Local Recovery Solidifies, While Global Uncertainty Continues

Alternative assets tend to have some characteristics in
common. Compared to conventional assets, they have four major advantages:

 

The potential
for much higher returns

Returns in
the share market are typically around 5% to 8% a year over the long term.
Alternative investments aim to provide far higher returns.

 

Typically
less correlated to the share market

While
traditional assets tend to gain or lose value in line with the share market,
alternatives move more independently.

 

Extremely
diverse types of investments

Alternative
investments are a way to own interesting assets that are not always available
on the share market, and potentially be more hands-on with choosing and
managing them.

 

Ideal for
providing portfolio diversification

Their low
market correlation and higher returns make alternatives a way to add
diversification to a well-balanced investment portfolio.

However, alternative assets also have some disadvantages, typically
including:

 

Relatively
higher risk

With higher
potential rewards come higher risks, and alternatives are overall more risky
than traditional assets.

 

 

Typically
lower liquidity

In many cases
alternative assets cannot be rapidly liquidated and investors may be tied in
for a certain period.

Not always
available to all investors

Some
alternative investments are limited to institutional investors or high net
worth individuals.

  

These pros and cons will vary depending on each individual investment, so anyone considering investing in alternatives will need to weigh
up these factors carefully each time. This is an area where a financial advisor can be valuable, as they can do the research and help investors understand why and how a particular alternative asset could fit into their specific portfolio.

Zagga’s advantages compared to riskier
alternative assets

Zagga provides direct private debt investment secured by physical properties. It has some of the typical advantages and disadvantages of
other types of alternative assets, including:

  • Higher returns than traditional fixed income investments – current[1] annual returns for Zagga investors are between 8% and 10%.
  • A higher risk profile when compared to traditional investments like bonds and cash, due to reliance on borrowers.
  • Loan performance is not correlated with share market performance.
  • Loans have lower potential liquidity than conventional investments as funds are committed for the term of a loan.
    However, Zagga’s loans can be sold on their secondary market to other
    investors.

However, Zagga differs from riskier alternative investments in a few key ways:

  • Zagga is regulated by the Financial Markets Authority. It has held a peer-to-peer lending licence since 2015 and is a
    registered member of Financial Services Complaints Limited, as is its trust company.
  • Zagga’s loan investments are all secured by first ranking mortgages over the borrowers’ residential or commercial property.
  • Loans are not limited to institutional investors
    or high net worth individuals. Any person, company or trust that has been identity verified and holds a New Zealand bank account can access this investment.
  • Investors can choose individual loans, which allows them to tailor their selections to fit their risk profile and diversify by location and project type.  Loans are not pooled, meaning no contagion risk across loans.


Because Zagga loans pay a regular return to investors, this also sets them apart from speculative alternative investments such as cryptocurrency. Rather than hoping for the value of an asset to rise and then selling it, a Zagga loan provides a reliable income stream throughout the term
of the loan.

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[1] Annual
returns as at January 2024. 

The latest GPD data is out, and at 0.2% growth in the last three months of 2025, it’s risen for three out of the past four quarters. We’re into annual growth for the first time since the third quarter of 2024, which is a hopeful signal that local conditions are improving.

The latest data shows solid increases in retail and accommodation sectors, finance and insurance, media and comms, and arts and recreation. Construction under performed, but data from January and February 2026 looks more positive for the sector, so overall the picture here in New Zealand is encouraging.

The looming concern is the global oil crisis, and the headlines seem alarming. But we’ve been reading some pretty frightening headlines every week since 2020, and we all just keep on going. What can you do in these uncertain times? The best advice is not to panic. If you have an investment strategy that’s taking you toward your financial goals, stay calm and talk to your adviser before you make any sudden moves. As ASB’s analysts point out, “the average conflict results in a very short-term drawdown of roughly 5% (using the S&P500 as a proxy), with the market recovering its losses over an average of 47 days.”

In the longer term, this fuel crisis might have an upside. If it encourages a faster shift to renewables, that will improve New Zealand’s energy security and make us less vulnerable to these oil shocks in future. ANZ is reporting more interest in EVs, and BYD says it’s had a bumper few weeks. The national grid reached a record high of 96.4% renewable in the latest data, a new record, so the decarbonisation megatrend is continuing its onward march here in New Zealand.

In response to the picture both here and abroad, the big banks have been nudging up their interest rates, leading to higher returns for savers. Term deposit rates are up marginally, but still below 4%. Returns on Zagga loans have also stayed steady, and have been consistently paying around 7%. We’re seeing rapid uptake on new opportunities, and we expect this continue throughout 2026 – particularly as momentum grows in the construction sector.

We’ve seen a noticeable increase in both the volume and quality of loan investments coming through this month, and we’re excited to be bringing these new opportunities to our investors. With strong demand and quick uptake on new listings, it’s important to be prepared so you can take advantage of opportunities as they become available.

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Zagga in New Zealand: Zagga Limited (Zagga) holds a peer to peer licence (FSP393946) from the Financial Markets Authority (FMA). Zagga is a registered member of Financial Services Complaints Limited, Registered ID 5580. Magna Trust Company Limited is a registered member of Financial Services Complaints Limited, Registered ID 5580.

The Financial Market Authority                 The New Zealand Companies Office                The Financial Services Complaints Limited