New Zealand Superannuation Fund Hailed As World’s Top Performing Wealth Fund By JPMorgan

The New Zealand Superannuation Fund has been hailed as world’s top performing wealth fund by JPMorgan. Having generated returns of more than 17 percent a year, the nearly NZ$30 billion New Zealand Superannuation Fund is ahead of all its global counterparts, which have published figures, according to the analysis published in the Financial Times. New Zealand's Super Fund was set up in 2001 to pay for the costs of superannuation entitlements of New Zealanders.

“The New Zealand fund has a very interesting governance model. It is run by a group called The Guardians, who have a very deep belief in the power of long-term returns”, said Patrick Thomson, global head of sovereign wealth funds at JPMorgan. The last few years have been among the best years the fund experienced, noted Gavin Walker, NZ Super Fund chairman.

“As the world has been recovering post global financial crisis, prices have shifted back up towards fair value and we’ve been able to ride that,” commented Adrian Orr, the Super Fund’s chief executive.

Top Funds

JPMorgan also rated Government of Singapore Investment Corp as the second-best performing sovereign wealth fund with returns of 12.4 percent a year followed by Temasek (Singapore) with returns of 11 percent and Australia’s Future Fund’s with 10.4 percent. “All these funds have an allocation of at least 30 percent to illiquid assets such as property, infrastructure, private equity and hedge funds," it noted.

The commendations are a major endorsement of the Super Fund's strategy, spearheaded by chief investment officer Matt Whineray. It also makes the Government’s stand of suspending its contributions in 2009 as a wrong step. Else the Super Fund fund would have grown to $47 billion, by now.

Market Exposure

The super performance of all the wealth funds can be traced to the portfolio allocations. JPMorgan noted that all the four top-performing funds from New Zealand, Australia, and two from Singapore have allocated more than a fifth of their portfolios to illiquid investments in areas like real estate, infrastructure, hedge funds and private equity. Among the funds featured in the report, the New Zealand Super Fund had the biggest exposure in public equity markets at 67 percent of total investments. Give that most share-markets delivered stellar returns in the recent past, the Super Fund too benefited.

However, Super Fund chairman Gavin Walker gave a caution that the recent high returns need not work in the long-term. "The last few years have been among the best years the fund will experience for some time. Over the long-term we expect to earn the rather less exciting figure of 8 percent per annum. Still it can provide a handsome return to New Zealander stakeholders," Walker asserted.

(For feedback/comments, contact the writer at k.kumar@ibtimes.com.au)