New and Emerging Investment Opportunities and Trends for New Zealander Investors
Our guide looks at emerging investment trends such as AI, semiconductors, medical technology, cyber security, and robotics and explores how to invest in them and the risks involved.
Updated 9 April 2024
Summary:
To help explain what’s important, our guide covers:
Know This First: What are Emerging Investment Opportunities?
- With technology changing rapidly, it can be hard to keep up with all the investment trends developing around the world. In particular, high-income, well-resourced investors with significant sums to invest are in a particularly strong position to take advantage of these opportunities - the biggest question for many New Zealanders is how and through what investment vehicle.
- Disclosure: Some of the themes included in this guide have referenced from four key global financial institutions and investment managers:
- Blackrock’s 2024 Thematic Outlook
- MSCI’s Investment Trends in Focus
- Morgan Stanley’s 2024 Investment Outlook
- Morningstar’s 2024 Themes for Investors
To help explain what’s important, our guide covers:
- Emerging Investment Themes for 2024
- Emerging Investment Asset Classes for 2024
- Further Warnings and Must-Know Facts
- Frequently Asked Questions
Know This First: What are Emerging Investment Opportunities?
- Emerging investment opportunities are typically newer trends or investment classes that may not have been around for that long but have the potential to grow massively in the coming decade. They are typically harder to access (whether due to regulation or the lack of investment capital to support these companies), or the thematic sector itself is more complex.
- For New Zealand investors, particularly those with significant resources and a sophisticated understanding of the market, navigating these opportunities requires a keen insight into local and global trends (but can provide much higher returns if done right).
MoneyHub Founder Christopher Walsh Explains Why Carefully Navigating the Uncertain Terrain of Emerging Investments is Critical:
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"Investment landscapes are ever-evolving, and a heightened need for caution comes with new and exciting opportunities. While emerging investment themes and asset classes present the potential for significant gains (think Xero, NVIDIA, Tesla and Apple over recent years), they are often accompanied by risks as substantial as the opportunities.
Today's booming sector can be tomorrow's downturn story. Cannasouth should be an example familiar to many in the 'Sharesies Covid era' of 2020 and 2021, which has since seen its share price sink. Another and more significant example is the dot-com bubble of the early 2000s, where many internet-based companies saw their values skyrocket, only to crash dramatically, leaving investors with significant losses or total wipeout. I see emerging opportunities crash and burn every year and despite my prudent research, I still see -15% and -30% (unrealised) returns on selected shares that have everything right on paper and in the market, but investors don't see the opportunity even if I do. Emerging markets are risky - don't think it's easy to make profits, because it's not. While exploring emerging investment opportunities is useful, and there is a lot of upside to be found, always prioritise due diligence and a well-rounded understanding of the risks involved. Diversification remains key; spreading your investments across various sectors, geographies, and asset classes can help mitigate these risks. In the world of investing, what shines the brightest often has the potential to burn out just as quickly - My Food Bag is a recent example of what can happen to investors who misstep. Please stay informed and stay cautious". |
Christopher Walsh
MoneyHub Founder |
Your free guide to new and emerging investment opportunities and trends, thanks to BlackBull Markets
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Emerging Investment Themes for 2024
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Artificial Intelligence (AI)With the rise of Open AI and Chat GPT, it's never been more apparent that AI is here to stay and will completely change how businesses work. AI's shift from concept to commercialisation presents significant opportunities. Areas of focus include enterprise AI adoption, accelerated computing, and cutting-edge hardware. Investment in the AI value chain, especially semiconductors, is recommended for targeted exposure.
As an example, companies like Microsoft (and their investment into Open AI) and Meta are exposed to AI investments. |
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SemiconductorsClosely tied to AI, Semiconductors (and in particular - GPUs or Graphics Processing Units) are essential to running the models underpinning AI. Investments in the AI supply chain and semiconductors could provide investors with focused exposure to AI, encompassing both the enablers, like semiconductor firms, and the developers.
As an example, companies like NVIDIA and AMD are both notable semiconductor companies. |
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GlobalisationAs the world gets wealthier and developing countries move up the economic scale, globalisation will likely continue to evolve. Supply chain strategy changes create opportunities in certain emerging market regions, with countries like Mexico and India poised to benefit. Consequently, investors should think strategically about their allocations in emerging markets, targeting specific country funds and viewing China separately from other emerging markets.
