murray Harris explained Milford\u2019s funds weren\u2019t as exposed to tech stocks, which have been shooting up in value, as some other funds \u2013 especially those that tracked the market. <\/p>\n
Because the likes of Nvidia, Apple and Microsoft had become so big, they were accounting for very large portions (in the realm of 35%) of indices like the S&P 500. <\/p>\n
Milford\u2019s growth fund, on the other hand, was about 20% exposed to this sector. <\/p>\n
Harris conceded Milford probably took too cautious an approach to investing in AI-related companies early on.<\/p>\n
\u201cSo that\u2019s impacted our one-year performance,\u201d he said. <\/p>\n
\u201cWith the benefit of hindsight, yeah sure, we would have put more into AI sooner.<\/p>\n
\u201cWe have been adding to that tech theme \u2026 We\u2019re at market weight for our index, but how far do you want to chase it before you\u2019re wrong, and then you\u2019re causing pain for your clients by being overexposed to a sector that\u2019s not performing well?\u201d<\/p>\n
MJW principal actuary Ben Trollip noted the tech and energy sectors had far outperformed other sectors, like utilities and real estate, in the September quarter. <\/p>\n
However, the tech and energy sectors were also a lot more volatile. <\/p>\n
Harris said Milford\u2019s approach was to not only maximise returns in the good times, but to protect investors\u2019 funds in the bad times. <\/p>\n
\u201cThere\u2019s quite a bit of risk out there, and we just don\u2019t want to expose our clients\u2019 money to that unduly,\u201d Harris said.<\/p>\n
He noted Milford\u2019s funds were among the least volatile of those assessed by MJW.<\/p>\n
Harris said KiwiSaver providers that actively managed their funds, rather than had them track indices, earned their stripes during downturns. <\/p>\n
As for the recent poor performance of Milford\u2019s conservative KiwiSaver fund, which is more exposed to bonds and cash than equities, Harris said: \u201cThe bond exposure that we have been carrying hasn\u2019t really been performing in the way you would expect, where often bonds and equities work in opposite directions.\u201d<\/p>\n
However, he noted that with bond yields rising globally, \u201cif you\u2019re buying the bonds now, in the future, the yields are going to be good\u201d.<\/p>\n
What about Simplicity?<\/p>\n
Turning to Simplicity, its founder Sam Stubbs challenged Milford\u2019s approach. <\/p>\n
Even though Simplicity is a passive manager and tracks some indices, so should benefit from tech companies\u2019 strong performances, he noted the other parts of its portfolios were also doing well. <\/p>\n
Its growth fund is currently slightly more exposed to \u201cgrowth assets\u201d than Milford\u2019s, at 80% versus 75%, with Harris clarifying that Milford could alter this portion quite a lot depending on market conditions. <\/p>\n
Stubbs said Simplicity was reducing its funds\u2019 volatility by increasing their exposures to New Zealand. <\/p>\n
For example, Simplicity\u2019s KiwiSaver growth fund\u2019s largest investment, accounting for a notable 6.7% of the fund, is in Simplicity Living, which does build-to-rent developments in New Zealand. <\/p>\n
Stubbs believed this would protect investors if tech stocks crashed, as Kiwis would still need somewhere to live and would continue paying rent. <\/p>\n
\u201cWe have a lot [invested] in Icehouse Ventures. We have a lot in built-to-rent housing. We run our own mortgage operation,\u201d he said, noting Simplicity\u2019s performance was proof that \u201cinvesting in New Zealand is much better than people think\u201d.<\/p>\n
Stubbs believed Simplicity was well-placed to make good investment decisions locally, as it knew the market. <\/p>\n
But when it came to investing offshore, it was happy to track the market. <\/p>\n
\u201cIf you\u2019re an active manager and you think you can have a competitive advantage in picking where tech stocks in America are going to go, you\u2019re kidding yourself,\u201d he said.<\/p>\n
MJW\u2019s Trollip recognised the variety in KiwiSaver fund management styles. <\/p>\n
He encouraged investors to look at longer-term performance, noting there could be a lot of noise in the short term.<\/p>\n
Trollip also made the point that while comparing funds\u2019 performance was important, the amount one invested and risk profile of the fund selected (ie; growth, balanced or conservative) had the biggest impact long-term.<\/p>\n
He also cautioned that past performance didn\u2019t guarantee future performance.<\/p>\n
Jen\u00e9e Tibshraeny is the Herald\u2018s Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.<\/p>\n