12 Jul 2012

Super Fund commits $100 million to China fund

10:31 am on 12 July 2012

The New Zealand Superannuation Fund has committed $100 million worth of investment to a fund which is building infrastructure projects in China.

The investment vehicle, which has already started some projects in China, includes equity stakes from other sovereign wealth funds, including Singaporean government investment arm Temasek.

Super Fund chief executive Adrian Orr says the fund has been trying to develop these co-investment relationships for some time.

He says teaming up with other sovereign wealth funds to invest in infrastructure projects is a sensible deployment of resources.

It has invested toll road in Melbourne and is looking at other co-investments with various funds around the world.

"These are people who we have spent a lot of time with, comparing how we go about considering investments, collaborating on various issues - research issues in particular - and then developing a relationship where we can co-invest with them. It's to everyone's advantage".

Mr Orr says the details of where in China the fund is invested and which sorts of projects it is backing will be detailed in the fund's annual report.

Super Fund flat full year performance expected

The fund is expecting a flat full year performance, which it says will be a good result following volatile global equity markets.

The fund, which was set up to help pay for future superannuation payments, reported declines of 4.5% in May, when stock markets tumbled on the back of heightened concerns about Europe's debt problems.

For the year so far, the fund has edged down 1.1%.

But Mr Orr says a rebound in global stocks last month means the fund will finish its financial year at the end of June with assets of nearly $19 billion, close to where it started the year.

Mr Orr says the fund bought more shares - including in America and Europe - while prices were falling.

The fund has also bought more farms in New Zealand where its rural land portfolio now tops $100 million.

The fund bought its first New Zealand farm in February last year after launching a strategy in 2010 to eventually have 3% of its investments in the rural sector.

Since its inception in September 2003, the fund return, after fees but before tax, is 6.8%. The fund totals $18.33 billion.

Nearly 60% is invested in global equities, 5% is invested in New Zealand equities and another 13% is shared nearly equally between property and fixed income.

Infrastructure makes up nearly 10%, timber 7.5%, and other private markets and farmland 4%.