The FMA has released its report, Private assets in managed funds: Investment landscape and valuation practices, which sets out the results of a survey of local Managed investment scheme (MIS) managers on their current private asset investments, valuation practices, and the risks that will need to be managed as allocations grow. FMA also provided a media release confirming that most KiwiSaver providers expect to increase their allocations to private assets over the next three years, in line with global trends.
The FMA's media release can be found here, and the full report is available here.
Who needs to read it? Why?
This update is relevant to MIS managers (including KiwiSaver scheme providers), fund supervisors, and their advisers. The FMA anticipates that increased investment in private assets by KiwiSaver providers, and providers should understand the current regulatory expectations, particularly around valuation practices, governance, and investor communication.
What does it cover?
The FMA's media release confirms that while overall KiwiSaver exposure to private assets remains low by international standards, most providers surveyed expect to increase their allocations over the next three years.
The accompanying report is based on a voluntary survey and provides the details behind these findings. Key points include:
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KiwiSaver's private asset exposure remains low by international standards. Accounting for less than 5% of total assets under management on average were held by survey respondents – after excluding 3 private-only funds. According to the Reserve Bank of New Zealand, in the June quarter of 2025, private assets’ share of KiwiSaver’s total Assets under management (AUM) was only 2.4%, compared to approximately 16% for Australian pension funds as at December 2023. The FMA notes that other jurisdictions also have greater levels of private investments in their retirement savings than New Zealand.
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Private asset exposure is a blend of direct and indirect. The FMA observed two models of how managed funds gain exposure to private assets, either as a direct investment in the private assets, or through investment in assets managed by another (related or non-related) fund manager, i.e. indirect investments. A little over half of respondents investing in private assets hold private asset investments both directly and indirectly. Each approach gives rise to potential issues to be managed.
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Most providers plan to increase allocations. All the respondents who currently invest in private assets have made at least one new investment within the last three years, and most expect to expand further in the next three years. Some providers who currently hold no private assets have indicated they may begin investing within that period.
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Valuation practices are generally sound, but improvement is needed. The FMA found encouraging signs in how valuation risks are managed, with most providers following international standards, using independent valuers, recognised methodologies, and strong governance frameworks. However, the FMA highlighted areas where improvement is needed, including:
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clearer communication to investors about how the valuation frequency of indirect investments affects daily unit pricing;
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the risk of inequitable investor treatment where valuations are infrequent (e.g. annual);
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a lack of formal provision for out-of-cycle valuations;
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greater visibility into the inputs and assumptions used by external valuers for indirect investments; and
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better identification and management of conflicts of interest, particularly where management fees or performance incentives are tied to asset valuations.
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Ongoing FMA engagement. The FMA has indicated it will continue to engage with KiwiSaver providers and supervisors to support appropriate valuation practices and encourages providers to consider out-of-cycle valuation triggers, strengthen oversight of third-party valuations, and communicate more clearly with investors.
Our view
We agree with the FMA that it is encouraging to see that the investment in private assets is part of a long-term investment strategy, rather than a reactive response to market conditions. KiwiSaver is a long-term game.
The Reserve Bank’s numbers, as well as the survey responses, New Zealand's KiwiSaver private asset allocation remains well behind comparable jurisdictions, and the FMA's proactive engagement with industry on valuation practices and governance is a welcome step.
We support the FMA's approach to engaging with industry on valuation practices. We also support further work on governance including the management of potential conflicts of interest, collaboratively with industry. It is vital, whether or not the proportion invested in private assets grows, that the FMA is actively in dialogue with providers.
Still open for discussion is the question as to whether legislative change to address the structural barriers that continue to act as disincentives to greater private asset investment in KiwiSaver. In that regard we refer to the 2025 consultation by MBIE on possible regulatory changes to enable KiwiSaver providers to increase investment in private assets, and the analysis undertaken on behalf of The Centre for Sustainable Finance in 2023. See here and here.
These identified potential disincentives including the account portability requirements (in particular the 10 business day transfer timeframe), the limited availability of liquidity management tools suited to illiquid asset classes, and the current regulatory settings around fees which may discourage providers from pursuing private asset strategies. Further targeted reform in these areas would continue to encourage KiwiSaver providers to invest in private assets for the long-term benefit of members, and potentially the New Zealand economy.
Finally, it is important to bear in mind, when considering the findings that while the FMA sent its voluntary survey to 30 MIS managers who were KiwiSaver providers, 16 responded, with only 7 reporting some existing private asset investments. The FMA points out a 53.3% response rate provides a sufficient sample size, and is confident that they received responses from a significant majority of fund managers who invest in private assets, and that the non-responses likely reflect fund managers who don’t presently invest in private assets. However, we note there is still a material risk of self-selection bias on the part of the respondents.
What next?
If you have any questions about the FMA's media release or report, please contact one of our experts.
This article was authored by Olivia Maher, a solicitor in our Financial Services team.
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