The Fund began investing following the transfer of $2.40 billion in Treasury bills on 30 September 2003. An additional $1.39 billion in contributions was made to the Fund in the subsequent nine months to 30 June 2004. The balance of the Fund at 30 June 2004 was $3.985 billion. Investment income during the year (after fees but before tax) was $239 million.
The Fund’s primary investment target is to exceed, before tax, the risk-free rate of return (effectively the yield on Treasury bills) by an average of at least 2.5% per annum over rolling 20-year periods. During its first nine months of operation this target was exceeded with an annualised (time-weighted) return of 10.4% compared to a risk-free rate, calculated on the same basis, of 5.3%.
Guardians’ Chairman David May cautioned against reading too much into performance over such a short time period, given the long-term nature of the Fund’s investment program.
“It is important to remember the long-term mandate that has been given to the Guardians for the investment of the Fund. Our focus will always be on building an investment strategy to deliver over future decades. Results over a period as short as one year should be seen in that context.”
He said the Fund had accomplished what it set out to achieve in its first nine months.
“Over the first nine months, the portfolio was gradually transitioned from cash to be fully allocated to investment managers. There are now 15 managers appointed covering a range of mandates in fixed interest and equities.”
The asset allocation at 30 June 2004 was as follows:
|
Sector |
Value |
% of Assets |
|
New Zealand Equities |
$396.1 million |
9.94% |
|
New Zealand Fixed Interest & Cash |
$482.1 million |
12.10% |
|
International Equities |
$2,546.7 million |
63.90% |
|
International Fixed Income |
$560.5 million |
14.06% |
|
TOTAL |
$3,985.4 million |
100.00% |
This exposure is broadly consistent with the Fund’s published strategic asset allocation (http://www.nzsuperfund.co.nz/web/pageID/2145826365/index.asp).
However, in line with the Board’s decision not to allocate assets to either property or other growth assets during the first year, the exposure to each of the above sectors has been temporarily increased to cover this. The Board plans to explore how best to address property and other growth assets in the 2004/5 year.
The external investment management firms appointed by the Guardians as at 30 June 2004 were as follows:
|
Sector |
Manager |
Amount held as at 30 June 2004 (NZD millions) |
|
New Zealand Equities |
AMP Capital Investors |
$172.6 |
|
Brook Asset Management |
$172.3 |
|
Fisher Funds Management |
$51.2 |
|
New Zealand Fixed Income |
ING (NZ) Ltd |
$472.6 |
|
International Large Cap Equities |
Alliance Capital Management |
$252.8 |
|
Barclays Global Investors |
$1,350.8 |
|
Bernstein |
$202.8 |
|
LSV Asset Management |
$214.7 |
|
International Small Cap Equities |
AXA Rosenberg |
$121.6 |
|
Goldman Sachs Asset Management |
$40.3 |
|
Grantham, Mayo & Van Otterloo |
$121.0 |
|
Numeric Investors |
$81.1 |
|
Thompson, Siegel & Walmsley |
$82.2 |
|
Emerging Markets |
West AM |
$79.4 |
|
International Fixed Income |
Vanguard Investments Australia |
$560.5 |
|
Cash |
Held by BNP Securities Services as custodian |
$9.5 |
|
TOTAL |
$3,985.4 million |
The performance in each sector was broadly in line with market indices (after fees). Many managers held their mandates for only a few months of the 2003/4 year and their effectiveness will be better judged over the full 2004/5 year. More information about the appointed managers, the sectors in which they specialise, and the mandates they have been given, can be found at http://www.nzsuperfund.co.nz/web/pageID/2145826361/index.asp
As at 30 June 2004 the top holdings of the Fund were as follows:
|
Market value |
% of Fund |
|
New Zealand Equities |
|
Telecom |
$66,786,904 |
1.67% |
|
Contact Energy |
$31,959,186 |
0.80% |
|
Carter Holt Harvey |
$30,823,943 |
0.77% |
|
Fletcher Building |
$22,054,046 |
0.55% |
|
Fisher & Paykel Healthcare |
$18,839,713 |
0.47% |
|
Auckland Int. Airport |
$15,735,136 |
0.39% |
|
Sky City |
$14,333,476 |
0.36% |
|
Guinness Peat Group |
$12,475,121 |
0.31% |
|
NGC Holdings Ltd |
$9,805,214 |
0.25% |
|
Fisher & Paykel Appliances |
$9,252,194 |
0.23% |
|
International Equities |
|
Citigroup Inc. |
$37,041,198 |
0.93% |
|
Bank of America |
$27,949,471 |
0.70% |
|
General Electric |
$27,792,492 |
0.70% |
|
Pfizer Inc. |
$26,744,647 |
0.67% |
|
JP Morgan Chase |
$23,741,595 |
0.60% |
|
Intel Corporation |
$22,575,614 |
0.57% |
|
Johnson & Johnson |
$19,406,949 |
0.49% |
|
BP Plc |
$18,690,823 |
0.47% |
|
Merck & Co |
$17,590,293 |
0.44% |
|
Microsoft Corp. |
$17,255,852 |
0.43% |
Peter Urbani
