The gap that familiarity built
RNZ tracked a real personal share portfolio from 2017 through to April 2026, and the numbers are a quiet indictment of how many New Zealanders invest. The lifetime return was just over 26%, less than 3% a year, underperforming conservative managed funds. Of 13 holdings, only six were in profit. Ryman Healthcare was down 57.66%, Air New Zealand down 40%, and Fletcher Building down 10%.
The thread running through the portfolio was not a valuation framework or a sector thesis. It was recognition. The airline, the retirement village operator, the construction conglomerate, the bank, all names lifted straight from daily life and the business pages. Koura founder Rupert Carlyon put a figure on the cost of that habit: two global index funds instead could have returned up to 130% over the same decade.
Recognition is not research
Kernel founder Dean Anderson is blunt about the mechanism. “Familiarity can make you feel more confident, but it doesn’t tell you whether a company is well priced or likely to grow,” he told RNZ in April 2026. “Markets already reflect what is publicly known, so what investors are often bringing is familiarity, not necessarily insight.”
His sharper line, in a separate interview, captures the post-Covid retail wave: “A mass amount of people bought up post-Covid in something they knew and then share prices dropped… that doesn’t make it a good investment.” He offered a single portfolio as proof of the coin-flip nature of the strategy: “Intel up 197 percent, Me Today down 94 percent, both picked by the same person with the same good intentions.”
The academic term is home bias. University of Auckland finance associate professor Gertjan Verdickt identifies it as a structural pattern: New Zealanders overweight domestic and familiar stocks and forgo the diversification benefit of holding international equities closer to their global market-cap weight.
Why the strategy is worse here than anywhere
New Zealand is a particularly bad place to run a buy-what-you-know approach because the domestic market is tiny and extraordinarily concentrated. The NZX represents only 0.1% of global equity markets, and its top 10 names make up 76% of the MSCI New Zealand IMI index, the highest concentration of any market in that research. South Korea was next at 50%, Australia at 46%. The global benchmark carries just 14% in its top 10.
So a portfolio of recognisable Kiwi names is not even a diversified domestic bet. It is a heavily concentrated wager on a handful of companies in a market that is a rounding error of global capital, weighted toward utilities, telcos and property that have historically lagged global tech and pharma on capital growth.
Most companies never generate wealth
The uncomfortable follow-on is that brand size and wealth creation barely correlate. RNZ’s later analysis found that between 1990 and 2020, just three companies, Spark, Fisher & Paykel Healthcare and Meridian, accounted for roughly 30% of all gross wealth creation in the NZ market. Fewer than half of individual stocks beat the risk-free rate over any timeframe; the market’s positive return exists entirely because of a small number of outliers.
Pie Funds founder Mike Taylor explains why: “Capital markets are efficient at directing resources toward the strongest businesses, and competitive dynamics naturally result in a small number of dominant companies pulling away from the pack.” Picking by recognition risks both missing those outliers and loading up on the underperformers.
There is a competition wrinkle too. The Commerce Commission’s May 2026 baseline report found competition decreasing in some industries. Investors may be mistaking market dominance in a thin domestic market for genuine quality. A company that earns well because rivals are scarce is not the same as one that earns well because it is productive, and it is more exposed to disruption and policy change.
The cost compounds
This matters more each year because the stakes keep rising. RBNZ data shows managed funds under management reached $369 billion by December 2025, up roughly $42.8 billion in a single year. And the divergence between sectors is severe. Stats NZ’s 2024 enterprise survey showed finance and insurance operating surplus up 42% while manufacturing fell 30% and agriculture 36%, with 23% of businesses posting an operating deficit before tax.
Business owners who agonise over every dollar of capital inside their own firm too often turn casual the moment they invest outside it, defaulting to names from the headlines. The data now makes that habit’s cost quantifiable. As more Kiwis accumulate serious portfolios, the price of mistaking familiarity for quality only compounds.
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