Milford comes top in difficult year for fund managers

It's been a challenging time for active fund managers with profits taking a hit from declining management fees as investors flock to low-cost passive funds.

Macro uncertainty including global trade tensions and increasing economic risk is also making life tough for managers, while interest rates and bond yields remain at record low levels.

However, there is still a basic need for people to grow their savings for retirement. The Zenith FundSource awards, which recognise the top performing fund managers in New Zealand, were held in Auckland last night.

Thirteen awards were presented in total including the coveted Fund Manager of the Year title.

This year's big winner was Milford Asset Management, which headed off Fisher Funds and Smartshares for the top gong.

David Wright, managing partner of Zenith Investment Partners, said with most active managers under increasing pressure, the bar has been lifted for the industry.

“You really have to be best practice to survive these days,” he said, referring to asset managers needing to continually improve their investment teams and processes to compete.

“Notwithstanding the very strong returns in various markets, basically since the GFC, in more recent times it's been a pretty difficult environment for a lot of managers.”

Wright said the awards judging criteria was multi-faceted and not solely focused on performance.

Funds must pass rigorous qualitative and quantitative screening as part of the selection, before being analysed on performance. Overseas funds needed to demonstrate strong commitment to the local market.

“It's dangerous to make awards on performance alone,” Wright said. “At the end of the day, investors want performance, so it does carry a heavy weight but it's certainly not that alone.

“There's a fair bit of evidence that shows historically that the best performing fund manager one year is often the worst the next and vice versus.”

Milford also took out the Diversified and New Zealand Fixed Interest award categories, but did not feature in the KiwiSaver Manager of the Year Award that it had previously won three years in a row. That was won by ASB Group Investments.