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The Financial Markets Authority (FMA) has identified a number of risks for fund managers to grapple with.
A review by the FMA concluded increased regulations had reduced risks in the funds management industry to medium/low, though there were a number of emerging risks to test the sector.
The report noted effective risk management by fund managers was an important mitigant against the potential for harm to investors in such funds as KiwiSaver.
“Without controls, the risk would be medium/high,” the FMA said.
“Examples include investment risk for mortgage fund managers, governance risk for the managers of smaller funds, and operational risk for the managers of larger and more complex funds.”
FMA director of investment management Paul Gregory said the overall results of the review were encouraging.
“It’s very, very important that these risks are well managed, and that’s why licensing and supervision and being properly regulated is also important,” he said.
“What’s in their KiwiSaver and what they’re investing in is likely their largest asset and certainly one of the most real ways that they engage with their futures meaningfully.”
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