by Rob Hosking
The New Zealand Superannuation Fund could put money into alternative asset classes that could include private equity and infrastructure projects.
Guardians chairman David May, told Parliament’s Finance and Expenditure select committee that the Guardians would be looking at alternative asset classes and that these could include putting some of the fund – which at its peak will hold around $58 billion in today’s terms – in infrastructure such as roads and electricity, as well as taking other private equity investments.
The fund is prevented from taking a controlling interest in any company or other entity.
There has been a growing number of calls for the fund to be invested in projects such as roading, from the mayors of Auckland and Wellington. The government’s political allies – Untied Future, have also called for some of the fund to go into such local investments as forestry, and the Green Party would like all the fund to be invested locally.
The Guardians are still working out their investment strategy, which will be completed by around the middle of the year, May says.
"We are looking at how much we can invest in the New Zealand market – but we have to balance that with the need to make the necessary returns."
The Guardians are doing some analysis of how much investment the local market could bear form a fund the size of the New Zealand Superannuation Fund, he said.
"There are capacity constraints on a market this size. We have done some analysis on that."
Pressed by MPs to say what that analyses had shown, May said the work was still very general.
"It’s very hard to answer that in a precise manner. We have a feeling for a range of what is comfortable, and what is not going to be comfortable for the market, but its such a wide range I don’t think it would be very helpful at the moment."
Guardians’ board member Sir Douglas Graham, who was also at the hearing, told MPs that he was "not sure it would be a good idea to tell you that anyway."
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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