NZ Super Fund, Auckland, achieved 14.9% returns, beating its treasury bills benchmark but falling slightly short of its passive reference portfolio benchmark, to reach a record high of NZ$76.6 billion ($46.7 billion) in assets for the financial year that ended on June 30.
The sovereign wealth fund attributed the performance to strong global equity markets over the past year, the fund said in a statement on Sept. 9.
In the previous fiscal year ended June 30, 2023, the fund posted an 11.9% return, and its assets rose to NZ$64.5 billion.
“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 in the statement.
The fund had 44% of its portfolio invested in developed-market global equities, and 2% in emerging-market global equities as of June 30. In comparison, global equities made up 43% of the portfolio in total a year ago, according to the the fund's 2023 annual report, which did not provide the break down between developed and emerging market equity allocation.
The fund's allocation to domestic equities remained unchanged at 4%.
Allocation to debt securities fell to 21% from 24% a year ago, and alternatives were reduced to 7% from 10% of the portfolio. Rural and timber assets held steady at 5%, but infrastructure and property allocations each rose to 5% from 4%.
Private equity made up 3% of the portfolio, from 4% a year ago, and the remaining 4% was invested in cash and other asset classes, up from 2% a year ago.
The fund's 14.9% one-year return fell slightly short of its reference portfolio return of 15.13%, but was higher than the New Zealand treasury bill return of 5.61%, the statement noted.
The fund's 20-year return was 10.03%, beating its reference portfolio return of 8.49% and the treasury bill return of 3.45%.
The reference portfolio is a low-cost passive listed portfolio comprising 80% equities and 20% fixed interest.
Since the fund's launch in 2003, returns have outperformed the reference portfolio benchmark by 1.46% per year, Townsend said in the statement. “To put it another way, the fund is more than NZ$17 billion better off than if we had implemented a strictly passive, index-linked approach,” Townsend said in the statement.
Around half of the portfolio is managed actively, which has added value over the lifetime of the fund, she said.
