In its latest review Morningstar has dropped a star each off AXA New Zealand, ANZ Funds Management and Colonial First State.
Colonial First State and ANZ Funds Management have each seen their ratings drop from four to three stars while AXA has moved from a three to a two star rating.
Meanwhile, BT Funds Management and Tower Managed Funds have both retained their four star ratings.
Morningstar managing director Graham Rich says AXA and ANZ have had their ratings dropped primarily due to poor performance.
He says while there are "glimmers" of good performance, overall the performance has been poor relative to their peers.
Colonial First State's ratings have dropped due to uncertainty related to Commonwealth Bank of Australia's takeover over of Colonial.
CFSI New Zealand chief executive Bruce Abraham says the merger "combined, with the fact that (Morningstar) have yet to research in detail the recently announced outsource of the investment management of Australasian Shares to Colonial First State (Australia), has resulted in an overall lowering of the company rating."
Abraham expects the downgrade will have little impact on funds flow.
Tower, meanwhile, expects its rating to increase once it has integrated Tower Managed Funds and Tower Investment Savings.
AXA New Zealand director Personal Funds Management Mark Pickering says AXA's downgrade was "no surprise" as several of the company's older products had been poor performers.
"We have anticipated the re-rating given our investment performance in products which have held low levels of international shares during a period when markets out performed the New Zealand market."
He says "the downgrade is of concern but we have been proactive in taking steps to address the key issues."
AXA's downgrade comes at a time when the firm is trying to build up its funds management business.
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