31 Oct 2022

Financial market volatility costs NZ Super Fund $3.3 billion

4:45 pm on 31 October 2022
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NZ Super Fund's annual report showed the value of the Fund fell to $55.7billion from $59b the previous year. Photo: 123RF

Financial market volatility this year has cost the NZ Super Fund $3.3 billion, which it said was a strong performance in the circumstances and could have been bigger but for active investment management.

The Fund's annual report showed the value of the Fund fell to $55.7b for the year ended June from $59b the previous year.

However, it said it outperformed the benchmark portfolio it measures itself against by a record $4.5b, which offset some of its losses.

"It might sound counter-intuitive to say the Fund had a strong year, given the drop in overall net asset value," it said in a statement.

"However, our active investment strategies, which are a reflection of the excellent work and skill of the team over many years, have performed extremely well."

The Fund has returned on average just under 10 percent a year since it was set up to fund long term retirement costs in 2003.

It said the investing outlook remained challenging because of global economic conditions.

"Heightened inflation, and the associated response by central banks to push up interest rates to suppress demand, places considerable pressure on investment returns for both bonds and equities."

"As a long-term investor, however, we are well-placed to ride out the market volatility we have seen this year."