Australia and New Zealand’s asset managers seek a technology rethink

Asset managers in Australia and New Zealand are becoming increasingly active and sophisticated. However, the ecosystem of providers serving this market has not kept pace or prioritized this growing market.

Following two weeks of client and prospect meetings across both markets, leaders from Enfusion’s Product and APAC team identified two common themes across these two very different investment environments: technology vendors have not been focusing closely enough on recent changes, and they are not supporting firms as they evolve.

Australia: From asset owners to asset managers

Superannuation funds have long been a cornerstone of Australia’s retirement savings system. As of December 2024, the total assets within Australia’s superannuation system reached approximately AUD 4.2 trillion. These “supers” have historically leveraged external managers and custodians, but that model is changing:

• An aging client base. As participants move from accumulation to decumulation, demand increases for products that generate sustainable retirement income and align with members’ changing risk profiles. This shift puts more emphasis on being able to personalize portfolios.

• Growing portfolio complexity. As portfolios diversify across asset classes, geographies, and private investments, the operational burden grows. Consolidating fragmented data sources to deliver timely insights, accurate reporting, and regulatory compliance is an increasing challenge.

• Regulatory pressures and change. The Australian Prudential Regulation Authority (APRA) periodically introduces performance benchmarks and reporting standards, such as intensifying scrutiny of fund-level expenditure in October 2024. The Australian Securities and Investments Commission (ASIC), which monitors consumer protections and disclosure clarity, also has plans to market integrity rules and climate-related disclosures in 2025.

• Non-governmental pressures. Sustainability mandates are widely expected but require more granular data on investment decisions, climate risks, and corporate governance practices.

• Cost control. With APRA increasing pressure on fees and performance, cost control has become mission-critical. Our client conversations and separate J.P. Morgan data confirm that super funds now see internalisation as a key lever for reducing investment costs at scale.

Firms are responding by looking for more control and customisation. The first wave has been around two key initiatives:

• Internalising Trading. Larger funds have already made this move to create greater flexibility and lower costs.

• Data Governance: The strong emphasis on data is spawning large-scale efforts to build new business models around a data-centric architecture.

Internalisation and data-centric approaches create a significant challenge for Aussie funds, however. Most supers’ technology and operational capabilities were built around their legacy operating model as pure asset owners. It does not provide the agile technology stack or support the innovative portfolio strategies they want as they bring asset management in-house.

Enfusion’s prospects consistently shared pain points such as rebalancing strategic asset allocation, tactical asset allocation, and closing data gaps that limit total portfolio views

New Zealand: Fast-growing and globally-oriented

New Zealand’s market is distinct but shares familiar operational pain points. Traditional open-end fund structures dominate. The few local hedge funds often focus on strategies that leverage domestic market inefficiencies, such as long/short equity, event-driven, and market-neutral approaches.

KiwiSaver, New Zealand’s voluntary retirement savings scheme, has experienced steady growth. As of March 2024, total funds under management reached NZD 111.8 billion, a 19% increase from the previous fiscal year.

With New Zealand’s local equity market limited in size, investors are naturally global in their outlook, seeking broader diversification and asset class exposure. Social attitudes also heavily favour sustainable and responsible investing, further shaping managers’ mandates.

Yet, the market’s size and structure create persistent operational challenges:

• Major technology vendors have largely overlooked New Zealand, with no local offices as of this writing.

• As a result, firms struggle to access advanced investment management solutions suited to their needs.

• Given fund sizes, cost-effectiveness is paramount.

In our discussions, most firms told us they rely on manual solutions and brittle workarounds for even basic functions. This has led to three critical issues:

• An inability to fully integrate portfolio construction into core investment management platforms

• Extensive use of Excel, complex inter-fund workflows, and concerns about the resulting potential for operational risk

• Doubts that legacy solutions are committed to supporting NZ firms

These factors underscore the need for cost-effective, scalable, and integrated technology solutions that can streamline operations, flex to meet local investment preferences with global asset coverage, and mitigate risks inherent in manual processes.​