Source: New Zealand Super Fund
A successful year for the Guardians of New Zealand Superannuation’s active management strategies helped to mitigate the effects of the severe downturn in global markets during the 2021-2022 financial year, Guardians Chair Catherine Drayton told members of Parliament’s Finance and Expenditure Select Committee today.
Ms Drayton told the committee factors including higher-than-expected inflation, rising interest rates, the increasing likelihood of a global recession, Russia’s invasion of Ukraine, and the lingering effects of the Covid-19 pandemic, particularly on commodity markets and global supply chains, had affected global financial markets and seen investment funds around the world post losses.
Ms Drayton said while the Reference Portfolio, the passive market benchmark, returned -14.24 percent for the 2021/22 financial year, the Guardians’ successful active investment strategies meant that the NZ Super Fund outperformed that by 7.25 percent, earning a record $4.5 billion in value add.
Ms Drayton said that markets had recovered somewhat since the Guardians posted its result for the past financial year. At the end of January, the Fund was worth more than $60 billion, a record high.
Ms Drayton said that the Fund’s returns had consistently beaten its performance benchmarks, the reference portfolio and the cost of government debt.
“Investing in the NZ Super Fund instead of paying off debt has benefited New Zealanders by $34.6 billion over the time the Fund has been in existence,” said Ms Drayton.
Ms Drayton said the Fund continued to put significant energy and capital into domestic housing development.
It was also continuing to increase its investments in climate solutions, and was presently carrying out feasibility work for a $5+ billion offshore windfarm development off the South Taranaki Coast.
Ms Drayton said the Guardians’ increasing focus on a sustainable finance approach would not compromise financial returns.
“Above all, our main objectives for the year now underway are to maintain our focus on our long-term investment strategies, manage our liquidity carefully, and maintain an appropriate balance of risk and return in order to fulfil our purpose: Sustainable investment delivering strong returns for all New Zealanders.”
