Who's got the best super fund? New Zealand, says JP Morgan

Super Fund chief executive Adrian Orr says the fund had benefited from keeping its nerve during the global financial crisis and making investments in stocks that had been heavily sold-off. Photo / Steven McNicholl

New Zealand has the world's best-performing sovereign wealth fund, new research has found.

With annual returns of more than 17 per cent over the past five years, the nearly $30 billion New Zealand Superannuation Fund has outperformed all of its counterparts that publish figures, according an analysis by JP Morgan published in the Financial Times.

The second-best performing fund for the five-year period was the Government of Singapore Investment Corp, or GIC, with annualised returns of 12.4 per cent.

Temasek, also from Singapore, returned 11 per cent a year, while Australia's Future Fund was in fourth place with 10.4 per cent, according to the research.

The last few years are likely to have been among the best years the fund will experience for some time.

Super Fund chairman Gavin Walker

Norway's Government Pension Fund Global returned only 4.2 per cent a year in the five years to June 2014.

New Zealand's Super Fund - which was established in 2001 with the aim of helping to pay for the future costs of superannuation entitlements - has been benefiting from buoyant global equity markets.

Its portfolio includes more than 6000 international stocks.

The fund returned 18.4 per cent in the 12 months to the end of April this year.

In a recent Herald interview, Super Fund chief executive Adrian Orr said the fund had benefited from keeping its nerve during the global financial crisis and making investments in stocks that had been heavily sold-off.

"As the world has been recovering post global financial crisis, prices have shifted back up towards fair value and we've been able to ride that," Orr said.

However, in a speech last week Super Fund chairman Gavin Walker warned that the recent high returns were unlikely to continue in the long-term.

"The last few years are likely to have been among the best years the fund will experience for some time," he said. "On average and over the long-term we expect to earn the rather less exciting figure of 8 per cent [per annum] - but which will still provide a handsome return to New Zealander stakeholders."

The National Government suspended contributions to the fund in 2009 and it is estimated that it would be worth $47 billion if contributions had continued.

The Super Fund is currently trying to claw back a $200 million loan it made to a Portuguese bank that collapsed last year.

Legal proceedings have been filed in Europe as part of that process.