NZ Super Guardians Detail Portfolio Completion Strategy

Posted on 06/22/2020

The Guardians of New Zealand Superannuation is the Crown entity that manages the NZ Super Fund (New Zealand Superannuation Fund). The Guardians released a white paper detailing its Portfolio Completion program that was formed in 2009. The program expanded beyond its original remit of traditional treasury management to become a key return driver for the institutional investor. The Guardians report that the strategy has helped return roughly NZ$ 700 million in value-added returns over the past five years. According to the white paper, foreign exchange management is the biggest contributor to value add.

According to the press release, “the paper explains the Guardians’ Portfolio Completion programme, a value-adding activity which aims to achieve efficiencies in the management of the Fund’s passive exposure to equities and bonds (making up approximately 60 per cent of assets under management) and the associated currency hedging.’

NZ Super’s portfolio completion activities span foreign exchange management, liquidity management, and rebalancing the Fund’s Reference Portfolio investment mix.

NZ Super utilizes a reference portfolio, which is set by the Guardians. This reference portfolio is the benchmark for the Fund’s actual portfolio. At the moment, the reference portfolio is split 80% to growth equities and 20% to fixed income investments.

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