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Medical and Healthcare InnovationWith demographic shifts leading to an ageing population, innovative healthcare, particularly in neuroscience and biotech, is positioned for growth. Investments focused on these areas could offer substantial returns (whether in cancer treatment, Alzheimer's, Longevity or Biohacking).
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Sustainability and Climate ActionThe role of capital in the net-zero revolution is underscored, with an emphasis on ESG (Environmental, Social, Governance) factors and sustainability. Both governments and the private sector are funnelling and allocating more capital towards carbon emissions reduction and climate change. Investors keen to get exposure to this should explore ESG ratings, impact solutions, and sustainable finance solutions to align their portfolios with broader global sustainability goals.
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Emerging marketsMost of the world's population (and future economic GDP growth) will come from emerging markets. Countries like China, India, Brazil and Nigeria will largely be responsible for the next phase of global growth.
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Cyber SecurityInvesting in cybersecurity involves allocating resources to companies and funds that protect information and systems from digital attacks and unauthorised access. As the world becomes increasingly digital and interconnected, the importance of cybersecurity continues to grow, making it a compelling investment theme.
Investing in cybersecurity is not just about capitalising on a growing industry; it's also about recognising digital security's critical role in the modern economy. By investing in cybersecurity, individuals and institutions can participate in the growth of an essential industry that contributes to safeguarding digital infrastructure and data across the globe. |
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RoboticsThe robotics investment theme centres on allocating capital to companies involved in designing, producing, and implementing robots and automation technologies. This sector has seen significant growth due to technological advances and increasing adoption across various industries, including manufacturing, healthcare, and consumer services.
Investing in the robotics theme offers potential for significant growth, given the expanding use of robots and automation in various industries. However, it also comes with challenges and risks related to the technology lifecycle, market adoption, and economic factors. |
Your free guide to new and emerging investment opportunities and trends, thanks to BlackBull Markets
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Emerging Investment Asset Classes for 2024
For higher income and net worth individuals, or those with existing knowledge and skillsets to qualify as Wholesale Investors (defined by the FMA), investing opens up far beyond just investing in the NZX 50. Many of the below asset classes are known as "alternative investments". They will most likely require wholesale investor status in New Zealand or be less common (but provide more potential upside opportunities given fewer people have access to them).
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Thematic ETFsInvesting in exchange-traded funds (ETFs) that focus on specific sectors or themes (like those listed above) is one easy, cost-effective way to get access to sector-specific companies (and exclude certain industries that you either don't support or want to avoid - like oil, gas and fracking).
ETFs allow investors to take a more targeted position in areas of interest or growth without researching individual shares, and our guide to ETFs explains more. |
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Income-Focused Investment StrategiesFor well-resourced investors seeking cash flow and a steady income, focusing on income-focused funds and term deposits can be a low-risk strategy. Generally, these can provide regular cash flow with minimal day-to-day management. There are several funds which go further and look for higher returns. For example, Revolution Asset Management has recently targeted and raised a debt fund for New Zealand (available to wholesale investors).
Other New Zealand fund managers offering debt or income funds include:
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Ethical Investing or Impact InvestingIncreasingly, high-income earners are looking towards ethical and impact investing to align their financial activities with their values. This approach considers the social and environmental impact of investments alongside financial returns.
Ethical investing can include sectors like renewable energy, social housing, or businesses that adhere to high ethical standards. Impact investing focuses on generating positive social or environmental impacts directly through investment activities. The top ethical investors in New Zealand include the likes of Pathfinder Asset Management (now fully owned by global wealth manager Alvarium, which recently merged with Tiedemann Group and is now known as Alvarium Tiedemann, with almost US$70 billion under management) and Simplicity (which is set up as a non-profit but also invests in the local community via private startups, housing and lending to Simplicity users for mortgages). Pathfinder and Simplicity are known for their dedication to impact and a strong focus on ESG investing. Internationally, there are many ESG/Cleantech companies or ETFs that are publicly listed that would provide broad exposure to the ethical or impact investing verticals. MSCI have an updated list of the top 20 ESG funds globally. Further resources include: |
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Unlisted Real Estate Investment Trusts (REITs)As another unique alternative to direct property investing, high-net-worth New Zealanders can access real estate through unlisted REITs. REITs allow investors to get the upside of owning income-producing real estate without managing and dealing with things like tenancies, maintenance and fees. REITs offer the potential for income and capital appreciation without the need for direct property management.
