2025 was not a good year for active fund managers in New Zealand, new data suggests.
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2025 was not a good year for active fund managers in New Zealand, new data suggests.
S&P Dow Jones Indices has released its latest SPIVA scorecard, measuring the performance of actively managed funds against benchmarks over various time horizons.
It follows concerns that some active managers have struggled in recent years, although others argued that a longer-term comparison was more appropriate.
The new data found 74 percent of actively managed global equity funds in New Zealand underperformed the S&P World Index in 2025. Over 10- and 15-year periods, all funds underperformed.
Head of index investment strategy Sue Lee said it was another challenging year for active funds, “with a firm majority of funds underperforming relevant benchmarks across global and domestic equities, as well as domestic bonds”.
“Notably, 79 percent of New Zealand bond funds underperformed, marking a significant departure from their majority outperformance over the past four calendar years.”
She said there were relatively resilient results in the first half of the year, but funds lost ground in the second half.
As well, 65 percent of actively managed New Zealand equity funds underperformed the NZX50. Over 15 years, 85 percent underperformed.
Bond funds also faced challenges, with 79 percent of funds underperforming. Over 15 years, that dropped to 76 percent.
University of Auckland senior finance lecturer Gertjan Verdickt said some people might expect active managers to do better in current market conditions, where there are a number of geopolitical and other pressures having an effect.
“Markets feel chaotic, so surely the people paid to navigate them should be earning their fees right now. But the evidence is surprisingly stubborn on this.
“A large international study by Fink, Raatz, and Weigert covering 16 countries found that equity funds underperform during recessions by about 0.4 percent per month on average, with the effect observed in 15 of 16 countries.
“Their best guess at why: managers try harder when conditions get rough, trade more actively, and the elevated trading and liquidity costs in stressed markets end up exceeding the active calls’ earnings. Tracking error goes up; net performance goes down.
“That said, there’s a more hopeful counterpoint. There is literature showing that skilled managers do exist and adapt – that is, picking stocks in good times and timing the market in bad times) – and that subset genuinely outperforms.
“The catch is that the average fund still underperforms, because for every manager who reads the regime correctly, there are several who don’t. SPIVA’s 74 percent figure for global equity in NZ fits that pattern pretty cleanly.”
Rajat Vats, founder of financial advice software firm Nuvano, said it was better for investors to look over a full market cycle.
“In the last 10 years, [active managers] have been the top eight in absolute returns … only two are passive.
“The more risky funds are active managed funds… they clearly state in their product disclosure statement that the timeframe we are suggesting [to look at] is seven years. People should be looking at that perspective instead of one year the fund goes down.”
He said benchmarks would have a head start because they did not include taxes and fees.
The report noted that the number of active funds continued to grow, driven by the launch of global equity funds.
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