By Allie Black, Financial Adviser, Investment | The HTL Group
If you've been keeping an eye on your portfolio lately, there's a lot to process. The OCR has risen for the first time since May 2023, shifting the ground under term deposits and fixed-income allocations. KiwiSaver contribution changes are on the table for 2027. A November election is adding its own layer of uncertainty. And in global equity markets, something is happening that most everyday NZ investors haven't been briefed on — and that I think deserves more attention than it's getting.
For most people, no dramatic action is needed. But right now is a good time to think about whether your investment approach is still doing what you need it to do.
Specifically — is your portfolio actually as diversified as you think it is?
When 'diversified' might not mean what you think
The issue is concentration — and it shows up in an index that many NZ investors are exposed to without realising it.
Take the S&P 500 — the index that tracks the performance of the 500 largest publicly traded companies in the United States. Around 40% of the entire index's value currently sits in just the top 10 companies.
"If you have $1,000 invested in a fund that tracks this index, $400 is allocated to just 10 companies."
That might not sound alarming until you consider what it means in practice. Negative news, regulatory fines, or earnings misses from just one or two of those tech giants can drag down your entire portfolio — regardless of how well the other 490 companies are performing.
The diversification you thought you had may be less robust than it appears.
What you can actually do about it
One way to manage concentration risk is to ensure your diversified portfolio includes active fund managers alongside any index-tracking funds.
An index fund, by design, cannot decide to reduce its exposure to a stock or sector — it tracks the index as it is. An active fund manager can make independent decisions based on their long-term outlook. They can choose to underweight or avoid certain stocks entirely when they see concentration risk building.
This is another layer of risk protection — one that can strengthen a portfolio's resilience when market conditions change quickly. It doesn't mean index funds are bad. They have a place in many portfolios. It means it's worth understanding what you own, and whether the balance still makes sense for your goals and your risk tolerance.
What a managed approach has delivered in practice
For investors weighing whether adding active management is worth it, the returns over the last five years are instructive. A common point of comparison is the term deposit — something many NZ investors default to when they want lower risk. But when you look at the numbers properly, including tax, the gap is larger than most people expect.
| Term deposit | Managed PIE portfolio | |
|---|---|---|
| Average gross return | ~3.77% pa | 4.70% pa |
| Tax rate | 39% RWT | 28% PIR (capped) |
| Net return | ~2.30% pa | ~3.38% pa |
Term deposit rates based on approximate average gross return for a 1-year New Zealand bank term deposit, rolled annually, 2021–2026. Managed portfolio is a moderate investment portfolio with limited equity exposure and a diversified range of income assets; return of 4.70% pa is after fees over the same period. Net figures modelled on a $500,000 starting principal. All figures are approximate and illustrative.
On a $500,000 portfolio over five years, that difference adds up to approximately $30,000 — not from taking on more risk, but from a more diversified structure and a more tax-efficient one. Term deposit rates also moved significantly through this period, from near 1% in 2021 to peaks of 5.5–6% in 2023 and back down again, with no flexibility to position differently along the way. A managed portfolio can adapt. A locked rate cannot.
Whether adding an active component makes sense for your portfolio depends on your goals, your existing mix, and your risk profile — it's a conversation worth having with your adviser.
When markets get noisy, you don't have to figure it out alone
Financial pressure is real right now — and it's showing up in the data. New Zealand's Financial Ombudsman has recently reported a significant increase in people seeking help, reflecting the genuine strain many households are under.
"The surge in disputes shows the real-world impact of ongoing financial stress for some New Zealanders. More people are turning to us when they experience hardship or service issues and feel they have limited options. Our job is to listen to both sides and help reach a fair and practical solution."— Susan Taylor, Financial Ombudsman
What that tells us: more people are navigating complexity — KiwiSaver hardship questions, uncertainty about where their investments stand, what changes in the market actually mean for them — and many feel they don't have someone in their corner.
That's exactly what a good adviser relationship is for. Not just the strategy conversation, but being the person you call when you're not sure what to do next.
Ready to check in on your investment strategy?
Have a chat with our investment team — no obligation, no jargon. Just a straightforward conversation about where you're at.
The HTL Group advisers work with clients across Taranaki, Central Otago and throughout New Zealand, with offices in New Plymouth and Cromwell.
Returns used in this article are modelled and illustrative, based on average New Zealand 1-year term deposit rates and a moderate diversified income portfolio over the five-year period 2021–2026. Individual returns will vary. Past performance is not a guarantee of future returns. This article is general in nature and does not constitute personalised financial advice. HTL Group Limited is a registered financial advice provider. A disclosure statement is available here.
