Fund focusing on property

By ELLEN READ


The New Zealand Superannuation Fund is planning to increase the amount it invests in property - at the expense of cash placed in international shares.

So far investments are limited to local and global fixed income and equity markets. Over the next two years the fund will diversify, putting 7 per cent of cash into alternative assets (including private equity, infrastructure, forestry, commodities) and 6 per cent into property.

"The work we're doing at the moment [reviewing the current asset allocation] would suggest that could probably increase," fund chief executive Paul Costello said.

"We'll know more by Christmas ... We are working towards entering other assets. It's one thing to make an allocation but to actually develop an implementation strategy is quite complex."

Currently standing at over $4 billion, the fund receives $80 million to invest each fortnight. The Government is allocating on average $2.2 billion a year to the fund, which is expected to grow to around $100 billion by 2020.

Its second annual report was sent out this week and confirms the finalisation of its ethical investing policies - in line with governing legislation. It reports that the first third-party screening of the portfolio to ensure investments meet the requirements came out clear.

"There was no company that we've had to delist from the portfolio. There are some we're seeking further information on," Costello said.

In August, the fund's first annual result was released - showing it earned an annualised 10.4 per cent in the first nine months to June 30 since it was fully invested.

This was ahead of its performance target, which is to beat the Treasury bill rate (5.3 per cent) by an average of 2.5 percentage points over 20 years.


Super priorities

NZ Superannuation Fund priorities for 2004-2005 include:

Formalising procedures for the management of external investment managers.

Preparing the framework for the introduction into the portfolio of alternative asset classes.

Measuring the operating efficiency of the Guardians against international peers.

Source: 2004 NZ Superannuation Fund annual report.


NZ Superfund