Active Investing

Active Management

We actively manage our clients’ investments with discipline, research and a focus on long-term outcomes.

Investing is a long-term journey. Markets operate through cycles, and they can change quickly. Active management gives Milford the flexibility to make deliberate, research-led decisions based on experience of managing through many market cycles and managing risk, rather than simply accepting the market as it stands.

Hear how Milford approaches active management

What is active management?

Active management is an investment approach where experienced professionals decide what to invest in, what to avoid and when to make changes.

Rather than automatically following an index, active managers research companies, industries and markets, then continually re-evaluate them to capture opportunities and manage risk. Our approach to active management means we not only take a bottom-up approach (by carefully looking into each investment) but also a top-down approach, by looking at broader factors, including market positioning and market cycles, and the opportunities and risks these present.

The goal is to seek long-term returns, while carefully managing the level of risk each fund is designed to take.
At Milford, our team of more than 40 dedicated investment professionals across Auckland and Sydney manages more than $35 billion on behalf of our clients.

Why active management matters

Economic conditions, interest rates, technology and global events all influence markets and prices. Markets also don’t always price investments efficiently — some companies may become overvalued, while others are overlooked despite strong potential.

Our investment philosophy

Our active management philosophy is grounded in discipline, research and active decision-making with an emphasis on managing volatility (movements up and down) and risk. At Milford we take the risk to your money seriously.

As active investors, we look for situations where the market may not yet fully reflect an investment’s value or risk. We test assumptions, look beyond short-term headlines and make decisions using ongoing assessment and judgement exercised over numerous market cycles. This means we can:

- Invest in companies we believe have strong long-term potential
- Reduce exposure where risks appear too high based on our analysis and experience
- Adjust investments as conditions change
- Build diversified portfolios aligned to each fund’s objective.

Understanding our investment process

We use a structured process that combines bottom-up research and top-down analysis. We continually assess both our existing investments, market conditions and future opportunities and risks, with a focus on building value over time.

Bottom-up research

- Individual company research, including outlook, valuation and long-term potential.
- Meet with hundreds of companies each year to understand where our clients’ money should, and should not, be invested.
- Look for opportunities where the potential return is attractive relative to the risks involved.

Top-down analysis

- Evaluate the economic picture and consider how it may affect sectors, businesses and consumers.
- Use this broader market view to identify risks, test assumptions and uncover opportunities that may be overlooked.

Risk and investing timeframes – staying focused on long-term objectives

Milford’s funds may look and perform differently from market indices or other managers at different times. These differences are intentional and reflect the objectives of the fund and decisions we make for each fund.

The level of volatility or risk we take on depends on the objective of the fund. This is why choosing the fund that best suits your goal and time horizon matters. Some funds are managed to meet very near-term objectives, such as the Milford Cash Fund. Others are built for longer-term growth, such as the Milford Aggressive Fund or operate with a specific objective through all market conditions such as the Milford Active Growth Fund.

Funds with longer time horizons generally see greater volatility (movements up and down) than shorter-term funds. That’s why we believe in active management, risk management and goals-based investing.

Active vs Passive investing

Active and passive investing work in different ways. Passive investing generally follows a market index. Active management allows Milford to look beyond index weightings and assess whether an investment’s price, outlook and potential return justify the risk.

Active investing

- Investment decisions are made by a team
- Can move away from expensive assets
- Can adjust exposure to manage risk
- Focuses on fund objectives

Passive investing

- Follows an index
- Holds assets based on index weightings
- Moves with markets, both up and down
- Focuses on matching an index

What does this cost?

As with all actively managed funds, there is a fee for the work involved in researching opportunities, managing risk and making ongoing investment decisions. Milford’s fees may be higher than some lower-cost investment options, however, our focus is on the value created after fees over the term of the fund. That is why we show our returns after fees, so investors can see the true return Milford creates.

What does active management look like in practice?

Milford looks beyond the headlines

Markets can move quickly on headlines, trends or investor sentiment. We look beneath the surface to assess whether an investment’s fundamentals have changed or whether the market has overreacted.

Managing risk when markets become expensive

At times, some sectors or companies may become highly valued after strong performance. When we believe the risks outweigh the potential reward, we can reduce exposure and look for opportunities elsewhere.

Finding opportunities others might miss

We research companies, visit premises and meet with business leaders across New Zealand, Australia and global markets, drawing on our expertise to understand what may drive value.

Thoughtful adjustments as conditions change

While no investment strategy can eliminate risk or guarantee returns, active management allows us to make thoughtful adjustments when we believe it supports client outcomes, rather than holding investments simply because they are part of an index.

Managing diversification

Rather than concentrating investments in a small number of companies or sectors, we seek to build diversified portfolios that balance opportunity for reward with risk management. This ongoing decision-making sits at the heart of active management.

Frequently asked questions

Why does Milford take an active management approach?

Markets do not move in a straight line. Active management gives Milford the flexibility to make deliberate decisions as conditions change, while staying focused on each fund’s objective and recommended investment timeframe.

How does Milford make active investment decisions?

Every investment decision starts with disciplined research. We assess businesses, industries and economic trends to identify where potential rewards may justify the risks being taken. We also consider whether an opportunity is already reflected in the price.

Is active management right for me?

It depends on your goals, timeframe and tolerance for risk. Active management may suit investors who value professional expertise, ongoing portfolio oversight and the ability to respond as markets change.

What is a market index?

A market index is a measurement that tracks the performance of a group of investments, usually shares, bonds, or other securities. It is used as a benchmark to show how a particular market or segment of the market is performing. For example, S&P/NZX 50 Index tracks the performance of the 50 largest companies listed.

We invest alongside our clients

At Milford, our employees invest in the same Milford funds available to our clients. That means when clients invest with Milford, our team is on the same investment journey. We share in the same investment experience.

We believe that alignment is fundamental to putting clients first.

Talk to Milford
0800 662 345
If calling from overseas: +64 9 921 4700
Call hours: Monday – Friday, 8am – 5pm

Email us
[email protected]
If you need help choosing the right Milford fund, complete your details below and one of our Financial Advisers will be in touch.