NZ Super warns of lower gains in short term after returning 21% in 2019

New Zealand Flag. Photo: Reuters

New Zealand Superannuation Fund (NZ Super Fund), the country’s NZ$47-billion ($30 billion) sovereign wealth fund, anticipates lower returns than what it has enjoyed in recent years as it is taking a less active risk in the short term due to what it foresees as a challenging market this year.

NZ Super Fund CEO Matt Whineray, however, said the fund will remain “well-positioned to exploit emerging opportunities” and is exploring a range of potential investments in New Zealand and abroad, particularly in infrastructure and real estate.

In a statement Thursday, the wealth fund reported a strong 2019 calendar year performance, returning 21.13 per cent, before tax and after costs, which sent its total size to NZ$47 billion. Since its inception in 2003, the fund has returned 10.32 per cent per year and has earned NZ$8.9 billion ($5.7 billion) in value-added returns over its passive reference portfolio benchmark.

Two-thirds of the Super Fund, which has backed private equity funds managed by firms such as Bain Capital, HarbourVest and KKR, is invested in its passive reference portfolio, which returned an impressive 22.74 per cent in 2019, according to a statement.

While Whineray lauded the fund’s solid performance in 2019, against a backdrop of strong market returns, he warned that the coming year presents a range of challenges for investors.

Market dominating issues from 2018 and 2019, such as Brexit and the US-China trade war, have been suppressed, at least for now, Whineray said. However, unforeseen events such as the coronavirus outbreak illustrate how quickly risks can emerge and upcoming events, such as the result of the US general election and the UK-European trade talks, could see former risks resurface.

Interest rates also remain low and asset prices are high, which means there are fewer attractive investment opportunities available, he added.

The International Monetary Fund expects global growth to rise from 2.9 per cent in 2019 to 3.3 per cent in 2020 and 3.4 per cent in 2021, according to data cited by NZ Super Fund. The increase reflects tentative signs that trade and manufacturing activity has bottomed out.

The IMF, however, said the global macroeconomic data still does not include any turning point and the growth forecasts were made before the outbreak of the coronavirus.

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.