Value of managed funds

IBISWorld forecasts the value of managed funds to rise by 8.4% in 2023-24, to reach $285.0 billion. A recovery in the NZX 50 index, following a decline in 2022-23, is expected to support growth in the value of managed funds. The largest growth in 2023-24 is expected to be in Kiwisaver net assets and growth across listed share holdings in managed funds.

The NZX 50 index has been relatively volatile over the past two years compared with earlier in the past five-year period. This volatility has largely been due to global economic uncertainty caused by the COVID-19 pandemic, high inflation and a series of supply chain issues and price spikes for key commodities like crude oil. The pandemic had a significant impact on equity markets around the world, with NZX 50 index falling below 8,500 index points in March 2020. Following this, the NZX 50 recovered rapidly, reaching a record high of 13,644 index points in January 2021. However, the index has declined from this peak as investor uncertainty has risen in the face of high inflation and rising interest rates.

The value of funds under management has risen rapidly over the past five years, largely on the back of strong domestic sharemarket performance. Despite volatility caused by the pandemic, the NZX 50 index has grown at a double-digit rate over the period, supported by consistent cuts to the official cash rate by the RBNZ, which made borrowing cheaper and equity investments more attractive. This drove asset price growth and increases in the value of managed funds over the past five years. The RBNZ moved to increase the cash rate from late 2021 onwards, and this has led to growth in managed funds slowing but remaining positive. The strong uptake of KiwiSaver over the past five years has supported continued growth in the value of managed funds even in 2022-23 when the NZX 50 index declined. The New Zealand Government provides several initiatives to boost enrolment in KiwiSaver, including the KiwiSaver HomeStart grant, the ability to make withdrawals for first home buyers and tax credits. Overall, IBISWorld forecasts the value of managed funds to grow at a compound annual rate of 8.5% over the five years through 2023-24.