Wounded fund turns to home-grown option

The Government Super Fund is reducing the proportion of money it invests in overseas shares after losing hundreds of millions of dollars on world sharemarkets in 14 months.

The fund's board has come under fire for the losses and for the heavy investment it has made in sliding international sharemarkets since November 2001.

The fund, which pays the pensions of retired public servants, lost $324 million in overseas markets in the 14 months to December.

After a board review of its investment allocation strategy, the fund has cut back the original allocation of 52.5 per cent of its $3.05 billion into international shares to an allocation of 42.5 per cent.

It has also raised the percentage of New Zealand shares from 12.5 per cent to 15 per cent and has decided to invest 7.5 per cent of its money in property and private equity.

The fund has 41.2 per cent of its money invested in international shares, so it will need to spend about another $40 million to hit 42.5 per cent.

It will retain its split of 65 per cent invested in growth assets and 35 per cent in fixed interest assets.

Fund chairman Basil Logan said yesterday that reducing the international shares allocation was not bowing to pressure after criticism of the losses.

"We said from the start we would not look at alternative growth assets until we were fairly well down the track."

- NZPA