In a complex world, Kiwi investors can take comfort in mega forces

This article was originally published as sponsored content on BusinessDesk in October 2025.

The world is increasingly complicated and contradictory, so how can investors navigate their way through the confusion?

Take some comfort in the mega forces – the massive structural shifts you can consider leaning on in volatile times. That was the message from Ben Powell, BlackRock’s Chief Investment Strategist for APAC and the Middle East, at a recent breakfast event in Auckland hosted by iShares and Smart.

“The macro backdrop is very uncertain, and genuinely complicated,” Powell told the crowd.

“You can be sad about it, but that’s not a practical approach. And if you’re waiting for clarity or for the clouds to clear, you’ll be waiting a long time. You just have to get on with it. Find confidence in the mega forces, which can provide an anchor. They are critical to understanding how the world is evolving.”

Five critical mega forces that can help anchor your strategy

While geopolitical instability and trade uncertainty dominate the headlines, investors can look to these five global mega forces to build a diversified portfolio:

Digital disruption and AI, which should lead to consequential productivity gains. “We are positive on the AI superboom,” Powell said. “Money is deluging into microchips, AI architecture and associated infrastructure assets like data centres.”

Geopolitical fragmentation, as countries prioritise national security over economic efficiency, accelerating the rewiring of supply chains “The trade-ties between US and China are deeply interconnected. The US could manage away from China over the next 50 to 100 years, maybe, but for now they are together.”

Low-carbon transition, spurring a massive reallocation of capital.

Demographic divergence, as populations in major economies age. BlackRock believes that these three forces (fragmentation, decarbonisation, demography) will combine to make inflation an ongoing structural problem.

Future of finance, as innovation leads to the evolution of the sector.

Dramatic ETF growth as investors seek ‘precision exposure’

Investors are increasingly looking for precise exposure to specific sectors and asset classes, which is driving an Exchange Traded Fund (ETF) boom, according to Nicholas Peach, Head of iShares APAC, who also spoke at the event.  

“It’s been an extraordinary period for ETFs. There are now more ETFs than individual stocks listed on the NYSE,” he noted. “That growth is partly being driven by [investor demand for] precision exposure through narrow, targeted indices.”  

Thematic ETFs allow global investors to focus on a specific sector or mega force without needing to research individual stocks, and these continue to grow in popularity. Peach illustrated how useful these can be: certain China tech ETFs, for example, have seen greater investor inflows in 2025 to date than their US counterparts. This has also been a bumper year for Korean equities ETFs, with the largest inflows since 2019. This has also been observedwithEuropean defence ETFs which have been similarly booming. 

Also attracting plenty of funding are outcome ETFs, which target specific financial goals, whether that is income, growth or protection from volatility. Active ETFs are another fast-growing category, now accounting for a record share of inflows in 2025, particularly in fixed income strategies where investors are seeking tailored outcomes. 

Crypto has been another considerable driver of ETF growth. Launched in 2024, the iShares Bitcoin Trust attracted US$50bn in assets in just 227 trading days - faster than any ETF in history, by a sizeable margin, as Chantal Giles, BlackRock’s Head of APAC Strategic Clients & Business Development and Head of Wealth Australasia, explained to the crowd. 

“We’re entering an era of new asset classes,” she said, “and the role of the ETF is to provide access to these.”  

Dramatic ETF growth as investors seek ‘precision exposure’

With the New Zealand market comprising less than 0.1% of total equities, and a heavy reliance on primary industries, global diversification is imperative for local investors.  

“[New Zealanders] can get access to these mega forces with Smart ETFs focused on automation and robotics; US tech; healthcare innovation; or Bitcoin, for instance,” said Catherine Pollock, GM, Business Development and Distribution, for Smartshares. “Thematic ETFs are very popular and they can give you access to [areas experiencing] accelerated growth or specific outcomes. And for crypto they provide simple access to a complicated asset.”  

Smart ETFs allow Kiwis to build global portfolios in New Zealand dollar PIE funds, removing/reducing the cost and complexities of managing individual holdings, foreign currencies and tax reporting. 

While it’s vital to diversify internationally, Pollock points out that investing locally still retains distinct advantages: “Local investments often provide good dividends on equities, with imputation tax benefits that can generate strong income. You might not be able to replicate that overseas. Plus, it can help to avoid currency risk.”  

The overall message from iShares and Smart is not to let global turmoil keep you on the sidelines. The headlines can be worrying, even frightening, but avoiding investment altogether might be even more risky for your future wealth.  

“We’re not in Kansas anymore,” Powell added. “This maximally confusing economic geopolitical landscape is just life now. Investors need to cope with that and try to navigate it rather than waiting for clearer weather.” 

Disclaimer

The Smart Exchange Traded Funds are issued by Smartshares Limited (Smart). The product disclosure statements are available at smartinvest.co.nz. Investing involves risk. The value of your investments can go down as well as up. Returns are not guaranteed. We recommend you seek professional assistance from a licensed Financial Advice Provider before making any investment decision.  

iShares® and BlackRock® are registered trademarks of BlackRock, Inc. and its affiliates (“BlackRock”) and are used under license. BlackRock makes no representations or warranties regarding the advisability of investing in any product or the use of any service offered by Smartshares Limited.