Several KiwiSaver fund managers are reducing their holdings in large technology and artificial intelligence companies as market volatility increases.
The shift follows a tech sell-off earlier this week that affected global markets. Tech and AI firms have produced strong returns in recent years but their share prices experience large swings.
Milford Asset Management's Murray Harris said the firm adjusts its tech and AI exposure based on valuations, prices, risk and potential returns. "Since the March selloff around the Iran war breaking out, we had been generally adding to AI and tech positions but have paused in the last few weeks after the big run they've had," Harris said.
Milford has dropped in KiwiSaver performance rankings over the past year after being a long-time top performer in the growth category. Some commentators attribute the decline to lower tech stock exposure compared with passive funds that track indexes.
Generate's Greg Smith said the firm has reduced positions where valuations became stretched after extraordinary share price runs this year. "We haven't taken a view to limit exposure to AI as a theme. If anything, we remain very positive on the long-term opportunity, as we think AI will continue to be one of the most important drivers of economic and corporate change over the coming decade," Smith said.
Kernel founder Dean Anderson said active managers face challenges making ongoing choices that serve investors well. Every active fund domiciled in New Zealand investing in global shares underperformed their benchmark over the 10 years to December 2025.
University of Auckland senior finance lecturer Gertjan Verdickt said AI-related investments have been very volatile and it is reasonable for managers to avoid them. "I would prefer passive management because you lower overall idiosyncratic risk and increases the likelihood of having these high returning stocks," Verdickt said.