Our sovereign wealth fund is set to double in the next decade. How will its new CEO meet its growth demands? Video / Cameron Pitney
New Zealand’s sovereign wealth fund is now worth a record $76.6 billion, but its biggest challenge is ahead of it - doubling its value before the Government starts withdrawing money to help pay pensioners.
“Our challenges probably are not that different from every other business as you get larger and larger, so we need to be able to remain nimble and agile.” Jo Townsend, the new chief executive of the Guardians of the Superannuation Fund, told Markets with Madison.
She said culture was key to achieving the $139b value Treasury projected for it by 2035.
“You need to make sure that people continue to be highly engaged in the work that we do, and we can attract smart people doing really interesting jobs.
“What I would say is, I have a large, strong, investment team. Their job day to day is to continually look at all the investments we have in the portfolio today and what could be the next best idea to actually come into the portfolio.”
The scale challenge was reflected in an independent assessment of the fund’s success released last week, which stated that one of its challenges was embedding new leadership into the organisation to ensure its culture remains strong as it scales.
Kaingaroa Timberlands is the Super Fund's largest direct investment with a 42% stake. A law change now allows the fund to take larger positions in businesses. Photo / Chris Kenny
The report by global advisory firm WTW said the Super Fund’s results of the past five years had been excellent, but its returns going forward could be lower due to geopolitical risks and excessive levels of sovereign debt around the world.
Treasury forecasted Government withdrawals from the fund would begin in 2035, at which time the fund would be worth $139b.
About half of the fund was passively invested in global and domestic stocks, with one quarter in fixed income and about another quarter in alternative investments such as private equity, venture capital, rural holdings, direct holdings, property and infrastructure.
The fund returned almost 15% in the year to the end of June, and has returned 10% annually on average since inception, off $26.5b in Government contributions.
Meet the Super Fund’s new CEO in today’s episode of Markets with Madison above.
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Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.
Madison Reidy is host and executive producer of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.
