KEY POINTS:
The New Zealand Superannuation Fund is the very model of a modern sovereign wealth fund.
It tops a list of 32 such funds ranked by 25 criteria in research reported to a conference in Washington two weeks ago. Collectively they account for more than US$2 trillion ($2.6 trillion) and include the investment vehicles of oil-rich countries like Norway and the Emirates.
Edwin Truman of the Peterson Institute for International Economics has ranked the funds by such criteria as: How clear is the fund's objective, what is the role of the government in setting its investment strategy, can the government dip into it, and other elements of governance, transparency and accountability.
The New Zealand fund ticked 24 of the 25 boxes. Runner-up was Norway's fund.
The funds were not judged by their investment returns.
Since it started investing four years ago, New Zealand's superannuation fund has made an annual return of 14.8 per cent before tax, comfortably exceeding its long-run target of 2.5 percentage points above the risk-free return - the yield on short-term Government debt.
But Adrian Orr, chief executive of the Guardians of the fund, warns that the market conditions underpinning such high returns cannot go on indefinitely.
