The New Zealand Superannuation Fund expects to keep its private equity exposure at 5 percent, even amid an increase in its overall portfolio to a record high of NZ$32.7 billion ($23.9 billion; €22.2 billion) in end-December 2016.
“We’re continuing to invest opportunistically and don’t have any plans to change our exposure to private equity at the present time,” an NZ Super spokesperson told Private Equity International.
Among NZ Super’s recent investments include a NZ$263 million investment in local retail bank Kiwibank, as well as commitments to invest up to NZ$260 million in local small and medium-sized enterprises through Auckland- headquartered fund managers. NZ Super will invest up to NZ$90 million in Direct Capital’s Fund V, up to NZ$120 million into Pioneer Capital’s Fund III and NZ$50 million into Movac’s Fund IV.
The Auckland-based sovereign wealth fund’s assets grew from NZ$32.7 billion as of 31 December 2016, compared with NZ$29.5 billion in the same period last year, according to the fund’s latest performance report published on 1 February.
NZ Super also generated returns of 13.2 percent over 2016 – almost double its 6.5 percent return in 2015. For the month of December, NZ Super posted a 2.44 percent gain, following a -1.84 percent return in the same period in 2015.
Chief executive Adrian Orr said in a statement the fund will “remain highly disciplined on price and on selecting investments that are a good fit with NZ Super’s characteristics as in investor”.
He added: “The current global economic environment continues to be challenging for investors, with attractive opportunities often chased by an abundance of capital.”
Global equities make up the bulk of NZ Super’s asset class exposure at 66 percent, while fixed income takes up 11 percent. Meanwhile, the fund allocates 5 percent each to private equity and timber assets, 4 percent to NZ equities and 3 percent to infrastructure. Other assets in public and private markets as well as rural farmland make up the remaining 6 percent.
In terms of geographic exposure, NZ Super invested 48 percent of its portfolio in North America, 20 percent in Europe and 14 percent in New Zealand and Australia. Asia made up 15 percent of the fund’s investments last year; South America, 2 percent and Africa, 1 percent.
Orr said that the fund’s priorities for 2017 included focusing on its climate change strategy as well as establishing an investment hub to ramp up investment opportunities in New Zealand.