Investment Performance for the Year Ended 30 June 2006 (1 September)
POSTED ON: 1 September 2006
The New Zealand Superannuation Fund today announced its investment returns for the year ended 30 June 2006.
In the 12 months to 30 June 2006 the assets of the Fund grew from $6.6 billion to $10.1 billion (net of current and deferred tax). The growth consisted of $2.3 billion in Government contributions and $1.4 billion in pre-tax investment income.
The Fund's objective is to maximise returns 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.
The Fund's rate of return for the 12 months to 30 June 2006 was 19.2% (after costs and foreign tax, but before New Zealand tax). This exceeded the risk-free rate of return of 6.77% by 12.43%. In dollar terms, it equates to approximately $930 million above the risk-free rate of return.
The 2005/6 year generated a higher rate of return than the previous year. In 2004/5, the return was 14.13%.
Since the investment of Fund assets began on 30 September 2003, the return has averaged 14.89% p.a., against the average risk-free rate of 6.20% p.a.
Chairman of the Board of the Guardians of New Zealand Superannuation, David May, said: "This is our third year of very good results thanks, largely, to buoyant global equity markets. We have deliberately invested relatively heavily in these markets because, over the long term (20 years plus), they are expected to outperform more stable investments. We expect, as a consequence, that there will be shorter periods of substantial out performance and of substantial underperformance. We have been fortunate that our first three years have been ones of out performance.
"Particularly pleasing this year has been the contribution from the Fund's active equity managers. Collectively on average they have outperformed their respective market indices by 3.5%, a remarkably good result."
He went on to say: "Equally importantly the Fund has made significant strides in diversifying its investments. The total number of distinct investment manager mandates has increased from 22 to 34, including new investments in property, infrastructure, commodities, private equity and timber. In March last year we set ourselves the target of increasing the investment in these more diverse asset classes to 20% of total assets by June 2007. I am pleased to say that this target had largely been achieved by June 2006, one year ahead of schedule."
For more information please contact:
David May, Chairman, New Zealand Superannuation Fund Sarah Loutit, Media Relations, New Zealand Superannuation Fund, 021 351 141