The New Zealand Superannuation Fund, which was set up to help pre-fund a ballooning pension bill for baby boomers, clawed back some of its losses in December, in a tough first half to its current financial year.
The Cullen fund, named for its architect former Finance Minister Michael Cullen, made an absolute loss after fees and before tax of 5.3 percent in the six months ended Dec. 31, posting just two monthly gains in that period. A small rebound in equity markets last month helped it return 0.4 percent, or $90 million. The size of the fund was $17.73 billion at the end of the year.
The fund has had to contend with a collapse in investor confidence through the second half of last year, when the US had its triple-A credit rating cut over legislators’ inability to increase its ability to borrow, and a mounting sovereign debt crisis in Europe eroded traders’ appetite for bigger returns.
That comes after the NZ Super Fund had its best year in the 12 months ended June 30, returning 25 percent on a global stock market rally. Since its inception in 2003, the fund has returned 6.6 percent. That’s 1.23 percent in excess of Treasury Bills, which it aims to beat by 2.5 percent over its lifetime.
As at Dec. 31 the fund held about 59 percent of its assets in global stocks, and 5 percent in the local stock market. Some 6.2 percent of it is invested in property and 6.3 percent in fixed income. The fund holds 1.8 percent of its assets in private equity and about 11 percent in infrastructure.
Some 7.8 percent of the fund is invested in timber, 3.3 percent in other private markets, and 0.4 percent in rural farmland.
The value of the fund’s stake in Auckland International Airport rose to $335.1 million as at Dec. 31, from $314.4 million at the end of November, making it the fund’s biggest listed investment.