Since its inception in late 2003 the Superannuation Fund has returned 9.79 percent on invested funds, about three times the return it would have got from investing in fixed-interest Treasury bills. Photo: 123RF
Strong performing share markets have propelled the value of the Superannuation Fund to a record $69.7 billion at the end of 2023.
The fund returned just over 16 percent before tax in the year to December, which was outpaced by the 18.3 percent return from its benchmark reference portfolio of shares and fixed-interest assets.
But compared to its Treasury Bill return benchmark - a measure of the cost to the government of paying into the fund - it increased by $6.44b.
Superannuation Fund acting chief executive Paula Steed said it had benefited from the strong recovery in share markets.
"The value we create over and above the return on government debt is a very important measurement of our success, so it is satisfying to be able to report that our investment activities have outperformed the Treasury Bill benchmark ."
She said in 2022 falling share markets had limited the degree it could outperform the reference portfolio by 8.84 percent, but the variations in return because of volatility were part and parcel of its emphasis on growth.
"Our long-term investment horizon allows us to take on a greater degree of risk than might be appropriate for a fund with more immediate liabilities."
The fund actively manages much of its investments rather than leaving them to track various indices, allowing it to respond with buy and sell decisions during periods of market turbulence.
"In the short term, returns will vary and sometimes quite significantly. However, what matters to us is performance over time, and over the lifetime of the fund to date," Steed said.
Since its inception in late 2003 the fund has returned 9.79 percent on invested funds, about three times the return it would have got from investing in fixed-interest Treasury bills. The government invested about $25.7b during that time but received $9.6b in tax as well.
Finance Minister Nicola Willis said before the election that any National-led government would continue investment in the fund.
