The New Zealand Superannuation Fund is performing remarkably well, at 14.6 per cent, in a low interest environment, globally. As outlined in its annual report the fund has invested heavily in New Zealand, which is not a large market. This report, and foreword by Adrian Orr, CEO, explains the basis of the fund's performance.

Kia ora,

I'm delighted to present the 2017 Annual Report of the Guardians of New Zealand Superannuation and the New Zealand Superannuation Fund.

This year's Annual Report has the theme "Invested in New Zealand and the world – Kaingākau ana ki Aotearoa me te ao".

The Fund is a significant investor in New Zealand with nearly $5 billion invested locally. We also invest around the world in order to diversify the Fund and get the best long-term investment returns for New Zealanders.

In a global context, New Zealand is a very small investment market. If we took a purely passive approach to investment, in line with market capitalisation, the Fund would have just 0.1% of its exposure in New Zealand, not the 14.6% we do currently. But we believe the Fund has a comparative advantage when investing here.

Based on the NZ Super Fund's unique endowments as an investor - sovereign status, long term horizon, stable liquidity, operational independence – we target five active investment opportunities in New Zealand: listed equities; direct investment; expansion capital; rural land and small-medium sized infrastructure.

The Fund's largest investment is a 42% stake in Kaingaroa Timberlands, a world class forestry business headquartered in Rotorua. It also has a number of other significant unlisted New Zealand investments, including in rural land, property, banking and technology, and a $1.7 billion portfolio of NZX50 listed companies. Since 2003, the Fund has also committed $454 million to expansion capital investments in mid-market New Zealand companies with high growth plans.

The Fund will continue to grow in size in future decades, and we expect that its local presence will extend even further. This is, however, contingent on our ability to find world-class investment opportunities here that are of a big enough scale to make a difference to the performance of the overall Fund.

In this Annual Report, my 10th as CEO, we set out how we are responding to the New Zealand investment challenge by building up our team and establishing an investment hub to shape new opportunities.

We also feature two major Guardians initiatives with a global focus – our climate change strategy and our hosting of the 2016 Annual Meeting of the International Forum of Sovereign Wealth Funds.

As usual, the report also details Fund investment performance, including which strategies added value and which did not; provides a breakdown of costs, which have tracked down significantly over the last decade; and describes our governance arrangements.

Our Responsible Investment Report provides further detail on our engagement activities and how our activities have measured up against international benchmarks.

For more information please check out our Annual Report microsite. As well as the full Annual Report in PDF we've produced a couple of video interviews featuring myself, Chair Catherine Savage and Chief Investment Officer Matt Whineray.
Hard copies of the Annual Report are available on request from This email address is being protected from spambots. You need JavaScript enabled to view it.. We also welcome feedback on the report, to the same address.

Nga mihi

ADRIAN ORR
Chief Executive Officer