NZ Superfund performs well in annual report

Key items of interest include:

The NZ Superfund has delivered its annual report and the results are good. Here is a summary:

- On pages 40 – 41, we delve into the factors driving the recent shifts in the economic and investment environment:
"It has been a fascinating 12 months for investment markets with two dominant drivers through 2018: central bank policy decisions and trade tensions between the United States and China – which continue to be relevant today" - Economist Mike Frith

- On pages 42 – 43, we dive deep into our risk budgeting process, the framework through which we decide how much active risk we allocate to the opportunities out there in the market:
"Risk budgeting also provides a framework for a more structured approach to opportunity-driven investing, providing a flexible mechanism by which allocations can adjust to prevailing market conditions and attractiveness" – Head of Asset Allocation David Iverson

- On page 44, we report on the performance of each of our opportunities (grouped by 'risk basket') over the past financial year:
"In this section, we report on value-added or detracted by our active investments and value-add strategies... relative to our passive Reference Portfolio benchmark. In total, the Fund out-performed the Reference Portfolio by 0.67% (NZD261 million) over the year"

- On page 46, we set out the reasons why we expect lower returns in the short-to-medium term future:
"In particular, interest rates have been falling, leaving us in an environment of very low interest rates. Indeed, more than USD14 trillion of bonds globally currently yield negative rates. This means you receive less when the bond matures than you paid for it when it was issued"

- And, on page 54 we detail the steps we are taking to insulate our Fund from the investment risks posed by a rapidly changing climate:
"Climate change presents material risks to long-term investors like ourselves. Through our Climate Change Investment Strategy, we seek to ensure that these risks, as well as the potential opportunities, are factored into our investment decision making"

Importantly, our future focus extends beyond our approach to investment to include our values-led culture, our investment in the health and wellbeing of our team, operational decisions we make for the organisation, and our role as a responsible corporate citizen. Throughout the report you will find evidence of this.

Other key activities include:

- Participating in an independent review by leading global business advisory firm Willis Towers Watson, which found we are operating at global best practice levels, with an "exceptionally strong" governance model, and both the investment model and returns are "very impressive" – page 75

- Working with other Crown Financial Institutions following the Christchurch terrorist attacks on two mosques to engage with social media companies to strengthen controls on the live-streaming of objectionable content – page 61

- Receiving a new mandate from Government to establish the Venture Capital Fund develop early-stage capital markets in New Zealand – more details on this initiative is available here

- Following the financial year end, we decided to end our legal action against the Bank of Portugal relating to an investment in Banco Espirito Santo (BES) – click here for more information about this matter

We continue to place a high priority on ensuring our annual reports fulfil our transparency commitments and meet our readers' needs. Feedback is very welcome and can be directed to This email address is being protected from spambots. You need JavaScript enabled to view it..