The FMA does a lot of good work, and their recently released report, Private assets in managed funds – Investment landscape and valuation practices (April 2026), is a good example of that. In my view this is a timely report in the evolution of the New Zealand investment industry. Private markets will play an increasing role within portfolios across the sector, including KiwiSaver funds, and the FMA will have an important role to play as the industry matures and these asset classes become more mainstream.
You can access the full report here.
As private asset allocations grow globally and as interest from local fund managers increases understanding current practices and where risks may emerge is useful groundwork. This is also relevant with the growth in New Zealand’s Active Investor Plus (AIP) programme (the investment visa category designed to attract capital into New Zealand).
The FMA surveyed 30 managed investment scheme (MIS) managers in July 2025, with 16 responding. Of those, seven reported some exposure to private assets.
What are private assets?
Private assets are investments not traded on public exchanges. They span five main categories: private equity (shares in unlisted companies), venture capital, private debt (credit), private real estate, and private infrastructure.
Globally, private markets have grown dramatically, more than tripling over the past decade to around $15 trillion and are forecast to double again in the coming decade.
Historically, access to private assets has been the domain of large institutional investors: sovereign wealth funds, endowments, and superannuation funds. But technological and regulatory developments are steadily opening these markets to retail investors, with the retail share of private markets estimated to rise dramatically by 2032.
New Zealand’s current exposure to private assets is low
Private assets represent just 2.4% of total KiwiSaver assets under management as at the June 2025 quarter. For context, Australian pension funds allocate around 16% to private assets. Among the funds surveyed that do hold private assets, the average allocation sits under 5% of total assets under management, with 82% of those funds below a 10% allocation.
Figure 1 from the FMA report is presented below. “Private assets as a percentage of total KiwiSaver AUM”.
All graphs in this Blog post are from the FMA report.
Investment in private assets is growing, but from a very low base
Five of the seven managers with private asset exposure have been investing in them for at least five years, suggesting this is a considered long-term strategy rather than a recent trend. Six of those seven plan to expand their allocations over the next three years. A further three managers currently without private asset exposure indicated they may begin investing in them.
How are managers gaining their private asset exposure?
Managers access private assets either directly (holding the asset themselves) or indirectly through third-party fund managers. Most of those investing in private assets use both approaches.
Direct investments are larger in total value, over $1 billion disclosed. Real estate equity is the dominant asset class at over $450 million, followed by private debt and private equity.
Indirect investments are more varied, with venture capital gaining traction in recent years, though average investment values remain modest at around $9 million per holding. Despite having the most investments by number, private equity dominates indirect holdings by value at over $162 million.
What did the FMA find on valuation practices?
Valuation of private assets is more complex than for listed investments. There is no daily market price for private assets like there is for public securities listed on sharemarkets and for debt securities traded over the counter.
Private assets managers use methodologies such as income-based, market-comparable, or asset-based approaches.
For directly held private assets, most managers are using independent valuers, cross-checking valuations using multiple methodologies, and maintaining separation of duties between those preparing and those approving valuations. Most are also following internationally recognised guidelines such as the IPEV (International Private Equity and Venture Capital Valuation) guidelines.
For indirectly held assets, most managers make valuation methodology an important part of their due diligence on third-party managers, and have processes to test the reasonableness of valuations they receive.
The FMA identified several areas worth monitoring as allocations increase:
- Some private assets are only valued annually, creating the risk of stale pricing, particularly for investors transacting just before or after a valuation date. Quarterly appears to be the emerging international standard.
- Not all managers have formal provision for out-of-cycle valuations, which is a gap given the requirement for daily unit pricing in KiwiSaver.
- For some indirect holdings, managers have limited visibility over the inputs and assumptions used by third-party valuers.
- Investor communication about how private asset valuations flow through to unit prices is inconsistent, only three of six managers with indirect holdings said they regularly communicate with investors on this.
Why this matters for New Zealand investors
As this blog has covered extensively, New Zealand investors have historically had very limited exposure to private assets (private equity, infrastructure, private debt, and real assets) that have underpinned strong long-run performance from the world’s leading endowment funds, sovereign wealth funds, and superannuation schemes.
