NZ regulator flags growing KiwiSaver exposure to illiquid private markets
Mortgage and financial advisers may soon field more questions from clients about KiwiSaver growth strategies, as New Zealand’s regulator flags a gradual move into private assets.
The Financial Markets Authority (FMA) says most KiwiSaver providers expect to increase their exposure to private equity, private debt, and unlisted infrastructure over the next three years – a shift that could influence long‑term wealth planning for first-home buyers and property investors.
FMA’s new snapshot report shows that where private assets are held in retail KiwiSaver funds, they currently make up less than 5% of total assets under management on average.
Across 97 retail funds that invest in private assets, the average exposure is just under 8% of AUM, falling to just under 5% once specialist private‑asset‑only funds are excluded, and Reserve Bank data put private assets at only 2.4% of total KiwiSaver balances as at June 2025.
John Horner (pictured), the FMA’s director of markets, investors, and reporting, said the findings confirm that New Zealand is likely to follow offshore patterns.
“Private asset investments can offer diversification and long-term value for New Zealand investors,” Horner said in a media release, but stressed that outcomes must be “carefully considered as the extent of exposure to specific risks grows”.
Valuation risk in focus as allocations rise
The regulator is broadly comfortable that providers are using independent valuers, recognised valuation methods and existing governance frameworks. However, the review also highlighted gaps that need attention before private asset holdings scale up.
Infrequent valuations can leave unit prices stale and produce inconsistent results between investors entering or exiting funds at different times, while some managers have limited visibility over the assumptions their external valuers are using.
FMA notes that a small number of directly held investments are still only independently valued once a year and that some managers lack formal triggers for out‑of‑cycle valuations, increasing the risk that investors could trade on outdated prices.
Conflicts of interest – particularly where related parties are involved – and patchy disclosure to investors about how private assets are valued were also flagged as areas for improvement.
Horner said that as investment grows, “professional approach to valuation practices together with good governance will be critical for maintaining investor confidence.”
What it means for investors
The move into private assets adds another layer of complexity for KiwiSaver members saving for deposits or retirement. Illiquid holdings can support long‑term returns, but they rely heavily on robust valuation practices and clear communication so investors understand the trade‑off between potential growth and transparency.
FMA says it will continue engaging with KiwiSaver providers and supervisors to lift standards, encouraging measures such as out‑of‑cycle valuation triggers and stronger oversight of third‑party valuers as the sector’s private market exposure grows.
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