KEY POINTS:
Private fund managers have given the thumbs-up to their state-run counterpart, the New Zealand Superannuation Fund, which put in a 14.58 per cent return on investment in the June year.
The fund's total earnings grew to $1.6 billion in the June year from $1.4b a year earlier.
In so doing, the Superannuation Fund has maintained its record of double-digit returns, having put on a 19.2 per cent return in the June 2006 year.
Superannuation Fund chief executive Adrian Orr was quick to point out that the performance was unsustainable, reflecting a "very benign" investment environment, both domestically and globally.
Private fund managers spoken to by the Herald on Sunday went along with that conservative view.
"I understand where he his coming from and I share his sentiments on that front," says Rickey Ward, Tyndall Investment Management's joint equities manager.
"Most fund managers are erring on the side of conservatism given, as Adrian said, we've had some pretty good markets."
The Superannuation Fund has the luxury of being a long-dated investor, while private sector fund managers are often put under pressure to put in short-term performances.
But fund managers are complimentary of the job the Superannuation Fund has done, even though it has been helped along by favourable market conditions.
"The concept has been well-received and on a personal, self-interested level, I'm hoping that KiwiSaver has the same sort of backing as this fund has had," says Ward.
The Superannuation Fund has not been shy to invest in different asset classes, such as private equity assets.
"In fact, you've got a number locals now looking to do similar things and these guys at the NZ Superannuation Fund have paved the way for that, and they don't get the recognition they deserve for it," says Ward.
One fund manager says he is "pleasantly surprised" with the way the fund has performed, especially since it functions with a relatively small team.
"They seem to have achieved a lot in a very short space of time," the fund manager, who declined to be identified, said.
New Zealand has long stood out as a country with a savings pattern too heavily weighted towards estate, and that's long been a concern, Macquarie New Zealand investment director Arthur Lim says.
Lim says the Superannuation Fund has been a favourable factor for the New Zealand share market because it has at times worked to counter balance the bearish effects of offshore fund managers reducing their New Zealand exposure.
Since the guardians of the fund began investing in 2003, the annualised return was 14.8 per cent - more than twice the 6.5 per cent risk-free rate of return calculated on the interest on short-term debt issuance paid by the Crown.
The fund is expected to grow to about $109b by 2025.
