The New Zealand Super Fund reported Thursday a 1.7% return for the fiscal year ended June 30, lifting the value of its portfolio to NZ$44.8 billion ($28.8 billion).
The latest returns trailed those of the superannuation fund's passive reference portfolio by just more than 2 percentage points. For the 10 years through June 30, however, annualized gains of 12.6% remained well ahead of the reference portfolio's 10.3% advance.
Matt Whineray, the Auckland-based fund's CEO, in a news release said the 1.7% gain represented a "strong result" for a year marked by a hugely challenging investment and operational environment.
The 30 years or more before the government begins tapping into New Zealand Super's assets allows the fund to maintain a heavy weighting to equities, making sharp declines inevitable when a market shock like COVID-19 occurs, Mr. Whineray said. The fund's portfolio plunged 12.3% in March alone, he noted.
But that same long-term horizon gives New Zealand Super leeway to "lean into market opportunities via counter-cyclical strategies such as dynamic asset allocation and accessing stressed credit and fund markets, to take advantage of the corresponding recovery," Mr. Whineray said.
"The fund added significantly to its equity and credit positions as markets fell and has progressively reduced those positions as markets have recovered," he said.
Mr. Whineray said low interest rates and "constrained economic conditions" augur a difficult and volatile period ahead.
New Zealand Super's annual report will be released next month.