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Super Fund return exceeds expectations

NZ Newswire logoNZ Newswire 1/02/2017

The NZ Super Fund is now worth almost $33 billion after the value of its investments enjoyed double-digit growth in 2016.

The value of the fund, set up in 2003 to help cover the future cost of the government's superannuation scheme, grew by 12.3 per cent, well above its average annual rate of return of 9.9 per cent.

It is now well ahead of its two performance benchmarks, exceeding the Reference Portfolio return by $5.3b and the Treasury Bill return by $16.1b.

"Over the last year, global equities have continued to perform above our long-run expectations," said the fund's chief executive Adrian Orr.

"Looking forward, we expect equity performance to return to a more normal level. "

The fund is expected to generate an average annual return of 8-9 per cent over the long term, but has gained an average of 15.57 per cent over the last five years.

Mr Orr said its investment decisions remained disciplined on price and whether it was a good fit for it.

In 2016 it invested $263 million to acquire part of Kiwibank, committed to invest up to $260m in small-medium sized New Zealand companies and added more dairy farms to its portfolio to brings its investment in the sector to $260m.

Of the fund's $32.7b, $5b was invested in New Zealand.

The government suspended contributions to the fund in 2009 and will only resume once net debt fell below 20 per cent of GDP which is expected to be in 2020-21.

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