GSF tweaks portfolio

The Government Superannuation Fund is tilting its investment slightly back towards the New Zealand market – a move worth $76 million.

The fund’s recently completed annual review decided to move the proportion of New Zealand assets form 12.5% to 15%, chairman Basil Logan says.

The board has also decided to put $229 million - or 7.5% of the fund – into alternative asset classes. Previously the board had no allocation for this area.

However, the nature of those alternative asset classes is not yet known.

"The board will take time to review its options before the fund is fully invested in these asset classes. In the interim, the allocation will be invested in New Zealand based short-term investments and bonds."

The Government Superannuation Fund has been under concerted political attack since it diversified away from low risk investments in 2001. The timing of the diversification meant the fund took something of a bath on its overseas sharemarket investments. The target for these investments has been reduced in the latest review, - from 52.5% to 42.5% - but still makes up the largest single asset class of the fund.

The GSF has been gradually diversifying since late 2001, with the eventual goal of 52.5% in international equities by early next year. The fund’s holdings in offshore stocks currently stands at 41.5%.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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