Kia ora koutou,

I'll finish up with the Guardians later this year after more than 15 years as part of this great team. As we reach the end of 2023, the NZ Super Fund will mark 20 years since it began investing. And I'm very proud to be part of the whakapapa of the Guardians, one of the many team-mates and Board members who have worked at the Guardians to achieve our Purpose: Sustainable investment delivering strong returns for all New Zealanders.

I have an opportunity in this video to reflect on what we've achieved over the past 20 years.

Since I arrived at the Guardians in 2008, I've been a keen observer of the activities of our peer funds around the world. They've been generous in sharing their knowledge and approaches. Since I began visiting those more-established peers, I've been looking forward to the point at which we too could start reporting our 20-year rolling returns – a better metric to assess the success of a long-term fund. Now, that's not to say that shorter-term returns are not important for monitoring progress along the way, but short-term measures are less useful in assessing our performance than their long-term counterparts.

In my time at the Guardians, I've learnt a great deal about the art and science of global asset ownership. I've learnt the critical importance of governance as a foundation for investment success. Independent decision-making, combined with real clarity about who is responsible for which decision is paramount, as is being able to measure the success of those decisions through time. The late Sir Michael Cullen did a great job of embedding that commercial independence into the Fund’s governance architecture – as noted by successive external reviewers of the Guardians.

I have learnt the importance of being clear in our investment beliefs and our endowments as an investor, asking what competitive advantages do we have? They are few, but they are important. We suffer the same behavioural biases as everyone else in the market; we try to be explicit about those and set ourselves up to weather them. Aligning our investment strategy to make the most of those endowments is equally critical.

I’ve also learnt that it’s critical to diversify both active investment positions and market exposures. Being wrong is inevitable in markets. Investment strategies must be sized so that if they fail, they’re survivable.

The two biggest risks for us as a long-term investor are losing the support of our stakeholders, and running out of liquidity. Over the past 20 years, we have continued to invest positively in the face of significant market turmoil, managing our liquidity carefully and being open and transparent with our stakeholders so they have the information they need to enable their trust and confidence in us to be retained.

Humility is fundamental – the future is not ours to know. The markets we've seen since the Fund began investing are just one draw of the cards from an infinite number of possibilities that existed in 2003. Our team members have an average age of 41; we haven’t had to invest through sustained downturns in markets or the global economy, or in a world where inflation is high and persistent. Every day brings new challenges. We need
to be humble in the face of the wide range of risks and potential outcomes. This includes, critically, climate change and related risks in terms of biodiversity and environmental degradation.

The Fund is designed to smooth out the rising cost of universal superannuation. This means the Fund has a very long investment horizon. As a result, we care about the value of assets over the very long term; we care about the impact of those investments on long-term environmental and social outcomes, because those, in turn, will have an impact on our long-term returns. This is a critical underpinning of our approach to sustainable finance, and I am proud of the leadership we have shown in this space.

Beginning from a small team and outsourced model, we evolved to the point where more than half of our exposure and most of our active risk is managed in-house. To do this, we need a really capable and inclusive team committed to investment excellence. I'm proud to have been part of the team that has served as kaitiaki (Guardians) of the Fund up until this first waypoint, 20 years of investing. And I am confident that the team will continue to be careful stewards of New Zealand’s putea (wealth) in the decades to come.

Kia ora.