NZ Super is star earner in Crown investments

By Dene Mackenzie

Fund earns 23pc return on $19bn assets in nine months, Treasury reports show. Photo / Supplied
Fund earns 23pc return on $19bn assets in nine months, Treasury reports show. Photo / Supplied

Crown financial institutions felt the benefits of strong world sharemarkets in the nine months ended March, Treasury documents show.

In the nine months, the New Zealand Superannuation Fund had a 23 per cent return on its $19 billion of assets, with 93 per cent of them allocated to growth assets.

The Government Superannuation Fund had a 15.5 per cent return on its $3.3 billion of assets, with 77 per cent of its funds allocated to growth assets.

The next best was ACC with 10.7 per cent return on $16 billion and 38.6 per cent allocated to growth assets.

The Earthquake Commission had a 7.1 per cent return on its $5.5 billion of assets, with 27.1 per cent in growth assets. The National Provident Fund had a 6.6 per cent return on $1.94 billion, with 25.6 per cent in growth assets.

The aggregate of all financial institutions was 15.7 per cent, Treasury said.

In the past five years, the super fund had a 3.7 per cent return, GSF 2.9 per cent, ACC per cent, EQC 3.9 per cent and National Provident 5.6 per cent.

In total, the financial institutions had investments worth more than $43.5 billion on behalf of the Crown, excluding the National Provident Fund, which was not included on the Crown's balance sheet.

Kepler Group principal Peter Smith said the results showed the NZ Super fund knew exactly what it was doing.

"It is able to be more aggressive - 91 per cent of assets in growth - without taking too much risk in contrast to the managers of the National Provident, who are obviously far too conservative."

The National Provident Fund was hampered as it had to deliver a government guarantee in its main scheme of 4 per cent a year and needed to build reserves for years that, in the "normal cycle of events", could be negative, such as 2008. Also, the main scheme and others had been closed to new money since March 1991.

It was hard to be productive with a diminishing asset as members pulled out in retirement, he said.

The two funds with the lowest returns (National Provident and EQC) have lowest amounts in growth investments.

"EQC is probably a bit skewed by the September Canterbury earthquake and the later February one, where it would have been pulling funds out of the growth assets as that sector would have the most profit within it."

The GSF scheme was relatively small as it too had been hampered by having no new members since 1991, Mr Smith said.

Craigs Investment Partners broker Chris Timms said not all of the NZ Super fund assets would be invested in listed entities. It owned half of Greenstone Energy, the owner of Z Energy.

It would also have investments in private-public partnerships. Some of its investments would also be in private equity funds.

The superannuation fund could afford to take a long-term view of investments in such things as energy assets.


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