Milford's Active Growth Fund has long been one of the success stories of KiwiSaver, reliably at the top of performance tables in its category and delivering strong returns year after year.

While it's still the best performing growth fund over 10 years, with a return of 10.2 percent a year, it was the worst performer over the most recent three months according to research firm Morningstar, returning 5 percent compared to 12.5 percent for the best performer.

It was 28th over one year, with a return of 7.8 percent, compared to 21.5 percent for the top fund.

Steven Le, associate director at Morningstar, said Milford had taken a deliberate step back to a "somewhat defensive" position relative to other fund managers in terms of its allocation to technology and the US, both of which have been strong performers recently.

But he said Milford was still a strong manager. "They do a lot of good things, robust research, they cover a lot of ground. They have boots on the ground in several regions including Australia and the research they conduct is quite comprehensive. We think they're doing good things and we have a positive view of them as a business as well as a positive view of the strategy."

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There have been concerns that the fund has become too big. Le said those were legitimate because as funds grew larger investment managers were forced to extend their reach.

Since 2020, New Zealand equities exposure in the fund had more than halved. He said that trend was likely to continue as Milford tried to manage capacity in smaller local markets.

"Milford is undoubtedly a major player in the New Zealand market. The scale and growth of the business have enabled ongoing investment in its research and investment capabilities over time, which are key contributors to our positive view of the business and a number of its strategies.

"That said, the considerable growth of the business and several of its strategies does come with associated risks. In particular, the firm has expanded into new segments, such as global equities, and when a fund manager broadens its capabilities beyond its traditional areas of expertise, it is something we pay close attention to. To date, we have not identified any issues that we think would materially impact investors, but it's an area we are actively monitoring."

He noted that Milford's wide-ranging mandate for the fund allowed it to change its split between growth and income assets with discretion.

The allocation to equities fell as low as 60 percent in December 2022, while it sat at 76.3 percent as of November 2025. Le said although reduced US equities exposure could dent returns, as in recent times, it was beneficial during the April period last year when the fund returned 0.1 percent when the category index fell 1.6 percent.

Milford recently held a webinar for financial advisers about the fund, at which they were told that Milford intended to stick with its strategy, which aimed to deliver 10 percent annual returns over a seven-year period.

Milford head of KiwiSaver Murray Harris said the session was an opportunity for advisers to hear directly from and ask questions of the investment team about recent performance, portfolio positioning, the market environment and the outlook for the strategy. "Advisers place significant trust in us when recommending our funds to clients, and it is important that we are open, accessible and transparent about performance, investment decisions and portfolio positioning."

Milford said it had seen some movement of investment funds into higher-risk categories, such as people moving from growth to aggressive, and balanced to growth.