KEY POINTS:
The worldwide slump in sharemarkets is an opportunity of a lifetime for a long-term investor, according to New Zealand Superannuation Fund chief executive Adrian Orr.
The $12 billion fund set up by the Labour Government in 2003 to help pay the future retirement costs of ageing baby boomers
has lost $2 billion in value over the past couple of months after being hit by the global volatility.
But Orr is upbeat over the economic crisis which has seen sharemarkets around the world plummet by the same levels as they did in 1929, when the world was plunged into the Great Depression.
"Being a very long-term investor we have greed when others have fear and have fear when others have greed.
"The fund is so young in investment terms that the opportunity that has opened up now in terms of shares being at a low really is a long-term investment opportunity of a lifetime.
"In 20 years' time we will be looking back and this will be the moment that will make the difference."
Orr said that did not mean it was easy to be an investor but he believed the fund was managing the situation well.
Orr said the biggest challenge had been coping through the liquidity issues presented by the credit crisis.
This week Treasury officials told the Government it would be better to stop the $2 billion annual contribution it makes to the fund rather than forcing it to increase its investment in infrastructure.
Yesterday Orr would not comment on the issue or how it might affect the fund's abilities to take advantage of the opportunities it now saw, instead reiterating his message.
"The opportunities are there and we will continue to take advantage of them under our mandate."
Orr said it was the luxury of being a long-term investor that it did not have to be focused on short-term upheavals.
"It's a luxury in the sense of being a long-term fund with good liquidity that we don't have to be driven by the short-term picture. The mid- to long-term indicators show now is a good opportunity. There is exceptional value at the moment."
Orr said much of the downturn expected over the next two years had been priced into stocks.
But he did not know whether it would be six months or a year before the markets would pick up again.
Yesterday the Super Fund also announced that it would pull out of investing in companies which manufacture or test nuclear explosives.
That would involve selling out of its $13 million investment in Honeywell International and Lockheed Martin.
Orr said the move would not have any negative impact on the fund.
But it would continue to invest in companies such as New Zealand firm Rakon, which manufactures delivery systems.
"There are always companies which sit in a grey zone."
Orr said the final decision came down to what was legal in New Zealand.
"Nuclear warhead testing - it is illegal in New Zealand - delivery systems are not."
Orr said many companies involved in the nuclear industry also made products or delivered services that we use every day, such as aeroplane maker Boeing.
The fund had already said it would pull out of investments in companies which manufacture cluster bombs.