New Zealand platforms like Jasper now provide wholesale investors with direct access to unlisted REIT funds (or, in some cases, direct investment into the properties) and properties that New Zealanders otherwise might not be able to buy outright (like $50m+ commercial properties). Platforms like Jasper offer investors a chance to own "slices" of large commercial property and more easily buy and sell their stakes through the Jasper platform (as opposed to trying to find private buyers for property - which can take months and cost significant sums). |
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Commodities (e.g. Gold, Silver, Lithium)Whether through investing in the physical materials themselves (gold, silver, etc.) or purchasing a trust that holds the physical assets (like SPDR Gold Shares ETF), commodities can be an effective (but risky) way to hedge against inflation (and depressionary times in general) and also act as a store of value. For more details, we've created a definitive guide on how to invest in commodities.
Further resources: |
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Derivatives / Options / Contracts for Difference (CFDs)If you're not keen on hoarding gold bars in your house but still want to invest in commodities, using derivatives or options is a popular (but risky) alternative. Whilst quite complicated and usually much more advanced, derivatives can be a way to make tactical hedges on certain assets moving a certain way (e.g. taking advantage of volatility). Financial institutions like Blackbull Markets allow New Zealanders to leverage and invest in many different commodities and asset classes through derivatives.
Further resources: |
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Collectables (e.g. Art, Fine Wine, Collectors Items, Rare Trading Cards)While most might think investing in art and collector's items is only for the billionaires, it's common for New Zealanders to collect and stash away collectables like rare trading cards, comic books or fine wines in the basement or cellar.
Not only can it be a hedge against inflation, but it's almost certainly uncorrelated to the broader share market. The biggest reason to invest in collectables is the diversification factor - when you don't have all your money in one place, you'll always have a backstop if you ever get wiped out. Some New Zealanders prefer to try to find hidden collectable gems in places like TradeMe or Facebook Marketplace. The most legitimate place to find these items is usually through verified third-party sellers (for instance, in the comic book realm, CGC is known as the most credible collectable ratings agency) Additionally, platforms like Masterworks offer fractional ownership in fine art. While you might not be able to afford a Van Gogh outright, you might be able to own a slice of one (just like you can own slices of a share). This can add a unique element to your investment strategy without requiring in-depth knowledge of the assets. |
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Private Equity (PE) FundsIf you qualify as a wholesale/accredited/eligible investor, consider investing in private equity funds. These funds invest in private companies (e.g., companies that aren't listed on the NZX, NYSE, NASDAQ, or ASX). While these can require a larger investment and longer holding period, they offer the potential for substantial returns. Note that private equity funds will be illiquid/unlisted, which may make it harder to find a buyer/seller of these positions.
Private equity funds typically leverage up and acquire established profitable businesses, attempt to improve their operations and hold them over long(ish) periods before exiting. In contrast to the majority of the New Zealand investment scene, private equity funds can generate some of the highest returns in the industry (mainly due to debt, but also due to established expertise in these firms). New Zealand is known for its strong agricultural, tourism, and export industries. Given this backdrop, many private equity-owned companies end up being high-quality agriculture or tourism-based companies. The top private equity funds in New Zealand are Pencarrow, Direct Capital, Milford, Rangatira Investments, and Pioneer Capital. |
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​Venture Capital (VC) FundsKiwi ingenuity runs in our DNA - and given the amazing agricultural and tourism sectors, some founders with unique experience in these sectors sometimes decide to create startups around these sectors, providing opportunities for wealthy or high-earning New Zealanders with investment opportunities.
