NZ Super clocks 2017 returns at 19.8%, expects gains to normalise next year on

New Zealand Superannuation Fund (NZ Super) has posted an annual return of 19.8 per cent for the year ended December 2017 with total assets surging to NZ$37.9 billion ($27.8 billion) amid an overweight value of growth assets or equities, an investment segment that the fund is heavily skewed towards.

While the portfolio gains for the year are significantly higher over 2016 (13.2 per cent), there was also a word of caution from NZ Super which released its returns on Thursday. The fund has said that the bright returns over the past period in the “teens and twenties” may not persist and are set to “normalise” from next year.

“Looking forward, the global economic outlook is better than it has been for several years. However, with many asset classes globally at or above full value, we do not expect annual returns in the teens and twenties to persist,” said Catherine Savage in a statement. Savage is Chair of the Guardians of NZ Super, the Crown entity that manages the fund.

She further noted that the returns that have been in double digits for past few cycles are likely to normalise and over the long term the fund expects to deliver average returns of approximately 8 per cent a year, based on current portfolio settings.

Including the latest 2017 annual returns, the Auckland-based fund at an average has returned 10.5 per cent per annum — after costs, before NZ tax — since inception in 2003.

It may also be noted that in December last year, the New Zealand government resumed contributions to NZ Super which had been suspended for almost a decade, an aftermath of the global financial crisis that had hit most economies in the past decade.

“We remain focused on identifying attractive active investments in New Zealand, with recent highlights including a $100 million investment in New Zealand insurer Fidelity Life,” the fund noted.

As a long-term investor with known cash flows, the Fund is heavily weighted towards growth assets, such as shares. However, the NZ Super also mentioned that while growth investments can be volatile over the short term, “we can ride out and profit from any future market downturn.”

In total, the assets of the fund stood at $37.9 billion, again a surge over NZ$32.7 billion at the end of 2016. At the end of December last year, the asset mix comprised global equities at a whopping 66 per cent, fixed income at 11 per cent and private equity at 5 per cent. The rest of the assets were in Timber, NZ equities, other private markets, infrastructure and rural farmland, according to its December 2017 performance report.

The same report notes that its investments in terms of geographies was heavily skewed towards North America (46 per cent) while Asia (ex-Japan) formed 10 per cent.

Meanwhile, the firm is currently undergoing a transition at the top as it is pursuing a global recruitment process for a new CEO, something that may be only completed by March. The fund’s current CEO Adrian Orr is leaving for a new role as Governor of the Reserve Bank of New Zealand. For the time, Chief Investment Officer Matt Whineray has been appointed Acting CEO from mid-March.

Also Read:

People: NZ Super appoints interim CEO; PE firm ZZ Capital gets new chief

NZ Super reaps better returns with bets on high-growth domestic private firms

Central banks, US fiscal policy to have biggest impact next year: New Zealand Superannuation Fund

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.