Home / Analysis / NZS stays nimble, keeps things simple for ‘ever-changing investment landscape’

NZS stays nimble, keeps things simple for ‘ever-changing investment landscape’

The $74 billion New Zealand Super has shot the lights out with a chunky one year return and is now looking to “scale and optimise” its organisation as it eyes a projected doubling in size over the next decade.
Analysis

New Zealand’s sovereign wealth fund returned 16.85 per cent over the 12 months to 31 May, according to its most recent stakeholder update, putting it “well ahead of its benchmark” and contributing to a rolling 20-year return of 10 per cent per annum (after costs, and before NZ tax).

But while New Zealand Super (NZS) continues to perform excellently – and has been hailed by Global SWF as a leader in governance, resilience and sustainability several years running – new chief executive Jo Townsend used the update to warn that it faces “a number of challenges”.

“Top of mind is how we will scale and optimise the organisation given the projected doubling in fund size over the next 10-12 years,” Townsend said. “We want to do this without losing the culture and organisational character that has made us both successful and a place where very good people want to be. I’m conscious that the world is full of uncertainties and that the investment landscape is ever-changing.  As the world gets more and more complicated, an ability to keep things simple, and remain nimble, will stand us in good stead.”

  • Part of that will likely involve the conclusions of the five-year review of its activities recently conducted by WTW, soon to be released by the Minister of Finance. The previous review, in 2019, found that NZS was “achieving best practice in its activities” and more capable of achieving high performance than “the vast majority of its peers”.

    And on a numbers basis it’s clear that NZS has been a winning investment, with Townsend noting that active management had $16.9 billion in value and that the fund had generated $48.5 billion over Treasury bills, meaning “the government’s accounts are significantly better off as a result of investing in the fund instead of repaying debt”.

    There’s also been a flurry of activity across NZS’ portfolio as it offloaded its 19.8 per cent stake in toll road operator Connect East Group to the Future Fund and QIC, increased its capital commitment to pan-European renewable energy developer, owner and operator Galileo, and restructured its 42 per cent interest in Kaingaroa Timberlands Partnership. It’s also handed out mandates to the likes of trend following outfit Florin Court and committed US$150 million to Domain Timber Advisors.

    Meanwhile, NZS is still looking for a new chief investment officer following Stephen Gilmore’s departure for CalPERS earlier this year, with Alex Bacchus, head of its highly successful strategic tilting program, currently in the acting role.

    Lachlan Maddock

    Lachlan is editor of Investor Strategy News and has extensive experience covering institutional investment.




    Print Article

    Related
    Being selective, risk aware, flexible critical in today’s markets: Ninety One

    While the repercussions from ‘Liberation Day’ are still playing out, there can be little doubt it’s a more complex investment environment in which macro conditions, policy actions and asset-level fundamentals will interact in increasingly idiosyncratic ways.

    Ninety One Investment Institute | 24th Apr 2025 | More
    Turbulent markets will suit commercial real estate: Analysts

    Listed property, which found investor favour in 2024, is better positioned to weather market volatility with institutions eyeing improving valuations and development opportunities. For overseas players, a weaker Australian dollar is a bonus.

    Duncan Hughes | 28th Mar 2025 | More
    Investors on red alert despite inflation being tamed: Atlantic House

    Central banks have performed admirably to get economies back on track, but a public that is far less-trusting of big institutions and traditional asset classes remains unconvinced. US President Donald Trump’s trade policies are simply fuelling their fears.

    Nicholas Way | 21st Mar 2025 | More
    Popular