Value of managed funds

IBISWorld forecasts the value of managed funds to appreciate by 2.2% in 2025-26, spurned by several successive cuts to the official cash rate, to reach $337.3 billion. The value of managed funds in New Zealand has expanded in recent years despite changing economic conditions driving volatility. Early in the period, ultra-low interest rates and solid global equity markets drove a rapid strengthening of funds under management as institutional and retail investors alike sought higher returns in growth assets. KiwiSaver remained a key engine of growth as higher enrolments and greater contribution levels reliably added capital despite periods of market volatility.

In late 2021, the Reserve Bank of New Zealand began lifting the official cash rate to combat inflation, significantly altering investment dynamics. Higher rates reduced the relative appeal of equities and property, as investors could instead count on low-risk fixed-income securities. Managed funds still grew in value, but at a slower pace, as capital gains in domestic shares flattened and, at times, receded.

Like superannuation in Australia, New Zealand managed funds have comprised foreign assets more as time passes. This diversification away from domestic assets has created a divide between growth in the NZX 50 and the value of managed funds in the country. According to management companies like Generate and NZ Funds, New Zealand managed funds are increasingly turning to foreign assets to make up their investment portfolio. This trend means that fluctuations in global markets like the NASDAQ and S&P 500 have had a greater influence on the value of New Zealand managed funds than in the past. Overall, IBISWorld forecasts the value of managed funds to swell at a compound annual rate of 7.2% over the five years through the end of 2025-26.