RIAA broadly supports capital market reform to remove policy barriers for KiwiSaver funds to invest in private assets. Private assets have significant potential to address social and environmental challenges such as health, housing and infrastructure, and for the Government and investors to better leverage arrangements such as blended finance.

Our submission draws attention to factors which must be considered to ensure investors are able to properly assess risk and return when making investment decisions about private assets. Without proper mitigation, removing policy barriers alone may not achieve the policy objective of increasing investment in private assets as investment managers are unable to reconcile their fiduciary duties with the increased risks of investing in private assets without proper safeguards. For example:

• Enhanced transparency and consumer protection – as there is inherently less public information available on private assets, including climate risk information;
• KiwiSaver Default Fund exclusions – guidance of how exclusions be applied to private assets.
• Portfolio holdings disclosure – guidance of how to appropriately include private assets in disclosures.
• CRD reporting for KiwiSaver providers – KiwiSaver providers fall within the CRD Regime and thus require relevant information from investee companies to comply.
• Stewardship of private assets – Investing in private assets often results in significant ownership of the asset. KiwiSaver managers should ensure they are acting in their members best interests when exercising ownership rights by demonstrating strong investor stewardship. RIAA endorses the voluntary NZ Stewardship Code which is already lifting standards of investment stewardship.