The gap with Australia remains significant. At 2.4% versus roughly 16%, this is a structural difference in how retirement savings are invested. Whether that gap closes, and how quickly, will depend on fund managers being confident they have the right governance, valuation, and risk management frameworks in place to do it well. Therefore, the FMA report is a timely and useful contribution to that conversation.
The direction of travel is clear. Six of seven managers surveyed plan to grow their private asset allocations, and global private markets continue to expand. Getting the foundations right now, while allocations are still modest, is the sensible approach.
Relevance for New Zealand’s Active Investor Plus programme
This report also has direct relevance for participants in New Zealand’s Active Investor Plus (AIP) programme, the investment visa category designed to attract growth-oriented capital into New Zealand.
The AIP programme’s Growth category is heavily weighted toward private markets. Eligible investments include private equity, private debt, and venture capital, the asset classes that sit at the heart of this FMA report. For many AIP investors, managed funds investing in these areas are a natural and practical pathway to meeting their investment requirements, and the amounts flowing into this part of the New Zealand funds management industry are growing significantly.
That growth matters beyond the AIP programme itself. The capital flowing in through this channel is helping to build the scale and capability of New Zealand’s private equity and private debt managers. Private debt in particular stands to benefit. As local managers build longer track records, deeper expertise, and more robust operational infrastructure, including the valuation governance frameworks examined in this FMA report, the asset class becomes more credible and accessible for a broader range of Kiwi investors.
This has important long-term implications. A more developed and well-governed private markets sector in New Zealand creates the conditions for greater acceptance of these asset classes within KiwiSaver funds and client portfolios more broadly. The hurdles to inclusion, concerns around illiquidity, valuation complexity, and governance, become easier to address as the industry matures. In that sense, the AIP programme is not just meeting the needs of a specific category of investor; it has the potential to contribute to the development of a more diversified and sophisticated investment ecosystem that will ultimately benefit all New Zealand investors.
That makes the FMA’s decision to examine valuation practices now, before allocations grow substantially within KiwiSaver, well timed. A well-functioning private markets sector is in the interests of all participants, including the growing number of AIP investors who are making New Zealand private assets a meaningful part of their portfolios in some instances.
Further reading: why Kiwi investors may be missing out
If you’d like to understand more about the case for alternatives, which includes private assets, in a diversified portfolio, and why New Zealand investors have historically been underexposed, the following posts from the Kiwi Investor Blog are worth revisiting:
A framework for including alternatives in a portfolio — Provides a practical framework for thinking about how alternative assets, including primate markets, can be incorporated into a diversified portfolio. Covers the key considerations around asset class selection, portfolio construction, and implementation, and makes the case for why a structured and deliberate approach to alternatives, rather than ad hoc allocations, is more likely to deliver the diversification and return benefits that these asset classes can offer.
Are KiwiSaver Funds, NZ Endowments, and Family Offices missing out on the benefits of Private Investment? Makes the case that KiwiSaver funds are significantly underweight private investments and alternatives relative to Australian peers, and the implications for long-run portfolio performance.
KiwiSaver Balanced Fund strategic asset allocation analysis A detailed look at how New Zealand balanced funds are constructed, showing the heavy reliance on equities as the dominant growth driver, contrasted with the more diversified approach of comparable Australian funds.
Optimal private equity allocation Covers research on building and maintaining a private equity allocation within a well-diversified portfolio, and why many KiwiSaver providers may be overestimating their liquidity constraints.
Adding alternatives to an investment portfolio A foundational post on the diversification benefits of alternatives, covering downside protection and the case for broadening asset class exposure beyond traditional equities and fixed income.
Happy investing.
Disclosure
Please read the Kiwi Investor Blog Disclosure Statement before relying on any information in this post. This blog is written for information and discussion purposes only. Nothing in this post constitutes financial advice. All investment strategies involve risk, including the loss of principal. Readers should seek independent financial advice before making any investment decisions. The views expressed in this post are my own and do not represent the views of my employer or any organisation with which I am affiliated.
Kiwi Investor Blog 