Super fund loses in Parmalat collapse

By AUDREY YOUNG

The New Zealand Superannuation fund lost $545,000 in the Parmalat company collapse.

Finance Minister Michael Cullen said that Barclays Global Investors, which invests about $750 million on behalf of the fund, invested $698,000 in Parmalat during November and December 2003. The fund lost $545,000 of it.

He was responding to parliamentary questions by National's deputy finance spokesman John Key, who said it was a "healthy reminder that there are considerable risks associated with the 'Cullen fund'," as it is called.

Following the collapse of Parmalat, a European dairy giant which folded amid debts of $26 billion, the fund sold out of its position. Dr Cullen said the sale realised $545,000 or 78 per cent of the original investment.

But he added: "The result needs to be considered in the context of the broadly diversified investment portfolio held by the fund. At the time of purchase, Parmalat made up 0.127 per cent of the global equity portfolio and only 0.027 per cent of the fund as a whole."

The overall gain across the global equity portfolio (over December 2003 and January 2004 and taking into account the Parmalat loss) was $44.2 million.

"That reflects the benefits of diversification, both across the various managers and within the underlying portfolios, as a method of minimising the impact of any one poor-performing asset on the fund as a whole," Dr Cullen said.

Barclay's was one of seven specialist investment managers appointed by the guardians of the fund.