Townsend took over as chief executive a year ago, after running a similar fund for the state of South Australia.
Her career in finance has been remarkable, given she stumbled into it after leaving school early and working as a secretary.
“In country Tasmania in the 1970s, it was actually pretty tough,” she says, speaking on the Money Talks podcast.
“Money was certainly not plentiful in our household. My parents had both left school really young and had a family.
“They worked extremely hard, but were never in a position where they were business owners, they were both doing manual, relatively manual jobs.
“So money was something that was never just taken for granted.
“In our household, it was: study really hard at school, get the best marks you can, but then you finish Year 10 and you get yourself the best job that you can.”
Townsend won the typing and shorthand prize at school.
“I guess I was a really good secretary.”
In 1987, Townsend headed to Sydney looking for greater opportunities.
She worked in a range of administrative jobs before finding those opportunities at Rothschild Asset Management in the early 1990s.
“I started in the marketing department and then took on a role on the treasury dealing floor,” she says.
“There were people dealing currency and buying gold, and selling bonds. That was, that was just mind-blowing for me at that point in time, and that’s where I really discovered that I quite liked finance.”
She found she was good at it, but because she had left school early, she couldn’t get automatic access to university.
“I had to do an industry course to prove that I could study, so I ended up working fulltime and studying part-time for 10 years.”
While she was studying for her degree in finance and maths, Townsend was working as a bond trader.
It was helpful to be in a place where having to learn the theory behind things like pricing a bond had some practical application, she says.
From Rothschild, Townsend joined a group of colleagues who spun out and created their own business.
She spent about six years working in the smaller team and building the business.
Then the opportunity came to go back to Tasmania. The move was in part to be closer to her ageing parents and the rest of her wider family.
But it also meant moving from being an investor in bonds and fixed income environment to the world of superannuation.
“With that transition, you very much have to move from being a technical expert to being a generalist,” she says.
“I had to learn about equities and property and infrastructure and all those different asset classes.”
After that Townsend returned to Sydney where she worked for REST Super – one of Australia’s big superannuation fund managers
It was there that she moved into management and leadership roles, eventually becoming the chief operations officer.
“That was quite scary because I didn’t know a lot about operations. But my main role there was to manage and lead that team.”
It was then she realised she was interested in broader corporate management, rather than just sticking to investment roles.
It was around that time that the role of chief executive officer at Funds SA came up.
Funds SA is the state-based sovereign wealth fund for South Australia.
It’s much like the New Zealand Super Fund, but smaller, with around $40 billion under management, Townsend says.
“I loved that job, I loved living in Adelaide but had decided that for personal reasons it was just time for me to have a break.
“My plan was to have a break for a year and go and have lots of holidays. I got about four months in, and I was contacted about the role here at the New Zealand Super Fund.”
“I’d sort of realised that I wasn’t good at doing nothing. Four months is long enough.”
Even after a successful career in finance and fund management, Townsend says she is still more of a saver than a spender and is relatively conservative with her own investing.
“It’s interesting because in most of the jobs I’ve had in the investment world, I’m very comfortable working in a very long-term approach where you have to sometimes invest when markets are falling and take quite a bit of risk,” she says.
Townsend is happy to explain the risks and challenges around that.
“We have a lot of money invested in New Zealand,” she says.
But New Zealand is just a small country in a financial sense and only represents 0.12% of the global pool of potential investments.
“By contrast, we have 11% of our investments here in New Zealand, and so it’s about $8 billion.”
Those are in a combination of listed equities and direct investments in forestry assets such as Timberlands and rural properties.
“Further down the track, we would love to be able to invest more in New Zealand,” Townsend says.
“It’s about having the opportunities to earn that commercial return that is gonna contribute.”
As an example, she cites a new offshore wind project in Taranaki that the NZ Super Fund is working to develop in a joint venture with Copenhagen Infrastructure.
“As that goes through, that will be a major contributor to adding to the electricity supply here in New Zealand.”
One of the big challenges was getting investments of sufficient scale, Townsend says.
“Because the way that the fund is set up, we are about 20% of New Zealand GDP now and forecast to peak at about 37% of GDP in five decades.”
“But then we’ll continue to grow into perpetuity, so in the decades to come, when the fund is meaningfully paying contributions back to the Government to help pay pensions, the numbers are just staggering.”
Listen to the full episode to hear more from Jo Townsend about her career and her path to the Super Fund.
Money Talks is a podcast run by the NZ Herald. It isn’t about personal finance and isn’t about economics – it’s just well-known New Zealanders talking about money and sharing some stories about the impact it’s had on their lives and how it has shaped them.
The series is hosted by Liam Dann, business editor-at-large for the Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
Money Talks is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts.
