From kaitiaki to fund managers

To provide greater clarity, we analysed the balance sheets of most collectives, including iwi, Post-Settlement Governance Entities (PSGEs), incorporations, and Ahu Whenua Trusts, throughout Aotearoa New Zealand. These collectives jointly hold an asset base of $41 billion, with a significant portion of non-property assets, approximately $3.6 billion, invested in portfolio funding and term deposits.

Portfolio funding is overrepresented, especially in iwi and PSGE capital, as it fits mainstream financial norms and risk frameworks. But this can undermine iwi aspirations for tino rangatiratanga, intergenerational wellbeing, and place-based development. Heavy reliance on diversified, market-driven portfolios can misalign capital with iwi values, reduce control, and expose whānau to global financial risks while underinvesting in transformative local opportunities.

Portfolio funding means spreading iwi capital across a mix of listed equities, bonds, managed funds, and private equity, usually through conventional asset-allocation models. Many iwi entities have structured commercial arms or holding companies that manage diversified portfolios aimed at protecting and growing pūtea across generations. These portfolios often lean on external managers, standard risk-return metrics, and benchmarks derived from global markets rather than from iwi-specific kaupapa.

This has not happened by accident, and several forces push iwi in this direction. Treaty settlement capital is framed as scarce taonga that must be “protected”, with leading advisers, such as accountants and lawyers, and Crown narratives promoting the conservative, diversified financial products over direct, kaupapa-driven investments.

Mainstream fund managers and advisors’ market standard portfolio construction is the safe or default option, and iwi with limited internal investment capacity can find it easier to place funds into existing vehicles than to build and govern complex direct investments themselves. In addition, reporting requirements and comparisons, such as iwi investment benchmarking, normalise financial performance metrics and encourage alignment with conventional portfolio structures. 

Overweight portfolios can dilute the practical expression of tino rangatiratanga over key assets such as whenua, housing, and regional enterprises. Capital parked in distant, financialised assets may generate returns but often has weak or no links to whānau employment, reo, mātauranga, and environmental restoration in specific rohe. This creates a tension between nominal intergenerational wealth and lived intergenerational wellbeing, where financial indicators look strong but local social, cultural and ecological outcomes lag behind.

Portfolio funding is often sold as risk-reducing, yet it concentrates iwi exposure to global market cycles, geopolitical shocks, and interest rate volatility that iwi cannot influence. Reliance on external managers and fund-of-funds structures increases fee leakage and can obscure the real drivers of returns, limiting the ability of Māori 
collectives to exercise active kaitiakitanga over their own capital.

When the investment model is built around standard portfolio theory, risk is defined narrowly as price volatility, not as long-term threats to whenua, culture, language, or community resilience, so those dimensions are underweighted in actual decisions.

Overrepresentation of portfolio funding creates high opportunity cost. Every dollar in a generic global equity fund is a dollar not invested in papakāinga, whenua development, Māori enterprise, or regional infrastructure that could directly change outcomes for whānau.

There are signs that this is changing, with some iwi moving towards becoming more active investors, with direct investment strategies, including stakes in operating businesses, joint ventures, and property developments aligned with iwi priorities. This active investment position requires governance attention and capability that portfolio-heavy models sidestep.

Transitioning from passive financial investors to proactive economic architects, independent of external capital and systems, empowers indigenous economic ecosystems to thrive and is essential for long-term success.