New Zealand Super Fund breaks $20 billion mark; releases 2011/12 Annual Report
POSTED ON: 17 October 2012
The New Zealand Superannuation Fund reached an end-of-month record high of $20.08 billion in September.
The Fund, which commenced investing in 2003, was set up by the New Zealand Government to help pay for the increasing cost of universal superannuation. It is managed by the Guardians of New Zealand Superannuation. To date the Government has contributed $14.88 billion to the Fund, which will start paying out money to help fund super payments from around 2029/2030.
Since inception, the Fund has returned 7.57% per annum, 2.41% p.a. (or $2.7 billion) ahead of the Treasury Bill rate, New Zealand’s risk-free investment benchmark.* Over the same period the Guardians’ active investment efforts have contributed 0.57% p.a. (or $1.0 billion) ahead of the Fund’s reference portfolio return, its passive investment benchmark. The Fund has also returned $2.32 billion to the Crown in tax.*
Chief Executive Officer Adrian Orr says “the Fund has benefited by sticking to its long-term growth strategy and investment beliefs during volatile times.
“These results show the benefit of remaining focused on long term value, having the fortitude to stay the course, and concentrating on the things we can influence.”
“Our weighting to growth assets leads to ups and downs in short-term performance. The crucial factor is how the Fund performs over the long term - in our case 20-plus years.”
“The Fund is well placed to take advantage of our long-term investing horizon and exploit the market’s current risk aversion.”
2011/12 Annual Report released
In its Annual Report for the year to 30 June 2012 the Fund flags a number of new investments, including a USD$100 million investment in a Chinese infrastructure fund, the purchase of a 1/3 share in Christchurch-headquartered Scales Corporation, and additions to its portfolio of local dairy farms, now worth $110 million.
The report also discusses the progress made in implementing a 2009 Direction from the Minister of Finance to identify and consider opportunities to increase the allocation of New Zealand assets in the Fund.
Over the last three years, the proportion of the Fund that is invested in New Zealand has increased 1.6% and the value of the Fund’s New Zealand investments has grown by a billion dollars.**
“We are continuing to place a high priority on finding New Zealand investment opportunities of a scale and nature that suit our Fund, as a long-term, growth-oriented investor,” said Gavin Walker, Chair of the Guardians.
“In order to be sure that we are getting the best risk-adjusted returns on our investment portfolio, we will continue to take our time and remain disciplined on price.”
As well as its dairy farm portfolio and stake in Scales Corporation, the Fund’s New Zealand investments include more than $1 billion invested in the local sharemarket, a 40% share in Kaingaroa Forest and a 50% share in Z Energy.
The Fund’s Annual Report also details the recently-released results of a survey of the costs and investment returns of 286 sovereign wealth and pension funds for the five years to 31 December 2011.
The survey, by global benchmarking agency CEM, found the Fund to be among the strongest performers of its type, with investment returns on a value-add basis above median levels and with costs below the median level of its peers. The Fund’s full September performance report will be released later in the month.
* Figures as at 30 September 2012. ** NZ investment figures are for the three years ended 30 June 2012 and exclude cash and foreign exchange hedging contracts. See page 25 of the Annual Report for further detail. Media contact: Catherine Etheredge, Head of Communications: +64 27 4777 501, Email: [email protected]