NZ Super Fund posts second-best return, boosts local investment to 31%

By Paul McBeth

July 27 (BusinessDesk) – The New Zealand Superannuation Fund has ended its second-best year since inception as it boosted local investments to almost a third of funds under management.

The so-called Cullen Fund, set up in 2003 to partially fund pensions for an ageing population, made a $2.09 billion, or 15.45%, return after fees and before tax in the year ended June 30. Since it first started operating in 2003, the fund has posted a return of 5.49%, though that’s 0.51% behind its target. The size of the fund is $15.62 billion.

Over the past year the fund increased its New Zealand investments to $4.89 billion, or 31% of the total portfolio, from $3.07 billion, or 24%, a year ago. That’s led by a $1.26 billion increase in cash and fixed income to $2.1 billion.

“It shows a significant increase in cash returns from our investments – and therefore enhanced liquidity for the fund – which are then actively managed via short-term deposits by our in-house treasury function, to further enhance returns,” the fund manager said in its report.

The increased local holding comes after the fund resisted a push from Finance Minister Bill English to boost its New Zealand investment to 40% of the portfolio, which the National-led government campaigned on in the 2008 election.

The fund ended the year on a downer, reporting a $235.9 million paper loss in June, as the on-going threat of a double-dip recession plunged global equity into the mire. That followed an $844.9 million loss in May.

Auckland International Airport Ltd. stayed the fund’s biggest local stock, valued at $248.8 million, down from $251 million in May, while Shell New Zealand became its second-biggest local holding at $209.8 million.

(BusinessDesk)

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