The story of the New Zealand Superfund

Establishing a global investment fund from scratch, and running it from New Zealand, has been a significant challenge. Below is the New Zealand Super Fund story.

The story of the New Zealand Super Fund

Created in 2001 after an extensive public and Parliamentary debate, the Fund is a way for New Zealand to save now in order to make future superannuation costs more affordable. It’s needed because New Zealand’s population is getting older.

The legislation creating the Fund was sponsored by the then Minister of Finance, Sir Michael Cullen. For a long time, we were known colloquially as the “Cullen Fund”.

The Fund operates independently from the Government of the day. No withdrawals are permitted before 2020, and even after the Government starts withdrawing, the Fund will keep growing for many decades.

Growing the Fund

After a start-up period, the Fund began investing in 2003. We started with six Board members, with David May appointed the Chair. Tim Mitchell became our first employee, joining at the same time as our first Chief Executive, Paul Costello.

We started with an initial contribution from the government of $2.4 billion on 30 September 2003.

So far, the Government has contributed nearly $15 billion to the Fund.

Initially, we used external managers to invest the Fund’s money. Over time, we have grown our team and now manage investments in listed and unlisted markets in-house.

From the beginning, we chose a relatively high risk portfolio – reflecting our purpose and long horizon. We knew this would bring some bumps along the way, which is why we have always encouraged measuring our performance over the long term.

Government contribution so far $15 billion

A long term & global investor

One of our biggest advantages is that we can look through market ups and downs. Because we have a long time frame, we can buy when others are selling, and invest in assets that are difficult to sell quickly.

While the Fund is a major investor in New Zealand, most of it is invested overseas. In order to make as much money for New Zealanders as possible, without taking too much risk, we invest in a wide variety of investments both in NZ and globally.

The Fund is now worth $30 billion** as at 30 June 2016


In September 2008, the failure of Lehman Brothers bank heralded a credit crunch that turned into a global financial crisis.

With world equity markets plunging daily, our ability to invest for the long-term meant it was an opportunity for us to buy assets cheaply. Our constant risk appetite paid off.

We didn’t let a crisis go wasted. We increased our internal trading capabilities, establishing our Portfolio Completion team and began strategic tilting to widen our opportunities.

Investing innovation

Reference Portfolio

We use a ‘Reference Portfolio’ to measure how much value we’re adding to the Fund, compared to the overall investment market.

The Reference Portfolio is passive, low cost and weighted to growth assets, such as shares. By itself, the Reference Portfolio could achieve the Fund’s goals.

But we believe we can do better than the Reference Portfolio. This is because of our advantages as a long-term investor – certainty over our cash flow, operational independence and our sovereign status.

Target Operating Model

In 2012 we developed a Target Operating Model based on a commitment to active investment management. As a result, we have moved to bring more investment functions in-house, where there is a good business case to do so, and are focusing the Fund on the investment opportunities in which we have the highest confidence.

Risk Allocation Process

In 2014, we introduced our innovative Risk Allocation Process. We look at what is driving each investment opportunity’s returns, how confident we are in the return, and how good a fit the investment is with our way of investing. We rank the attractiveness of all our investment opportunities using this process.

Risk Budgets

We make decisions about how much money to put into each investment by spreading the overall level of risk our Board is comfortable with across baskets of ‘like’ investment opportunities.

Responsible Investing

We must invest in a manner that does not damage New Zealand’s reputation as a responsible member of the world community. Our Responsible Investment Framework was developed in 2007 – informed by the views of the people of New Zealand, as expressed in our laws, relevant international laws and major New Zealand government policies.

We were one of the first investors to sign the United Nations Principles of Responsible Investment in 2006 and are recognised as a leading responsible investor globally.

We believe that environmental, social and governance issues affect long-term financial returns.

We take these factors into account when we identify new investment opportunities, analyse companies, engage managers and act as a shareholder.


