Super Fund at record $69.7b

WELLINGTON: Strong performing sharemarkets have propelled the value of the Superannuation Fund to a record $69.7 billion at the end of 2023.

The fund returned just over 16% before tax in the year to December, which was outpaced by the 18.3% return from its benchmark reference portfolio of shares and fixedinterest assets.

But compared to its Treasury Bill return benchmark — a measure of the cost to the government of paying into the fund — it increased by $6.44b.

Superannuation Fund acting chief executive Paula Steed said the fund had benefited from the strong recovery in sharemarkets.

‘‘The value we create over and above the return on government debt is a very important measurement of our success, so it is satisfying to be able to report that our investment activities have outperformed the Treasury bill benchmark,’’ she said.

In 2022 falling sharemarkets had limited the degree it could outperform the reference portfolio by 8.84%, but the variations in return because of volatility were part and parcel of its emphasis on growth, she said.

‘‘Our longterm investment horizon allows us to take on a greater degree of risk than might be appropriate for a fund with more immediate liabilities.’’

The fund actively manages much of its investments rather than leaving them to track various indices, allowing it to respond with buy and sell decisions during periods of market turbulence.

‘‘In the short term, returns will vary and sometimes quite significantly. However, what matters to us is performance over time, and over the lifetime of the fund to date.’’

Since its inception in late 2003 the fund has returned 9.79% on invested funds, about three times the return it would have got from investing in fixedinterest Treasury bills. The government invested about $25.7b during that time but received $9.6b in tax as well.