There has been a lot of discussion recently around KiwiSaver manager performance and trailing returns.
And while performance absolutely matters, we believe there is a major problem with how many investors and even parts of the industry compare KiwiSaver funds.
A lot of the analysis being used is simply trailing returns.
1-year returns.
3-year returns.
5-year returns.
10-year returns.
And in our opinion, trailing returns alone are one of the weakest ways to assess KiwiSaver manager quality. Not because returns don’t matter but because trailing returns often tell you very little about:
- how those returns were achieved,
- the risks taken to achieve them,
- whether the outcome was repeatable,
- or whether the manager is likely to continue delivering strong outcomes in future market environments.
In fact, sometimes the opposite can be true.
A manager with an exceptional recent return may simply be:
- benefiting from a market style that came into favour,
- benefiting from concentrated exposures,
- or taking materially more risk than peers.
And history shows that periods of exceptional outperformance are often followed by:
- style rotation,
- mean reversion,
- or periods of material underperformance.
That is one of the biggest dangers of performance chasing.
The Biggest Problem With KiwiSaver Analysis
The biggest issue with trailing returns is that they measure the return of the fund, not the return of the investor. This distinction is incredibly important.
The famous Peter Lynch Magellan Fund is one of the best examples in investment history. The fund itself massively outperformed the market over time, but many investors in the fund significantly underperformed the fund’s actual return because they:
- bought after periods of strong performance,
- sold during periods of weakness,
- and constantly chased recent winners.
The behavioural outcome for investors ended up being dramatically different from the fund’s actual performance. We believe exactly the same risk exists within KiwiSaver.
Because the reality is, most investors do not tolerate years of underperformance. As advisers, we see it all the time.
Periods of underperformance create enormous pressure on investors. Especially in a world where investors can instantly compare their fund performance against:
- Sorted,
- Morningstar,
- provider apps,
- social media,
- and recent return tables.
If trailing returns are the only thing investors are using to assess KiwiSaver performance… why wouldn’t they switch managers when performance weakens?
We actually think it is a fallacy to assume most KiwiSaver investors will comfortably remain invested in the same fund for 10 years regardless of what happens.
Behaviour matters just as much as returns themselves.
Why Trailing Returns Can Be Misleading
There are several major issues with relying solely on trailing return analysis.
1. They Ignore Risk
Two KiwiSaver managers can produce the same return while one:
- took materially more volatility,
- experienced larger drawdowns,
- or concentrated risk far more heavily.
Without understanding:
- downside risk,
- drawdowns,
- and volatility,
the return number alone is incomplete.
2. They Ignore Consistency
One exceptional year can dominate trailing performance figures even if the manager:
- spent most rolling periods underperforming,
- or delivered highly inconsistent outcomes.
That makes it difficult to determine whether:
- the manager has genuine process quality,
or: - simply benefited from favourable market conditions.
3. They Encourage Performance Chasing
This is perhaps the most dangerous issue.
Trailing return tables naturally encourage investors to:
- buy recent winners,
- and abandon recent underperformers.
But in investing, the recent winner is often simply:
- the manager whose style was most favoured during the last market regime.
That does not necessarily mean:
- they will continue outperforming in future market environments.
Using a repeatable Framework
One way KiwiSaver managers could be assessed is through a broader framework than trailing returns alone.
The idea behind a framework like this is not to perfectly predict the next top-performing fund, but rather to:
- reduce the risk of getting caught in future underperformers,
- improve the probability of identifying managers with more consistent long-term outcomes.
Below is an example of some of the statistics that could be used when comparing managers, and how a framework could be constructed.
- rolling excess returns,
- consistency of outperformance,
- risk-adjusted returns,
- downside management,
- drawdowns.
Some Metrics that could be considered
A framework could consider:
Rolling Excess Return
How consistently does the manager outperform benchmark over rolling periods?
Rolling Batting Average
What percentage of rolling periods did the manager outperform benchmark?
Sharpe Ratio
How efficiently did the manager generate return relative to total volatility?
Sortino Ratio
How efficiently did the manager generate return relative to downside risk specifically?
Maximum Drawdown
How severe were investor losses during difficult market environments?
Down Number Ratio
How consistently did the manager outperform during down-market periods?