We remain true to our values of Inclusiveness, Innovation and Integrity and have invested significantly in our people. These efforts were recognised when we were awarded a major New Zealand public sector award for leadership excellence in 2016.

Our focus is on creating a constructive workplace culture where staff feel supported, while free to challenge decisions and debate questions.

We are committed to building a diverse workplace of skilled staff and want to make sure that all of our team feel comfortable to be themselves at work, and support our vision of a Great Team Building the Best Portfolio.

The number of team members has grown quickly, including many high-performing expats coming home to New Zealand to work for the Fund, as well as ongoing dedicated locals and newcomers from all over the world. Our Culture Club makes sure we are all at home.

  • Track the progress of the Guardians since the legislation creating the Fund was passed in 2001.


    • New Zealand Superannuation and Retirement Income Act 2001 passed and New Zealand Super Fund created


    • First Board appointed
    • David May appointed as Chair


    • First contribution ($2.4 billion)
    • Commenced investing in October 2003
    • Initial Strategic Asset Allocation determined


    • First investments in New Zealand and US timber
    • First investments in NZ private equity funds


    • Founding signatory to the United Nations Principles for Responsible Investment
    • Fund invests in Kaingaroa Timberlands
    • Fund invests in global infrastructure via a mandate with Morrison & Co
    • Fund makes first divestment - whaling and anti-personnel weapons stocks


    • Responsible Investment Framework developed
    • Fund divests from
      – tobacco stocks
    • Appointment of new master custodian, Northern Trust
      replacing BNP Paribas
    • Adrian Orr takes over as CEO


    • Companies manufacturing cluster munitions and nuclear explosive
      devices excluded
    • Lehman Brothers bank fails – prompting establishment of crisis management team at the Fund to make quick decisions and manage liquidity


    • Global Financial Crisis – March 9, 2009 – the low point in equity markets. From peak to trough the Fund fell by -30.70%
    • In-house Portfolio Completion (Treasury) function established
    • Strategic Tilting strategy begins
    • Following a change in the NZ Government, capital contributions are suspended – last contribution $250m
    • A Ministerial Direction seeking to increase the proportion of the Fund that is invested in New Zealand is received
    • Committed to the Santiago Principles of Best Practice for Sovereign Wealth Funds
    • Team size hits 50


    • Reference Portfolio introduced
    • Investment in Z Energy (assets formerly within Shell NZ)


    • First New Zealand farm investment
    • Eurozone uncertainty


    • Fund invests in NZ technology services firm Datacom
    • Winner, aiCIO Awards, world’s most innovative sovereign wealth fund
    • Winner, Chief Information Officer, Executive Team of the Year
    • First exclusions of individual securities for breaches of responsible investment standards
    • Target operating model introduced


    • Successful partial float of Z Energy
    • Fund celebrates 10 years of investing
    • In-house active NZ equities team established
    • Fund invests in NZ retirement care company Metlifecare
    • Introduction of PEARL performance reporting system


    • New Board Chair – Gavin Walker
    • Risk Allocation Process developed
    • Fund invests in Australian retirement village company RetireAustralia
    • Fund invests in waste-to-energy firm Lanzatech
    • Team grows to 100


    • Implements Risk Budgets
    • Initiates legal action against Novo Banco and
      Bank of Portugal
    • Reference Portfolio reviewed
    • A+ rating from the UNPRI for overall approach to responsible investment
    • Teams with other investors to establish NZ Corporate Governance Forum
    • Winner, Excellence in Governance, Deloitte Top
      200 Awards
    • Winner, Governance Award, Asian Investor’s 2015 Institutional
      Excellence Awards
    • CEO Adrian Orr becomes Chair of IFSWF


    • New Board Chair – Catherine Savage
    • Invests in Auckland residential housing development alongside Ngāi Tahu Property
    • Wins Deloitte IPANZ Public Sector Excellence Award for Leadership Excellence
    • Fund reaches $30 billion – double the amount of Government contributions to date
    • Fund invests in Kiwibank
    • Fund announces Climate Change Strategy