In contrast to private equity funds (which end up investing in older, profitable companies in established industries), venture capital funds invest far earlier in a founder's journey—usually within a few years of a company being set up. Venture capital funds will almost certainly have a technology tilt, meaning they'll be investing in cutting-edge, highest-growth startups. Some well-resourced New Zealanders might want a piece of the early-stage action, especially given the success stories of the last twenty years (Xero, TradeMe, Rocket Lab, Lanzatech, Sharesies, Halter, etc.). Venture capital funds often raise new funds (both from the public and wholesale investors) every 3-5 years after their prior fund has been allocated. For example, Movac’s Emerge Fund 4 is currently open and raising capital from wholesale investors. New Zealanders who wanted exposure to some of NZ's high-growth tech scene could invest with VC funds like Movac to get broad exposure to these local startups. Some of the top venture capital funds in New Zealand include: |
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Angel investingInstead of investing in vehicles that invest in NZ-based companies, some high-net-worth New Zealanders might find it easier to go directly and take private stakes in New Zealand-based small businesses (SMEs) or startups.
If you've got connections in the space you want to invest in, going directly to the founders and offering to support their next capital raise can be an effective way to get exposure to the local startup scene (and avoid paying the fees to VC and PE funds). Not only that, but you get to choose (and avoid) which high-growth startups you want to invest in rather than get the basket of whatever the fund managers end up choosing. If you don't have connections, many 'angel clubs' hold monthly pitch nights for startups looking to raise capital from high net worths. Networks like Flying Kiwi Angels, Angel HQ, The Icehouse, Angel Association of New Zealand and Enterprise Angels are all open for membership. For more details, check out our New Zealand Angel Investment Directory. |
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Cryptocurrency (individual coins but also ETFs)It's probable that cryptocurrency is here to stay. In January 2024, the Securities and Exchanges Commission (SEC) formally approved the first lot of Bitcoin ETFs, creating a pathway for institutional investors to invest in cryptocurrencies. This is significant from a regulatory "stamp of approval" perspective and an accessibility perspective.
The fact that Blackrock (the largest asset manager in the world with almost 10 trillion in assets), alongside other behemoths like Invesco, Fidelity and WisdomTree, all now have crypto ETF products in the market provides a layer of trust and accessibility that the crypto industry previously did not have. Pension funds and retirement accounts like 401ks and Roth IRAs (e.g. the KiwiSaver equivalent in the USA) can now be exposed to cryptocurrency. The total list of eleven Spot Bitcoin ETFs that were approved by the SEC includes:
Know This: Previously, you could only access cryptocurrency through your specific crypto wallets (or by investing in companies with ties to cryptocurrency, like MicroStrategy, Greyscale’s Bitcoin Trust, or publicly listed Bitcoin mining companies like Marathon Digital). Well-resourced investors who want increased diversification and who think cryptocurrency might be the way we transact in the future might want to consider directly investing in crypto (e.g. buying crypto like bitcoin or Ethereum in their crypto wallets through platforms like Easy Crypto) or invest in crypto ETFs (like the IShares Bitcoin Trust). For those interested in cryptocurrency who don't have time to research individual coins, cryptocurrency ETFs provide a way to invest in a whole basket of these coins (given that crypto is notoriously volatile). The top cryptocurrency and blockchain-related companies operating in New Zealand include Binance, Easy Crypto, and, more recently, Revolut (which is planning to turn on crypto functionality on their New Zealand app for beta customers). Crypto is a somewhat new asset class from regulators' perspectives, and the landscape for digital assets is constantly changing. It's recommended that you read up more about the IRD's treatment of buying and selling cryptocurrencies to understand whether you may need to pay capital gains tax on your trades. IRD Guidance: |
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​Crowdfunding PlatformsAs an alternative platform for raising capital, sometimes local startups raise online via crowdfunding platforms. A few crowdfunding success stories have led to huge gains for the early backers of local startups (notably, Ethique raised capital on PledgeMe and led to a large payday for investors). However, it has significant risks, as many have also failed and investors have lost all their money.
The top three largest crowdfunding platforms in New Zealand are: More information: |
MoneyHub Founder Christopher Walsh shares his views and must-know facts about emerging investment opportunities and trends:
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"While this guide has referenced well-known financial market institutions that are the best at anticipating emerging trends, nothing is known for certain and no one knows the future. 'Black Swan' events (like the pandemic) can upend any of the trends and investments listed above, so you must always take the time to understand what you're investing in deeply.
