FMA takes pulse of KiwiSaver private assets
KiwiSaver managers are likely to expand their allocation to private assets in the coming years, the Financial Markets Authority says, but one investment adviser says there should be more demand for it than there is.
Thursday, April 16th 2026, 4:33AM
The FMA has released a report on private equity in managed funds.
It said while New Zealand managed investment scheme and KiwiSaver funds had relatively low exposure compared to their counterparts in other countries, that was likely to grow.
The regulator surveyed managers who are also managers of KiwiSaver schemes mid last year, asking about their private asset invsetments. Sixteen responded and seven said they had some level of private asset investment.
Five had been investing in private assets for at least five years. Six said they planned to expand their private assets investments in the next three years.
Managers held private assets both directly and indirectly.
Private equity, private debt and real estate equity were the most common directly held private asset investments. Real estate equity was the largest in terms of value.
The need to regularly value private assets for the liquid KiwiSaver market has been cited in the past as a hurdle for many managers.
Of the five managers who held direct investments, there were 15 individual investments covering most asset classes. Of these, eight were valued by an in-house valuation team, five by an independent valuer and two using other approaches.
The FMA said it was encouraging to see most managers had provision for valuations outside a regular cycle, but it was concerning that some managers did not have the capability.
“KiwiSaver funds need to provide daily unit pricing for transfer and withdrawal purposes. In periods of high volatility or in response to market events, the value of the private asset may change significantly. Fund managers need appropriate arrangements in place to implement mid-cycle adjustments to reflect the value of the fund’s assets, for example where the asset’s value materially changes between scheduled valuations.
“Managers without provision for valuations to occur outside of the regular valuation cycle risk a disconnect between the private asset’s actual value and the value reflected in the unit price of the fund. Investors may be buying or selling units of the fund at a price that does not reflect a reasonable value of the fund’s assets.”
The FMA said all survey respondents highlighted that there was a conflict of interest risk when key personnel of an investee fund or company were also directors or serving as consultants.
“It is reassuring that all respondents had some policies in place to help manage this risk, either maintaining a conflict register for continuous disclosure, or excluding these personnel from valuation decision making altogether.
“Conflicts of interest can also arise when management fees or staff performance incentives are tied to asset valuations rather than to the committed capital. This is a key risk for private asset investment, especially when asset valuation is done in house or by a related party. “
Edward Glennie, an investment adviser with Genesis Advice, said he thought there should be more demand for private asset investment from investors.
He said the FMA seemed too focused on valuation issues and the conflict of interest concerns.
“In my old job at Hobson Wealth, I constantly tried to encourage more demand because the asset class is so misunderstood. High net worth investors understand it and if they use the right manager have had some phenomenal returns.”
John Horner (pictured), the FMA’s director of markets, investors and reporting, said there were encouraging signs of maturity in how risks were managed in what was likely to be a growing area.
“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.
“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.”
Horner said when it came to conflicts of interest, it was a case of managers knowing what to look for and where to look for it and to ensure the conflicts were carefully managed to prevent harm to consumers.
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