Super Fund boasts 14.6pc return

Trader Ryan Falvey at the New York Stock Exchange. Turmoil on world markets are expected to have a short-term impact on the NZ Superannuation fund. Photo / AP

The New Zealand Superannuation Fund has posted a 14.6 per cent return for the year to June 2015, but its chief executive is warning that increasing market volatility will impact the fund's short-term performance.

The fund sat at $29.5 billion on June 30, up $3.1 billion on its level a year earlier.

Chairman Gavin Walker said the fund had continued a pattern of strong, above-market returns.

"These returns - 16.8 per cent [per annum] over the last five years - are the result of disciplined and consistent investing," he said.

"Returns in the 10 per cent to 20 per cent range are at the higher end of our expectations and will not continue indefinitely. Over the long term we expect the fund to earn, on average, 8 per cent to 9 per cent [per annum]."

The Super Fund said it had exceeded its passive reference portfolio by $1.2 billion, or 4.5 per cent, over the year.

"Over the last five years active investment strategies have added $4.54 billion (3.65 per cent per annum) in value to the fund."

The fund said it had also exceeded its second performance benchmark, the Treasury Bill return, by $2.9 billion, or 11.1 per cent, in the year to June 30.

That benchmark measures the cost to the Government of contributing capital to the fund rather than paying down debt.

Chief executive Adrian Orr said that while increasingly volatile market conditions would have a short-term impact on the fund, it remained focused on longer-term strategies.

"As an agile and highly liquid investor, we are well positioned to manage short-term volatility, and will look to take advantage of market disruptions as they occur."

The Super Fund recently re-committed to a long-term 80 per cent growth/20 per cent fixed income composition for its reference portfolio.

"Given the Fund's long time horizon - it will keep growing until 2080 - this strong weighting to growth assets is appropriate," Orr said.