How We Review and Monitor Managers to Protect Investor Outcomes
One of the most important responsibilities we carry at Isbister’s KiwiWrap KiwiSaver is making sure that every dollar of our members’ money is working as hard as possible. Achieving strong long-term investment outcomes isn’t just about choosing good managers at the outset—it’s about constantly reviewing, monitoring, and holding those managers accountable to ensure they are delivering in line with, or better than, their mandates.
We have built a culture around constant vigilance, where we take an active role in evaluating the performance of managers across the funds we offer. Our process involves detailed performance reviews, ongoing engagement with managers, and an expectation of transparency. This commitment ensures that investors’ KiwiSaver accounts are positioned to perform consistently with expectations over both the short and long term.
Regular Reviews and Accountability
When we appoint a fund manager, it is not a “set and forget” decision. Investment markets are dynamic, and even the most experienced managers face periods of challenge. What matters to us is whether a manager has the skill, discipline, and process to generate value for our investors consistently.
To achieve this, we conduct regular performance reviews where we compare managers’ results against their stated benchmarks and mandates. We don’t just look at headline returns—we dig deeper, examining risk-adjusted outcomes, consistency of performance across different market cycles, and the degree to which a manager is sticking to their stated investment style.
This rigorous process allows us to separate genuine skill from luck. When managers demonstrate the ability to add consistent value, we continue to back them. But if performance drifts away from expectations, or if we lose confidence in their process, we act decisively—either by reducing exposure or, in some cases, replacing them.
Information Flow and Transparency
Our ability to carry out these reviews effectively is supported by the regular updates and detailed information we receive from our managers. This includes monthly and quarterly reports, investment commentary, and direct dialogue with portfolio managers themselves.
By monitoring not only results but also how decisions are made, we ensure that we are doing the heavy lifting on behalf of investors. This means our members don’t need to worry about whether their KiwiSaver accounts are being managed appropriately—we are watching closely every step of the way.
This flow of information and transparency enables us to identify trends early, evaluate whether a manager is staying disciplined, and ultimately ensure that all decisions taken are in line with our investors’ best interests.
Example: Schroders International Equity Portfolio
A recent example that illustrates this well is the Schroders International Equity Portfolio, which we recently included in our KiwiSaver platform. Schroders has consistently demonstrated the ability to add value over short, medium, and long-term horizons.
Looking at their performance:
- Unhedged Portfolio: Over one year, Schroders delivered a net return of +18.56%, outperforming the benchmark at +16.27%. Over three months, they returned +13.75% against +12.57%, and since inception, they have outperformed by an annualised +1.67%.
- Hedged Portfolio: Over one year, Schroders delivered +15.74%, exceeding the benchmark’s +14.11%. Since inception, they have generated an additional +0.97% per year versus the benchmark.
While we place significant emphasis on finding high-quality active managers who can outperform consistently, we are also pragmatic. If we cannot identify managers who we believe have a sustainable edge, we will simply buy the index.
This approach ensures that investors can access the returns of the broader market in a low-cost and efficient way, without paying active management fees where we do not see value being added. This disciplined approach—combining active where it works, and passive where it makes sense—ensures investors benefit from the best of both worlds.
Disclaimer: This newsletter is meant to be informative and engaging, hopefully not a cure for insomnia. Please don’t take this as personalised financial advice. Discuss your situation with an Advisor. This is where I need to say past returns are no guarantee of future returns.
