Where the money actually sits
The KiwiSaver pool hit $142.321 billion at March 2026, according to the Reserve Bank’s latest quarterly data. Of that, $86.482 billion, or 60.8%, is invested overseas, with overseas equities and trust units alone accounting for $61.647 billion. Only $55.839 billion stays in New Zealand assets.
Morningstar tracked roughly $49 billion in international stock markets at the end of March 2026, with an estimated $35 billion in US equities specifically. That offshore tilt has paid off. Mark Lister, investment director at Craigs Investment Partners, argues that KiwiSaver members’ healthy allocation of US shares has been a good thing, given many would have tilted toward an underperforming local market if left to their own devices.
So far, so sensible. The problem is what “global diversification” now actually means.
The concentration bet hiding inside the index
Fisher Funds chief investment officer Ashley Gardyne has issued the sharpest warning. The top 10 stocks in the S&P 500 now make up around 40% of the whole index, double their 1990 share and the highest concentration since the early 1970s. Nvidia alone is close to 8% of the entire index, and eight of the top 10 companies are tied to AI. Around 80% of the S&P 500’s gains this year came from AI-linked stocks, and only about one in five companies beat the index.
As Gardyne put it, investors buying a low-cost global index fund believing they hold safe, broad exposure across thousands of businesses are in reality taking a very large and specific bet.
This matters because growth funds now make up 47.5% of all KiwiSaver assets, up from 28.3% a decade ago, and a typical growth fund holds about 60% in global shares. The FMA found in 2025 that the share of KiwiSaver in high-volatility funds quadrupled from about 10% in 2021 to more than 40% by 2024, with assets in those funds jumping from $6.8 billion to $51.5 billion. Members may be getting US market returns while believing they are diversified. Those are not the same thing.
Meanwhile, NZ firms hunt for capital
While tens of billions flow offshore, the domestic market is starved. Just 2-3% of KiwiSaver money goes into private, unlisted NZ assets, against 16% for Australian superannuation. The venture capital gap is starker still: about 4.4% of Australia’s nearly $4 trillion super pool goes to VC, versus 0.2% here.
The cost lands on the real economy. Graham Law, acting chief executive of NZX, has noted that New Zealand businesses consistently face higher capital costs than Australian and larger OECD peers, reflecting smaller, less liquid markets. Even a 1-2 percentage point funding gap can decide whether a project proceeds or shifts offshore. NBR argues bluntly that for a system meant to build a domestic capital market, KiwiSaver is not working out well.
The plumbing problem nobody fixes
The reason so little flows into private NZ assets is structural, not ideological. Members can switch providers on ten business days’ notice, forcing managers to hold liquid assets to meet redemptions. Private company shares are illiquid, so the rules effectively penalise holding them.
The NZSA’s 2025 submission to MBIE flagged valuation independence, disclosure gaps and provider capability as the real barriers, and proposed specialist opt-in private asset funds. The government’s consultation on enabling KiwiSaver investment in unlisted assets closed in February 2025. There is still no confirmed outcome.
Proof it can be done
Generate KiwiSaver has quietly shown the middle ground works, crossing $100 million allocated to local VC through stakes in Icehouse Ventures, Movac and direct co-investments in Halter, Hnry and Partly. Icehouse chief executive Robbie Paul frames it as a double win, arguing Rocket Lab’s success has prompted many Kiwis to aim higher.
But the guardrail matters. Jeremy Sullivan, investment adviser at Hamilton Hindin Greene, warns KiwiSaver should not be treated as a nation-building exercise at the expense of members. Massey University’s Professor Claire Matthews is blunter still: these are assets owned by individuals who should decide where they sit, not a national piggy bank.
That is the right answer. Nobody should mandate domestic allocation. But fixing the switching rule and creating optional private-asset funds would let members choose to back NZ Inc without sacrificing their retirement. The debate has moved from contribution rates to allocation, and that is where the real capital-market question sits. Whether Wellington acts on its own consultation will decide if it stays theoretical.
Sources
- How billions in KiwiSaver quietly fund Wall Street and the case for backing NZ Inc instead (2026-07-02)
- Fisher Funds warns your KiwiSaver may be a much bigger bet on US tech than the label suggests (2026-06-27)
- What Wall Street’s rampaging run means for KiwiSaver investors (2026-06-30)
- Why New Zealand companies run out of money long before Australian ones do (2026-05-17)
- OECD report warns high capital costs slowing Kiwi business investment (2026-05-07)
- Increased risk profile of KiwiSaver funds 2021-2024 – Financial Markets Authority (2025-07-16)
- Submission: NZSA Response to MBIE Discussion Document – Enabling KiwiSaver investment in private assets (2025-02-14)