Just like most retail investors the New Zealand government, thanks to Bill English’s decision to suspend payments to the New Zealand Superannuation Fund (NZS) last year, has missed out on the big upswing in markets.
As I noted in an earlier blog April 2009 was quite possibly the worst time, in an investment sense, to suspend payments to the NZS.
Since July 2009 NZS has since returned 17.44%, which would’ve looked pretty good on the government’s books today if English had slung in the extra $2 billion or so as in previous years.
Despite this NZS is now looking almost healthy again – just about on track to meet its long-term goal of beating New Zealand Treasury bill returns by 2.5%. It has a while to catch up. The official time-period for NZS is meet this target is over ‘rolling 20-year periods’ and it is not yet a decade old.
And looking through the latest release you can see the NZS managers are thinking about the long-haul – or the haul anyway.
The list of NZS’ four substantial holdings – meaning ownership of 5% or more of a company – appears very transport-centric.
As well as owning almost 10% of Auckland airport, NZS also has a 6% share in Mainfreight and over 8% of the ConnectEast Group, which owns a Melbourne toll road.
As well, our super fund has a 5.05% stake in Flughafen Zuerich – also known as Zurich Airport, which was voted European Airport of the Year for the sixth consecutive time.
It’s quite comforting to think that each time those Swiss investment bankers head fly off to an important meeting they will also be contributing to my retirement fund.
Tags: David Chaplin
Well David, I would have thought professional commentators would display a bit more common sense. The Govt would have to borrow more offshore in order to fund additional super fund contributions. This would increase our national gearing ratio to unacceptable levels, resulting in penalty interest rates on overseas currency debt. I’m sure you know this. Borrowing to invest, especially in equity markets has sent so many to the wall in the past that I applaud the decision to forego super fund contributions until we have surpluses again. Better to concentrate on assisting the domestic economy to recover- this will eventually lead to renewed govt surpluses. Increased borrowing would just lead NZ even more down a path of spiralling debt and interest payments leaving our lovely country at the mercy of foreign bankers.