The Fund is one of the largest institutional investors in New Zealand and a significant player in New Zealand’s capital markets. Its $5.8 billion New Zealand investment portfolio (or 15.64% of investments*) includes more than $1 billion in the local share market, along with large investments in Kaingaroa Timberlands, Fidelity LIfe, Metlifecare, Kiwibank, Hobsonville, Datacom and rural farmland. The Fund is also invested, through external investment managers, in small, privately-owned companies, property developments and social infrastructure.
The Fund has some advantages that other investors don’t when it comes to investing in New Zealand. We are local and Crown-owned; we are relatively large in New Zealand terms; we have a long investment horizon and the ability to invest in illiquid assets (assets that can be hard to sell quickly) in order to earn a premium return over time.
Since 2009 the value of the Fund's New Zealand investments has grown significantly.
*The value given for NZ investments excludes cash and foreign exchange hedging instruments.
Under our whole-of-portfolio approach to managing the Fund, any new active investment (i.e. outside our passive Reference Portfolio) needs to measure up against all other global investment opportunities.
We also need to have a high level of confidence that the new investment will deliver a better risk-adjusted return for the Fund than we would be able to get from a passive, listed alternative.
While we believe the Fund has a competitive advantage when investing domestically, in a global context, New Zealand is a very small investment market. For our New Zealand investments we therefore also require a return that will compensate us sufficiently for the risk of concentrating too much of the Fund’s portfolio here.
As one of only a few investors of scale in the country, we also maintain a high level of price discipline.