Market turmoil shakes Super Fund

ELOISE GIBSON
Last updated 12:34 30/09/2011

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The New Zealand Superannuation Fund has posted a loss of $1.67 billion in July and August, citing a tough two months on world share markets.

The slump follows a golden year for the Super Fund that saw it rise 25 per cent in the year to June to reach a peak of $19.03b.

The fund fell 2.81 per cent in July and 5.04 per cent in August, ending up at $17.36b on August 31 - an overall loss of 7.71 per cent for the financial year to date.

The figures for the past 14 months are unaudited, with official numbers for the year to June due to be tabled in Parliament next month. Returns are calculated after fees but before tax, which the fund regards as a return to the crown.

The fund is strongly tied to global share markets, with about 59 per cent of its portfolio invested in global equities and 5 per cent in New Zealand equities. About 10 per cent is in infrastructure and 7 per cent in timber.

The fund was set up in 2003 to ease the burden of future superannuation bills, and is expected to start helping to pay pensions when today's 45-year-olds retire.

In the financial year ended June 30, the fund climbed in value by 25.05 per cent, or $3.41b.

That followed a rise of 15.45 per cent in the year to June 30, 2010.

Two years ago, the value of the fund slumped 22 per cent after it was dragged down by the global financial crisis.

Some of its largest single investments include a 50 per cent stake in the parent company of Z Energy (the owner of the Shell petrol stations) and an 10 per cent stake in Auckland International Airport.

The Government has suspended automatic contributions to the fund to avoid further increasing debt, with payments due to restart in 2016.

Since its inception on September 30, 2003 the Super fund has returned 6.57 percent on an annualised basis, a rate of return of just over 1 per cent more than the Treasury Bill rate which it aims to better.

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- BusinessDay.co.nz

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