The New Zealand Superannuation Fund made its biggest annual return in 2010/11 since its establishment eight years ago, making 25% after fees from riding the rebound in global equities.
The value of the fund, which was set up to help pre-fund pensions for an ageing population, rose NZ$3.9 billion in the 12 months ended June 30, more than half the pre-tax returns it has made since its inception in 2003.
That beat its previous best performance in 2005/6 when it made an after fees return of 19%.
The so-called Cullen Fund, named for architect former Finance Minister Michael Cullen, had NZ$19.03 billion under management as at June 30, and has beaten Treasury bills by 2.23% since its inception, just 27 basis points shy of its benchmark.
The year marked a change in investment policy at the fund as it lifted its exposure to international stock markets after having to deal with the suspension of government contributions that have made up the bulk of its cash.
As at June 30, the fund had almost 61% of its cash in global stocks, followed by international fixed interest at 11% and infrastructure at 9.5%. Timber investment was the next largest exposure at 6.8%, then New Zealand shares at 5.2% and global listed property at 4.2%.
The fund held 2.6% in other private markets, 1.3% in local property and 1.2% in private equity, with just 0.1% in New Zealand bonds.
Auckland International Airport Ltd. was the biggest locally listed holding, making up 1.5% of the fund, while Transurban Group was the biggest foreign listed holding, also at 1.5%.
See more detail here at NZ Super Fund.
(BusinessDesk)
6 Comments
No, National canned the contributions as the pension crisis will magically take care of itself.
As with any diversified growth asset you can get swings in returns over short periods of time. It is not necessarily risky transactions.
Some people would argue that taking a massive leveraged punt on a single asset class in a localised area, ie NZ residential property, is a massive risk, but people climb in.
Two obvious reasons for that :
1 : the Cullen fund is too big vis a vie the capitalisation of the companies on the NZX . It could buy out the leading stocks completely , so it trundles off to graze in bigger pastures off-shore .
2 : risk of investing in one country is high . Heaven forbid , but imagine what would happen to the NZ economy if foot-and-mouth disease broke out in our dairy herd . NZ is vulnerable by its reliance on just two sectors , primary production & tourism .
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