Media Release
MR No. 2026 – 16
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has released a report providing a snapshot of how KiwiSaver providers are investing in private assets. While overall exposure to private assets remains comparatively low, most providers told the FMA they expect to increase allocations over the next three years.
Where private assets are held in retail funds, they account for less than 5 percent of total assets under management, on average. Most KiwiSaver providers plan to increase allocations to private assets over the next three years, aligning with global trends of investment in private markets growing significantly as fund managers seek higher returns and more diversification.
John Horner, Director Markets, Investors and Reporting, says the findings confirm the global trend of increased investment in private assets is likely to occur in New Zealand also, and while it is early days, there are encouraging signs of maturity in how risks around valuation are identified and managed.
“Private asset investments can offer diversification and long-term value for New Zealand investors. Our goal is to ensure investor outcomes are carefully considered as the extent of exposure to specific risks grows. We want to see KiwiSaver providers exploring private asset investment opportunities while ensuring that risks are carefully managed, particularly around valuation, frequency of investment review, and conflicts of interest,” he says.
While the providers surveyed generally follow international standards, using independent valuers, recognised methods, and strong governance, the survey found a need for greater awareness of the challenges around valuation of private assets. Infrequent valuations can result in outdated pricing and inconsistent outcomes for investors. Some providers also have limited insight into inputs used by external valuers. Conflicts of interest, especially in related party situations, need to be well managed and communication to investors about valuation approaches and risks is not always sufficient.
“As investment in private assets increases, professional approach to valuation practices together with good governance will be critical for maintaining investor confidence. We encourage providers to consider out-of-cycle valuation triggers, strengthen oversight of third party valuations, and communicate more clearly with investors,” says Mr Horner.
Private assets include private equity, private debt, venture capital, private real estate, private infrastructure, natural resources and other non-exchange traded assets.
The FMA will continue to engage with KiwiSaver providers and supervisors to support an appropriate standard of valuation practices across the sector.
The full report Private assets in managed funds: Investment landscape and valuation practices is available on our website.
Ends
Media contact:
[email protected]
Non-media queries:
[email protected]
