NZ Super Fund grows for third month, still lags target return

Monday 29th November 2010

The New Zealand Superannuation Fund has reported its third straight monthly gain in October, growing $454.9 million.

The so-called Cullen Fund, named for its architect Labour Finance Minister Michael Cullen, made a 2.7% return last month, made up mostly from turnarounds in its cash, collateral and currency hedging programmes.

Established to partially fund the universal pensions of an ageing population, the fund’s investment in global bonds grew to $1.33 billion from $1.12 billion in September.

The fund targets a 2.5% premium to the 90 day Treasury bill rate, and achieved 2.4% in October, although on a year-to-date basis, the fund is ahead of target by 11.59%.

Since its inception in 2003, the fund has under-performed against target by 1.36 percentage point, at 6.99%, to create a fund worth $17.66 billion at Oct. 31.

The fund's biggest local holding is still Auckland International Airport at 1.6% of the fund’s value, followed by Fletcher Building and Contact Energy at 0.7% and 0.5% respectively.

It also holds 1.6% in Pike River Coal.

Australian toll road company Transurban Holdings was still the largest international stock in the fund at 1.6% of its value, followed by ConnectEast Group, which runs Melbourne's EastLink motorway, at 1.1%. The fund's stake in ConnectEast rose to 9.21% from 8.14% in September.

BusinessDesk.co.nz

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