Super Fund sees buying opportunities in volatility

Adrian Orr, Chief Executive of the New Zealand Superannuation Fund. Photo / Steven McNicholl

Recent sharp swings in equity markets around the globe offers buying opportunities, says chief executive of the New Zealand Superannuation Fund Adrian Orr.

For long-term investors like the super fund, it enables them to pick up assets at a lower price, Orr said in a statement. The NZ Super Fund set up to help pay pensions decades into the future saw a return on investment of 6.5 percent in 2015 and is now valued at just under $30 billion.

"Volatile markets provide opportunities for us. We respond to market fluctuations by adding more assets as they become cheaper, and selling those that are becoming more expensive," Orr said. "We remain focused on achieving the best outcomes over the long term".

The fund has returned an average of 9.6 percent since being founded in 2003, and has benefited from surging equity markets in the past three years, showing returns of 15.2 percent per annum.

However, the fund's managers have warned that such performances would be the exception, rather than the rule.

In December 2015, the 2016 budget policy statement revealed government contributions to the fund were projected to resume in 2022/23, two years later than previously indicated.

Contributions were suspended in June 2009. The government is expected to start withdrawing money from the fund in around 2031/32 to begin to help pay superannuation and the size of the fund is expected to peak in the 2080s.