Second best return for retirement fund

Photo / The Aucklander

The New Zealand Superannuation Fund had its second best annual performance in the year to June 30 but the fund is still behind where it would be if the money had been invested in low-risk treasury bills.

The fund, set up in 2003 by the Labour-led Government to help pay for the future cost of retiring New Zealanders, returned 15.45 per cent - beaten only by its performance in the June 2006 year where it pulled off a return of 19.2 per cent.

But the $15.63 billion fund remains 0.51 per cent below where it could have been if the money had instead been invested in Government-backed treasury bills.

Latest figures show the fund has been hit by the turmoil in global sharemarkets in the past couple of months with its performance in May down 4.82 per cent and June down 1.54 per cent.

The Super Fund said declines in equity markets were the main factor behind its June performance with 51 per cent of the fund invested in both local and international shares.

The strong annual performance was attributable to the recovery in equities in the second half of 2009 following the global financial crisis.

In the past year the fund has increased its investment in New Zealand after the Government made it clear it would prefer to see more local investment. That has now grown from 23 per cent of the fund's portfolio to around 31 per cent. A stake in Auckland Airport remains its biggest single investment - valued at $248.8 million.

Its investment in the Shell business, made in conjunction with Infratil, is the fund's second largest New Zealand equity investment at $209.8 million.

The Super Fund's investment in equities and timber has increased in value in the past year but property went down falling from $292.2 million to $267.6 million.

The fund, which only received $250,000 from the Government in the last year, has received total Government contributions of $14.88 billion since it was started and has paid $1.42 billion in taxes back to the crown.

Last year the Government put contributions to the fund on hold from July 2011. Previously it received about $2 billion a year from the crown.