It seems the Financial Markets Authority (FMA) is heading down those lines telling fund managers what they can and can't advertise.

This week it put out a release warning about advertising short term performance returns. No doubt one of the catalysts for this was NZ Funds rather large billboard in Wellington airport promoting its 107% returns in the year ending March 31.

"The first KiwiSaver fund to deliver more than a 100% return in 1 year" the billboard crowed.

Good on NZ Funds for this result. 

Why the regulator thinks that stopping a legitimate firm, advertising a fact is a good use of its time is hard to fathom. After all the ad has the required small print about past returns not being a predictor of future returns. (And it's not all that small on a billboard this size.)

It's interesting to see how NZ Funds achieved this result, especially its use of cryptocurrency. But that is another story.

One of the ironies is that Morningstar and FE Analytics are quoted as sources for performance numbers, but NZ Funds won't turn up in these reports as it, we understand, stopped supplying performance data.

FMA director of investment management Paul Gregory says advertisements should focus on longer term returns. Maybe an extension of this argument is that research firms like Morningstar should delete any returns of less than 12 months from all its performance tables.

Investors have always chased returns and they will continue to do so. It's just human behaviour, just like it is human behaviour to try and find the lowest mortgage rates. How many people joined Milford on the back of the promotion of its strong performance over the years? I know plenty of people who have done just that.

The FMA goes on to say it "notes shifting the performance period back just one month makes a significant difference to the result."

Hey, but haven't fund managers cherry picked performance numbers ever since day dot? I've seen enough presentations over the years to have become somewhat cynical about return graphs and benchmarks used.

Anyone in the industry should be concerned about comments like this from the FMA: "Where a provider decides to, or continues to, promote the strong returns seen over the 12 months to March 31, we will be closely monitoring whether doing so potentially breaches the fair dealing provisions contained in the Financial Markets Conduct Act 2013."

A far better message from the FMA would be to make sure everyone in KiwiSaver gets professional advice.