Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ Super Fund keeps strong equity weighting following review

NZ Super Fund keeps strong equity weighting following five-year review

By Fiona Rotherham

July 31 (BusinessDesk) - The New Zealand Superannuation Fund is sticking with a strong weighting to equities following a five-year review of its passive reference portfolio, which forms the basis for most of the fund’s investments.

Fund manager, the Guardians of New Zealand Superannuation, expects the reference portfolio, introduced in 2009, to return an annual 7.7 percent over 20-year periods, 2.7 percent above the risk-free Treasury bill interest rate.

The five-year review has found the portfolio’s current mix of 80 percent equities and 20 percent fixed income assets remains appropriate, given the fund’s long-term investment horizon. The fund, established in 2001 to help pre-fund universal super benefits, is not projected to start paying out money until 2031/32.

Guardians chair Gavin Walker said setting the reference portfolio was the most important decision the board makes, given it provides both economic return and a benchmark for active investment.

“We are prepared to weather volatility in fund returns as asset prices fluctuate in the short-term – indeed, as the fund experienced during the global financial crisis – in order to maximise long-term performance,” he said.

The reference portfolio’s existing 5 percent allocation to New Zealand equities will remain unchanged although the fund’s actual portfolio currently holds around 7 percent in listed NZ equities and about a further 8 percent in other New Zealand assets.

Changes include increasing the allocation to global equities from 70 percent to 75 percent, of which 65 percent will be targeted at developed markets and the rest to emerging markets.

The reference portfolio’s existing 5 percent allocation to global listed real estate investment trusts has been dropped, with chief investment officer Matt Whineray saying the Guardians believe the fund achieved sufficient exposure to listed real estate through its global equities, which comprise 5 percent of the reference portfolio.

It will remain 100 percent hedged to the New Zealand dollar to provide a clear performance benchmark for any active currency investments made outside of it.

Over the past five years the reference portfolio has returned 13.2 percent compared to an expected 8.5 percent. The overall fund generated an additional 3.65 percent per annum or $4.55 billion, over the same period through active investment decisions.

Currently around 70 percent of the fund is invested in line with the reference portfolio.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Voluntary Administration: Renaissance Brewing Up For Sale

Renaissance Brewing, the first local company to raise capital through equity crowdfunding, is up for sale after cash flow woes and product management issues led to the appointment of voluntary administrators. More>>


Approval: Northern Corridor Decision Released

The approval gives the green light to construction of the last link of Auckland’s Western Ring Route, providing an alternative route from South Auckland to the North Shore. More>>


Media Mega Merger: Full Steam Ahead For Appeal

New Zealand's two largest news publishers have confirmed they are committed to pursuing their appeal against the Commerce Commission's rejection of the proposal to merge their operations. More>>

Crown Accounts: $4.1 Billion Surplus

The New Zealand Government has achieved its third fiscal surplus in a row with the Crown accounts for the year ended 30 June 2017 showing an OBEGAL surplus of $4.1 billion, $2.2 billion stronger than last year, Finance Minister Steven Joyce says. More>>


Mycoplasma Bovis: One New Property Tests Positive

The newly identified property... was already under a Restricted Place notice under the Biosecurity Act. More>>

Accounting Scandal: Suspension Of Fuji Xerox From All-Of-Government Contract

General Manager of New Zealand Government Procurement John Ivil says, “FXNZ has been formally suspended from the Print Technology and Associated Services (PTAS) contract and terminated from the Office Supplies contract.” More>>