Super Fund back in the black with return of 16%

The New Zealand Superannuation Fund has made up for previous losses with a 16.03 per cent return in 2023, taking its worth to almost $70 billion.

A recovery in global share markets helped its return to positive growth — a turnaround from 2022’s negative 9.26 per cent return.

“Our reference portfolio, which is made up of 80 per cent shares and 20 per cent fixed interest assets, returned 18.3 per cent for the year, as opposed to our actual portfolio return of 16.03 per cent,” said the fund’s acting chief executive, Paula Steed.

She noted volatility was part of the game it played, but it could weather large moves with its long-term investing horizon.

. . . the Guardians’ active management strategies have earned the fund almost $16b more than investing in a passive, index-linked portfolio such as the reference portfolio would have yielded.

Paula Steed

Fund acting chief executive

“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, the Guardians’ active management strategies have earned the fund almost $16b more than investing in a passive, index-linked portfolio such as the reference portfolio would have yielded.”

The state-owned investing fund is aimed to help the Crown cover the future cost of pension payments to superannuitants, with withdrawals from the fund set to begin in 2035.

In dollar terms, it added $8.65b to its value last calendar year, off $2.086b in Government contributions — although it paid $190 million back to the Crown in income tax.

Since it began investing in September 2003, the fund has returned 9.79 per cent on average annually, and over the past decade has made 10.11 per cent on average.

That was well above its benchmark of Treasury bills,

In its lifetime it’s received $25.75b from the Government in contributions and paid $9.656b in tax — something previous chief executive Matt Whineray publicly complained about.

The fund has yet to announce its permanent replacement for Whineray, who departed before Christmas.