Adrian Orr on New Zealand’s Super Fund

“The sovereign wealth funds of Australia and New Zealand have much in common but the underlying holdings reveal a chasm greater than the Tasman Sea”, writes James Frost for the Australian Financial Review .

“Over the last one, three and five years NZ Super Fund has delivered returns of 14.64 per cent, 19.86 per cent and 16.85 per cent. Over the same period the Future Fund has delivered 15.4 per cent, 15 per cent and 11.9 per cent”, as reported in the article.

The NZ Super Fund is “adding more listed equity exposure” and “the Future Fund has sold shares, adding to its private equity and cash holdings”, which is likely to change the return profiles of each fund.

“Our portfolio is riskier than it looks. But it’s materially less risky than NZ Super”, said David Neal, Future Fund managing director.

“We made $17 billion last year and you don’t deliver returns like that without a reasonable amount of risk. But this is taxpayer’s money and there should be some prudence around the risk taking.”

But Adrian Orr, CEO of the NZ Super Fund says the Fund shouldn’t be described as aggressive.

“I could mount an argument that it’s not aggressive enough more easily than I could an argument that it is too aggressive,” said Orr.

“Standing still is not going to win anything. We are long term confident in emerging markets and we are long term confident in the European recovery.”

Orr believes it is “the responsibility of sovereign wealth funds to ensure they are taking enough calculated risk and that those funds who were overweight on fixed income should hand the money back to the government.”

Article Source: Australian Financial Review, James Frost, October 16, 2015.

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