Super fund falls 4.3% to $28.8b

The New Zealand Superannuation Fund took a hit in August as global markets continued their volatile runs.

The fund fell 4.3% in value in August and, at August 31, was worth $28.8 billion.

Since inception, the fund had achieved returns of 9.67%, in the last five years, a return of 15.36% had been achieved but in the last 12 months the return had dropped to 7.59%.

Chief executive Adrian Orr said the fund was seeking domestic investment opportunities, where it believed it had ''hometown advantages.''

The fund's 2014 15 report shows it had $4.4 billion of its portfolio invested in New Zealand compared to $3.7 billion a year earlier.

Domestically, it made one major purchase in the past year - an additional 3.2% stake in Kaingaroa Timberlands, bringing its total investment in the North Island forestry business to 42%.

The fund first invested in Kaingaroa, its largest investment with an estimated value of $1.4 billion, in 2006. Mr Orr said Kaingaroa was also one of its top performing assets.

''It has been a fantastic investment for us, as have Datacom and Scales,'' he said.

''We are continually seeking and being very proactive in New Zealand for good investment opportunities but any investment still has to stack up with global opportunities.''

The fund's hometown advantages included being one of a few buyers able to write a large sized cheque within the timeframes required by some vendors, not requiring Overseas Investment Office approval that offshore investors were subject to, and being local and Crown owned meant it could add value to the investee company's brand.

The top performing investment globally has been the fund's 50:50 deal in Z Energy, which cost $209.8 million, and has already returned $784.6 million. Its remaining 10% stake is valued at $246 million.

''We were able to add value and list it so we had the hatch, match, and practical despatch,'' Mr Orr said.

The fund was prepared to be patient for the right opportunities in New Zealand, he said, including any big infrastructure development and public private partnerships.

''We have to have partners as we can't be the controlling shareholder. It's reasonably difficult to find businesses with an enterprise value of $400 million to $500 million as not a lot of those pop up on the market and they have to represent good value rather than just being an asset for sale. People get those two things confused.''

Other listed investments in New Zealand in which the fund has a stake are: Metlifecare (0.6% of the fund), Fletcher Building (0.4%), Fisher & Paykel Healthcare (0.4%), Auckland Airport (0.3%), Spark (0.3%), Ryman Healthcare (0.3%), Summerset Group (0.2%) and Contact Energy (0.2%).

Overseas holdings include stakes in Apple, Zurich Airport, Microsoft, Exxon Mobil, Wells Fargo, Johnson & Johnson, General Electric, Nestle, JPMorgan Chase & Co and Copenhagen Airport.

 

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