"We consider that our active equity portfolio is adequately catered for through our in-house team and mandates with our existing two managers [Mint Asset Management and Devon Funds Management]," she said.
"We have no current plans to appoint a third external fund manager to replace Milford. The parting is an amicable one and we expect that what has been a long-standing relationship will continue cordially, albeit not in an investor/manager sense."
Milford managing director Anthony Quirk said the company had decided to focus resources on other areas including KiwiSaver and private wealth.
"We've got a lot of momentum in our business at the moment," Quirk said, adding that funds under management were approaching record levels, at $3.6 billion, including over $1 billion in New Zealand equities.
"We have to manage our capacity and we just didn't have capacity for a large wholesale account. That was the reality."
The firm currently manages over $600 million in KiwiSaver funds.
"We've got nice market positions but smaller market shares than we would like," Quirk said.
"We're not going to be a mass-market player in KiwiSaver - we're not going to take on the banks - but we've got a niche that we think we can get larger."
Private wealth was another big opportunity.
"That's a bit of a hidden jewel within our business," Quirk said. "We've got $850 million under private wealth advice and there's certainly scope to grow that."