There is always risk; many of the investment opportunities listed above may not be available or popular to the general public, but that's also where opportunities may lie. The fewer people who are aware of and invest in certain assets, the more likely others are to be able to take advantage of and exploit these opportunities. However, our list is journalistic and not investment advice - many people losing money investing and there is more risk than reward with certain asset classes. The hype of medical cannabis in 2020 and 2021 appears to be over, and shares in NZX-listed Cannasouth and Rua Biosciences have fallen significantly. As with any investing decision, the more uncertain the outcome, the more important diversification becomes. Because many of the above investment opportunities are emerging, it's harder to tell which ones will do well and which won't, emphasising the importance of spreading your bets widely across many different industries and asset classes. Remember - the more you stray from typical investment classes (like diversified ETFs), the more risk you take. While emerging investment opportunities can offer high returns, they often come with higher risks. Diversification across sectors, geographies, and asset classes is a key strategy for managing these risks. Additionally, many emerging investment opportunities are private or unlisted, meaning you can't easily buy and sell them on an open market (making it much harder to exit if needed)- illiquidity. It's important to understand that technology changes fast, and today's emerging trends may not be the profitable trends of tomorrow. The rapid pace of technological innovation has opened up new sectors for investment. Artificial intelligence, blockchain, and biotechnology are all areas experiencing significant growth. However, what's hot today may not be hot tomorrow. The more emerging the investment opportunity, the wider the variance of outcomes (e.g. the company you invest in may go bust and you lose your investment, or you might make 100X your initial investment). In contrast, investing in the S&P 500 or the NZX 50 is unlikely to get you such large investment returns, but equally, it won't wipe you out". |
Christopher Walsh
MoneyHub Founder |
Frequently Asked Questions
How do I assess the risk of an emerging investment opportunity?
Assessing risk involves understanding the market dynamics of the specific sector, the regulatory environment, and the historical performance of similar assets (if available). It's also crucial to evaluate the financial health and track record of the company offering the investment—is it growing and expanding or profitable and following a proven path? Emerging opportunities are known for their risks, which can't be overlooked.
What should I know about liquidity in emerging investment classes?
Many emerging investment classes, such as private equity or unlisted REITs, have lower liquidity than traditional investments like stocks or bonds. This means it might be harder to sell your investment quickly without a substantial loss in value. Understanding the liquidity horizon is crucial before investing.
How do I diversify my portfolio with emerging investments?
Diversification in the context of emerging investments means not putting all your funds into one asset class or theme. To manage risk effectively, spread your investments across different sectors (like AI, healthcare, cybersecurity), asset types (ETFs, commodities, private equity), and even geographies.
Are thematic ETFs a safer way to invest in emerging trends?
Thematic ETFs offer a way to invest in emerging trends while benefiting from the diversification within the ETF. However, 'safer' is relative as these ETFs are still subject to market risks and the specific volatility of the sector they represent.
How significant is the impact of global events on emerging markets?
Emerging markets are often more volatile and can be significantly impacted by global events such as economic downturns, political instability, and global health crises. Investors need to stay informed about global events and understand how they can affect investments in these regions.
Can ethical and impact investing also be profitable?
Yes, ethical and impact investments can be profitable. They are not just about social and environmental good; many such investments have shown competitive returns. However, it's important to thoroughly research these opportunities as they can vary greatly in profitability and impact.
Important: New Zealand regulations around wholesale investors are relevant if you’re investing in restricted asset classes like private equity.
- The Financial Markets Authority (FMA) regulates who can invest in certain asset classes to protect investors who may not understand the products or instruments they're investing in (known as "retail investors").
- For example, wholesale investors are legally defined with criteria including substantial investment activity, net assets, or turnover exceeding $5 million. Individuals can self-certify as 'eligible investors' with adequate financial experience, requiring validation by a professional.
- Wholesale investments offer fewer protections and lack requirements like a product disclosure statement (PDS), licensed firm dealings, independent dispute resolution, ongoing investment performance information, and a licensed supervisor.
Your free guide to new and emerging investment opportunities and trends, thanks to BlackBull Markets
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