Cullen on NZSF investment strategy

Finance Minister Michael Cullen said the investment strategy devised for the New Zealand Superannuation Fund by the Board of Guardians and made public today met the requirements of the law.

“The Fund was set up to ease the cost pressures of supporting in retirement an ageing population. The Board’s task, clearly defined in the legislation, is to maximise long term investment returns using best practice portfolio management principles.

“This must be their sole focus. They cannot be distracted by other objectives or allow themselves to be influenced by political pressure. For that reason, it is important that the Board guard jealously its independence of the government,” Dr Cullen said.

He had been impressed with the care the Guardians had taken in drawingup the Fund’s investment policy.

“They drew on a wide range of expert advice and subjected that advice to exhaustive analysis. The spread they have opted for strikes a prudent balance between growth and defensive assets.

“The decision to invest 22 per cent of the Fund locally tilts toward New Zealand while also acknowledging the constraints imposed by the potential size of the Fund relative to the size of the New Zealand market.

“New Zealand accounts for just 0.2 per cent of world markets. The Fund, by contrast, will be large by international standards and within ten years will be one of the largest – if not the largest – in Australasia.

“If too much was invested in New Zealand assets it would distort the market, pushing up prices artificially when the Fund bought and depressing them when the Fund sold. This would be in no-one’s interests,” Dr Cullen said.

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