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We use a Reference Portfolio, which is set by the Guardians’ Board, to benchmark the performance of our actual investment portfolio and the value we are adding through our active investment strategies. 




Stephen Gilmore, Chief Investment Officer


We were established back in the early 2000s because it was clear that with an ageing population the burden of funding New Zealand Super would fall on a smaller group of people.

So the idea was to set up a fund that would invest, that would create wealth, which could then be used to help pay part of that future New Zealand Super.

Our investment process is naturally shaped by the legislation and our purpose, and that purpose statement is: “Sustainable investment delivering strong returns for all New Zealanders".


Our Purpose, Sustainable investment delivering strong returns for all New Zealanders


Our first point in doing that is to construct something very simple, very liquid, passive, transparent – and we refer to that portfolio as a reference portfolio.

The reference portfolio that we have establishes the risk appetite that we feel comfortable taking, it is also a benchmark against which we can measure the performance of the actual portfolio.

But in relative terms our portfolio is riskier than would ordinarily be the case for other investors. It has 80% equities and it has 20% bonds, we’ve also fully hedged the currency to New Zealand dollars in that reference portfolio.

The reason it is that growth orientated is that we have a very long horizon. We’re not expected to make major contributions to the budget until the 2050s. So that means we can look through a lot of nearer term market volatility.

We aim to outperform the reference portfolio by making smart investment decisions. It just so happens that given who we are – New Zealand’s sovereign wealth fund – we do have access to some investments that other investors might struggle to get access to.

When we invest actively we’re going out and investing in things like timber, or it could be property, or infrastructure, we give money to hedge funds, we also look at equity factors. There are a whole range of things we could be investing in.

So when making those investments we have to think about:

  • how likely is it that those investments will do better than the reference portfolio
  • are we getting rewarded appropriately for giving up liquidity, the reference portfolio itself is highly liquid
  • are those additional investments – or those active investments – diversified, so do they give us something that we’re not getting from the reference portfolio
  • are there some particular advantages that we have in making those investments.

And that sort of approach has actually been quite helpful for generating returns over the longer run.

We’re investing for all New Zealanders, so if we do a good job, we will create more wealth, and we will ease the burden on the New Zealanders of the future.

So that goes back to our purpose, that purpose is: Sustainable investment delivering strong returns for all New Zealanders.


Logo of NZ Super Fund, Te Kaitiaki Tahua Penihana Kaumātua o Aotearoa

Breakdown of the reference portfolio


Asset class Percentage (%)

Global equities 


New Zealand equities


Global fixed income




Total reference portfolio


Last updated: September 2023

*Property had a 5% weight between July 2010 and June 2015.

The Reference Portfolio was introduced in 2010. It is a shadow or notional portfolio of passive, low-cost, listed investments suited to the Fund’s long-term investment horizon and risk profile. Capable of meeting the Fund’s objectives over time, it has an 80:20 split between growth and fixed-income investments and its foreign currency exposures are 100% hedged to the New Zealand dollar. 

The reference portfolio is therefore a very clear and ‘pure’ way for the Guardians to:

  1. estimate the Fund’s expected returns;
  2. benchmark active (value add) investment returns net of all costs; and
  3. be clear on the ‘hurdles’ for active investments.

Our aim, as an active investor, is to add more value after all costs to the fund than the reference approach would do, using strategies based on the Fund’s natural advantages as a long-term, sovereign investor with low liquidity requirements.

For example, we:

  • invest in a range of illiquid assets – including infrastructure, private equity and timber;
  • undertake extensive due diligence and manager monitoring to ensure we choose the most effective and skilled investment managers;
  • aim to implement our trades and investments as efficiently as possible; and
  • periodically adjust our exposure to various asset classes within our actual portfolio, using our long-term horizon to take advantage of market volatility. This is called ‘Strategic Tilting’.

These activities bring a higher expected return and/or offer diversification benefits for the Fund, albeit with more complexity and cost.

The Reference Portfolio approach encourages thinking on the underlying economic drivers of risk, returns and correlations (e.g. growth, inflation, liquidity and agency risks) rather than asset classes
per se. Allocating capital through these lenses can therefore improve the true level of diversification of the Fund, relative to a more traditional Strategic Asset Allocation approach.

The Reference Portfolio also encourages greater separation and delegation of value-adding activities from the Board to internal management. This allows the Board to focus on governance around the risk allocation and investment process, and allows management to focus on adding value to the portfolio.

The Reference Portfolio can change over time, for example, if:

  • aspects of the Fund’s purpose or endowments (e.g. our long-term horizon) change; or
  • market developments mean that a narrower or wider set of representative market exposures can be accessed passively and at a low cost; or
  • our assumptions about the equilibrium risk-return attributes of asset classes change materially, so that the mix of assets in the Reference Portfolio no longer reflects what the Guardians' believe is an appropriate balance of risk and return.