The New Zealand Superannuation Fund produced a 1.88 per cent return in February even though the value of its holding in Telecom fell.
Currently 7 per cent of the fund is invested in New Zealand equities and Telecom is its third-largest investment behind Auckland International Airport and Fletcher Building.
The fund's investment in Telecom was worth $107.7 million as at February 28, down from $111m a month earlier. On February 26 Telecom's share price was $2.33, and today the price was at an all-time low of $2.13, suggesting the fund will experience losses from its Telecom investment if the current price prevails until the end of this month.
The fund's return in the year-to-date in February is 17.24 per cent.
The fund recorded a 1.97 per cent loss in January, bringing its performance in the first seven months of its financial year to 15 per cent.
The fund's value lifted by $296m in February, to $15.94b.
The fund was set up by a Labour Party-led government to help fund the future cost of New Zealand superannuation by investing government contributions and returns on the contributions over the long-term.
It was designed to smooth the tax burden of New Zealand superannuation between generations.
National Party policy prior to the 2008 election was to encourage increased investment in New Zealand assets, with an eventual target of 40 per cent of the fund invested in New Zealand.
Finance Minister Bill English has directed the guardians to appropriately identify and consider an increased allocation to New Zealand assets.
The fund has received a total of $14.88b in government contributions including $250m this financial year, and has produced annualised absolute returns of 6.04 per cent since its inception.
In last May's Budget the Government revealed plans to suspend payments to the fund for at least a decade to help reduce Crown debt.
The fund's long-term target was to exceed the rate of return on Treasury bills by 2.5 per cent over rolling 20-year periods.
Almost 37 per cent of the fund's investments are in large capitalisation international equities, and another 17 per cent in international fixed income. Timber makes up 7.5 per cent of the fund's investment.