The New Zealand Superannuation Fund, which was set up to help pre-fund a ballooning pension bill for baby boomers, clawed back some of its losses in December, in a tough first half to its current financial year.
The Cullen Fund, named for its architect former Finance Minister Michael Cullen, made an absolute loss after fees and before tax of 5.3 per cent in the six months ended December 31, posting just two monthly gains in that period.
A small rebound in equity markets last month helped it return 0.4 per cent, or $90 million. The size of the fund was $17.73 billion at the end of the year.
The fund has had to contend with a collapse in investor confidence through the second half of last year, when the United States had its triple-A credit rating cut over legislators' inability to increase its ability to borrow, and a mounting sovereign debt crisis in Europe eroded traders' appetite for bigger returns.
That comes after the NZ Super Fund had its best year in the 12 months ended June 30, returning 25 per cent on a global stock market rally. Since its inception in 2003, the fund has returned 6.6 per cent. That's 1.23 per cent in excess of Treasury Bills, which it aims to beat by 2.5 per cent over its lifetime.
As at December 31, the fund held about 59 per cent of its assets in global stocks and 5 per cent in the local stock market. Some 6.2 per cent of it is invested in property and 6.3 per cent in fixed income.
The fund holds 1.8 per cent of its assets in private equity and about 11 per cent in infrastructure.
Some 7.8 per cent of the fund is invested in timber, 3.3 per cent in other private markets and 0.4 per cent in rural farmland.