GNZS' Annual Report Release Financial Year Ended 30 June 2008 (29 September)
POSTED ON: 29 September 2008
Auckland (29 September 2008) - The Guardians of New Zealand Superannuation today released their Annual Report and announced the investment returns of the New Zealand Superannuation Fund for the year ended 30 June 2008.
The Fund's net return on investments for the financial year was -4.92% before New Zealand tax. During the year, the Fund grew from $13.1 billion to $14.1 billion.
The Guardians' Chairman, Mr David May, said: "After four years of significant outperformance, the New Zealand Superannuation Fund recorded a negative return over the past year. This has partially reversed the gains made while investment markets were performing strongly. "The Fund has been impacted in the short term by the turbulence in the global equity markets. The negative impact comes despite our lack of any significant exposure to the subprime market, the finance company sector, or to the liquidity strains suffered by many financial institutions. "The Fund deliberately invests in global equity markets because we expect that they will perform best over the long term. The Fund's long-term horizon means it is well placed to withstand ups and downs in the market. The Board remains confident that this remains the right approach and that the appropriate response to the credit crisis is to remain calm and ready to benefit from the more favourable risk and liquidity premia in the years ahead."
The Guardians' Chief Executive Officer, Mr Adrian Orr, added: "People are naturally interested in how the Fund has performed through the more recent market turmoil, that is since end-June. Over July and August, we returned around 0.23%, a small but positive number. However, the market has remained volatile through September.
"We are going through a significant and rapid rearrangement of the global financial system. These are dramatic and unsettling times. Even then, however, the aggregate impact on the Fund, while not pleasant, is not outside the bounds of our long-term expectations to date. Investment opportunities for a long-term fund like ours are on the rise. We remain disciplined in our decision making.
"From an organisation perspective, we have made excellent progress over the year. We have developed a strong institutional structure and team that will serve the Fund well as it grows in size and complexity. We also continue to act as a responsible investor," concluded Mr Orr.
For more information please contact: Karine Fox, Head of Communications, New Zealand Superannuation Fund, 09 373 8963, 021 351 141
Notes for Editors: Photos of Chairman David May and Chief Executive Officer Adrian Orr, are available on the Fund's website www.nzsuperfund.co.nz / Newsroom / Photo Library.
About the New Zealand Superannuation Fund: The New Zealand Superannuation Fund, which commenced investing at the end of September 2003, is designed to partially provide for the future cost of New Zealand superannuation. An ageing population means the cost of providing New Zealand superannuation is expected to double over the next 50 years. To prepare for this, the Government plans to allocate around $2 billion a year to the Fund over the next 20 years while the cost of superannuation is relatively low. In the meantime, the Fund will invest the money on a prudent but commercial basis.
As the cost of superannuation escalates, the Government will progressively draw on the Fund to help smooth the impact on its finances. As at 31 August 2008 the value of the Fund was $14.5 billion. The Fund is expected to grow to around $109 billion by 2025.
In addition to best-practice management portfolio, and to avoid prejudice to New Zealand's reputation as a responsible member of the world community, the Fund's objective is to maximise returns without undue risk to the Fund as a whole, and expects to exceed, before tax, the risk-free rate of return (measured as the yield on 90-day Treasury bills) by an average of at least 2.5% p.a. over rolling 20-year periods.