The fund has significantly outperformed one of its benchmarks, 90-day Treasury Bills, a measure of the cost to the government of paying into the fund. Photo: 123RF
The Superannuation Fund has turned 20 and is claiming the country is $40 billion better off as a result.
It was set up in 2003 by then finance minister Michael Cullen as a way of funding future costs of providing pensions to a growing number of ageing New Zealanders.
In that time it has become one of the best performing sovereign wealth funds in the world, with a long term perspective on investment, riding out the highs and lows of markets, and broadening its scope to beyond stocks and bonds to include large infrastructure projects.
Outgoing chief executive Matt Whineray said it has done its job well.
"As a long-term, growth-focused investor, many of our targets and performance expectations are based on 20-year rolling averages, so we've always looked forward to being able to report against that yardstick."
It has significantly outperformed one of its benchmarks, 90-day Treasury Bills, a measure of the cost to the government of paying into the fund.
The fund returned 9.5 percent a year on average, compared to the Treasury Bills' 3.42 percent, and now stood at $64.4b.
"Since 2003, actual fund returns have outperformed the Treasury Bill benchmark by an annual average of 6.11 percent - in dollar terms, Aotearoa is more than $40b better off as a result of the fund."
Government contributions, which were suspended between 2009 and 2017 because of the Canterbury earthquakes and the global financial crisis, were worth about $15.7b, but Whineray said the fund would have been billions of dollars larger had they been paid over the full 20 years.
He said the fund was essentially inter-generation wealth transfer, and would start paying some of the national superannuation costs from the mid-2030s, but the peak would be in the 2050s and as it paid out it would still be earning from investments.
The fund has matured in its investing approach with about half the assets managed in-house and the rest with external managers, while it has expanded its investment scope to encompass ethical investing and to look at long-term infrastructure projects.