NZ Super Fund Posts 15% Return for Fiscal 2024, Just Shy of Benchmark

According to the sovereign wealth fund, its active-passive hybrid strategy produced a $10 billion gain as compared with a strictly passive investing approach.

The New Zealand Superannuation Fund reported a 14.94% investment gain for the fiscal year ending June 30, boosting its total asset value to an all-time high of NZ$76.6 billion (US$46.9 billion), up from NZ$65.4 billion one year earlier, when it earned 11.9%. Despite the robust returns, the sovereign wealth fund fell just short of its benchmark’s return of 15.13%.

“Declining inflation, positive macroeconomic data, and optimism that generative AI technology will boost corporate profitability saw global markets perform exceptionally well,” said Jo Townsend, CEO of the Guardians of New Zealand Superannuation, which manages the fund, in a statement.

NZ Super also reported five-, 10- and 20-year annualized returns of 9.53%, 10.33% and 10.03%, respectively, compared with its benchmark returns of 7.98%, 8.4% and 8.49%, respectively, during the same periods.

Townsend attributed the fund’s second straight year of double-digit returns to half its assets being invested passively, rather than all of them, saying that NZ Super “is more than NZ$17 billion better off than if we had implemented a strictly passive, index-linked approach.”

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

According to the sovereign wealth fund, its active investment strategies include real estate, infrastructure and timber, which Townsend said has “added significant value over the lifetime of the fund.” Townsend noted that much of the growth in global equities can be attributed to a handful of tech stocks, which she said had a combined market capitalization 9% larger than the entire European equity market.

“Having global market indices so heavily dominated by such a small number of stocks, all of which are concentrated in one sector, is a very unusual situation,” Townsend said. “Our equity exposure is highly diversified across sectors and geographies, and our active investment strategies are designed to take advantage of market ups and downs as they occur.”

NZ Super paid NZ$1.5 billion in taxes on the investment returns during the fiscal year while taking in NZ$1.6 billion in government contributions, according to the report.