KiwiSaver Growth Fund Research Results
Using Morningstar Direct data from:
1 October 2013 to 31 December 2025
and benchmarking against:
NZ OE Multisector – Growth
Applying an example framework like this to a range of KiwiSaver Growth Funds produces the following results:
Morningstar Data
| Manager | Sharpe Ratio | Batting Average | Excess Return | Rolling Return Avg | Sortino Ratio | Down Number Ratio | Max Drawdown |
| Milford KiwiSaver Active Growth | 0.83 | 100.00 | 2.60 | 10.23 | 0.63 | 0.66 | -14.53 |
| Generate KiwiSaver Growth Fund | 0.54 | 84.82 | 1.18 | 8.73 | 0.47 | 0.83 | -18.59 |
| ASB KiwiSaver Scheme Growth | 0.52 | 67.86 | 0.67 | 8.18 | 0.42 | 0.92 | -16.51 |
| BNZ KiwiSaver Growth Fund | 0.54 | 79.46 | 0.60 | 8.11 | 0.44 | 0.92 | -16.77 |
| MAS KiwiSaver Growth | 0.43 | 73.21 | 0.41 | 7.90 | 0.40 | 0.88 | -15.89 |
| Westpac KiwiSaver Growth | 0.49 | 58.04 | 0.00 | 7.46 | 0.37 | 0.92 | -16.51 |
| ANZ KiwiSaver Growth | 0.43 | 68.75 | 0.22 | 7.70 | 0.36 | 0.90 | -17.89 |
| Booster KiwiSaver Growth | 0.50 | 67.86 | 0.27 | 7.74 | 0.39 | 0.93 | -15.73 |
| AMP KiwiSaver Growth | 0.34 | 35.71 | -0.44 | 6.98 | 0.30 | 0.83 | -16.02 |
| SuperLife KiwiSaver Growth | 0.35 | 54.46 | -0.15 | 7.29 | 0.30 | 0.82 | -18.61 |
Example Weighted Framework Rankings
Using an example weighted framework focused on:
- rolling excess return,
- consistency,
- downside management,
- and risk-adjusted returns,
overall rankings are broadly as follows:
| Rank | Manager |
| 1 | Milford |
| 2 | Generate |
| 3 | BNZ |
| 4 | Booster |
| 5 | MAS |
| 6 | ASB |
| 7 | ANZ |
| 8 | Westpac |
| 9 | AMP |
| 10 | SuperLife |
What The Research Actually Showed
One of the most important findings from the research was that once you move beyond trailing returns, the rankings change materially.
Several managers that screened strongly on raw returns alone:
- fell once downside risk and consistency were incorporated,
while other managers:
- improved materially once rolling excess return and risk-adjusted outcomes were considered.
This highlighted an important point:
The quality of returns matters just as much as the level of returns.
Managers that consistently demonstrated:
- stronger rolling outperformance,
- stronger risk-adjusted outcomes,
- and more repeatable results across time
Tended to score more favourably within the framework than managers whose outcomes appeared more dependent on:
- favourable market conditions,
- concentrated positioning,
- or short-term style leadership.
Importantly, a framework like this is not designed to perfectly predict the next top-performing manager.
Instead, the purpose of a framework like this is to:
- reduce the risk of selecting future underperformers,
- identify managers with more durable characteristics,
- and improve the probability of selecting managers capable of delivering stronger long-term risk-adjusted outcomes.
In our opinion, an approach like this is likely more robust than simply selecting whichever manager currently sits at the top of a trailing return table.
Because ultimately, performance matters. But how that performance is achieved, and whether it appears sustainable matters even more.
Disclaimer
This article and the associated research framework have been prepared by Venture for general information and research purposes only.
The views expressed reflect Venture’s internal opinions, analysis framework, and interpretation of historical data at the time of writing. The framework is designed to assist with manager research and due diligence and should not be interpreted as a prediction or guarantee of future investment performance.
Past performance is not indicative of future returns. KiwiSaver investments can rise and fall in value, and different investment managers, asset allocations, and investment styles will perform differently across varying market conditions and economic environments.
While care has been taken in preparing this research, no representation or warranty is made as to the accuracy, completeness, or ongoing reliability of the information contained within this document. Data referenced within this article was sourced from Morningstar Direct and other publicly available sources believed to be reliable at the time of preparation.
This material does not constitute personalised financial advice, a recommendation to invest with any particular KiwiSaver provider, or an offer of financial products or services. Investors should consider their own objectives, financial situation, and risk tolerance before making investment decisions and seek personalised financial advice where appropriate.