The value of the NZ Superannuation Fund has hit a record high of $76.6 billion on the back of a strong performance by overseas technology stocks.
The fund earned $11.2b for the year ended June, a 14.9% rise on the previous year, as sharemarkets were driven higher by improving economic factors and surging overseas sharemarkets.
“Declining inflation, positive macroeconomic data and optimism that generative AI technology will boost corporate profitability saw global markets perform exceptionally well,” chief executive Jo Townsend said.
She said the fund’s active investment strategies, which included commitments to real estate, infrastructure and timber, had added significant value and suited its long-term investment horizon.
Beating benchmarks
The fund easily bettered the returns that could have been earned from the most conservative investment — government Treasury Bills — but it was fractionally lower than the notional reference portfolio used as a benchmark of performance.
Sharemarket returns were boosted by holdings in the so-called “magnificent seven” technology stocks, including Microsoft, Amazon, Tesla and Nvidia.
Since its inception in 2001, the fund has averaged a 10% annual return. It is expected to start making payments for the country’s superannuation bill in the mid-2030s.
Townsend said the fund would continue to invest in real estate, forestry and infrastructure projects which fitted its long-term, intergenerational strategy.
She said any prospect of investing more in Kiwibank to strengthen its financial ability to compete, as recommended in a recent Commerce Commission report, would depend on the governance and ownership structure of the state-owned bank.
“We cannot look at things in isolation — it would have to be part of the whole package of policy settings around that asset, at the time that we looked at investing.”
The fund was a direct investor in Kiwibank until 2022, when its desire for possible outside involvement resulted in the government of the day taking direct control of the bank.
Townsend said investment in long-term infrastructure, such as the proposed offshore Taranaki windfarm, were judged on the potential return that would generated by the asset, with the fund working in conjunction with experienced developers and operators.
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