New Zealand Superannuation Fund, Auckland, posted an 11.9% return after costs and before taxes for the fiscal year that ended June 30, according to a statement on Sept. 13.
The sovereign wealth fund's total assets rose to a record high of NZ$64.5 billion ($39.2 billion), reversing the previous year's performance that saw a 7% loss and a fall in asset value to NZ$55.7 billion from NZ$59.8 billion.
However, despite last year's negative performance, the fund beat its reference portfolio by 1.63 percentage points in fiscal 2022, which amounted to NZ$4.5 billion in value added relative to the reference portfolio. This year, it lagged the reference portfolio return by 0.16 percentage points, resulting in NZ$102 million in value lost.
The statement cited the strong recovery in global equity markets in the first half of the calendar year as a significant contributor to the fund's performance, but CEO Matt Whineray warned that the global investing environment remains challenging as core inflation and elevated interest rates are expected to persist.
"Core inflation remains high in many markets, leaving open the possibility of further interest rate rises. At the very least, it would seem any decrease in interest rates may be more gradual and further away than might have been expected," he said in the statement.
"Our expectation is that will lead to lower returns overall as central banks prioritize reducing inflation over fostering economic growth," he added.
Whineray, who is leaving the fund at the end of the year, also cautioned that the geopolitical tensions driven by Russia's invasion of Ukraine, and data on China's economy, such as the yuan recently hitting a 16-year low, are areas of concern for investors.