It's been a challenging time for active fund managers, with profits taking a hit due to 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 (read on for more category winners).
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 in order 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.
"We've obviously seen the rise of index or passive investment funds and you've seen in the Australian equities space a number of managers going out of business for a variety of reasons but one is certainly the fee pressure.
"At the same time, it has been a period where passive has actually done very well from a return perspective. Most active managers haven't been anticipating falling bond yields in fixed income to the degree that it happened so in many markets, it's the index funds have done better."
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 process, before being analysed on a performance based approach. Overseas funds needed to demonstrate a 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.
"So we look at manager performance over a medium-term horizon and at the same time look at the risk adjusted performance. It is possible for managers to take a lot of risk and generate good performance, but when you are doing that it usually is a recipe for volatility in year-to-year performance. So that's what we are trying to avoid."
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, which headed of Fisher Funds and Booster Investment Management for that title.
Castlepoint Funds Management also had a good night, winning the Boutique Fund Manager of the Year Award and the Australasian Equities category.
NZX's Smartshares, which specialises in passive investment funds, took home the New Zealand Equities award and the Australian Equities Award.
Full list of winners:
• Fund Manager of the Year – Milford Asset Management
• KiwiSaver Manager of the Year – ASB Group Investments
• Boutique Manager of the Year – Castlepoint Funds Management
• New Zealand Equities – Smartshares
• International Equities – Magellan Asset Management
• Australasian Equities – Castle Point Funds Management
• Australian Equities – Smartshares
• Alternatives – AMP Capital
• Diversified – Milford Asset Management
• International Fixed Interest – Mercer
• New Zealand Fixed Interest – Milford Asset Management
• International Property – Fisher Funds Management
• Australasian Property – Forsyth Barr Investment Management