tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, December 6th, 6:21PM

News

rss
Latest Headlines

Let the battle begin

There's no points for picking this week's top news story - the New Zealand Superannuation Fund and how it invests our billions of dollars.

Friday, August 15th 2003, 2:02PM

There's no points for picking this week's top news story - the New Zealand Superannuation Fund and how it invests our billions of dollars.

 

There's plenty of interesting aspects to the fund's asset allocation strategy (and we will cover these over the coming week or so), but perhaps one of the most fascinating is that someone is countering the self-serving arguments from the New Zealand Exchange about how many of the funds billions of dollars should be invested in local shares.

 

NZX chief executive Mark Weldon has been arguing that a much higher proportion of the fund's assets should be invested in the local market (he first made the case for this in the March issue of ASSET magazine).

 

Much of his arguments are based on warm fuzzies and the need for home market bias.

 

Thankfully the chairman of the Board of Guardians, David May, has confronted Weldon's challenge and given him a simple message - you grow the market and we will give you more money.

 

It's now time for the NZX to get some real runs on the board.

 

Macquarie economists meanwhile expressed the converse to Weldon's argument. They suggested that the 7.5% allocation to New Zealand shares may be too high as the local market accounts for less than 0.2% of the world market capitalisation.

 

Another angle on the argument is May's contention that if a manager has more than 1.5-2.5% of the market they will become the market maker.

 

The last thing we need is the market being driven by supply and demand, as opposed to fundamentals. (The real winners out of this would be people who own shares and options in NZX!)

 

Macquarie says that the fund's initial allocation of around $180 million is about 0.4% of the NZX's current capitalisation, so it won't take too many years until the fund breaches that crucial market maker threshold.

 

Superficial arguments promoted by people who should know better do nothing to help the debate.

 

The great advantage of this fund is that - with a bit of lateral thinking - it could be used as a great tool to educate the public about investment issues (Let's start with Greens co-leader Rod Donald).

 

Here's another question to ponder. National Party finance spokesman Don Brash has again talked about the need to cut the costs of the state pension. If the Government chose to introduce a bill which raised the age of eligibility would National and Act support it?

 

If they did then we could say that the political football of superannuation had been consigned to an exhibition spot in the New Zealand Sports Hall of Fame.

 

See stories:
Home market bias in Super Fund
Guardians defend their allocation
Our money, their gamble, our loss
Background Q&A
Cullen on NZSF investment strategy
NZ Super Fund announces asset allocations

Quotes of the week
"We had a serious glitch."
David May's description of the premature annuouncement of the NZ Super Funds asset allocation on its website.

"If they stuff up their investments as badly as they've stuffed up our strategy, then God help us."
Greens co-leader Rod Donald's (predictable) response.

 

« Guardians defend their allocationSovereign takes regulation bull by the horns »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Advisors must take note of supervisor guidelines on AML/CFT
    “When I read this, the following memory plucked a note. Venue was a US financial planning conference maybe 30 years ago. Speaker...”
    5 hours ago by Murray Weatherston
  • Partners kills its matrix
    “@Backstage, thanks. I agree there is no relationship to CoFI, though, from a service perspective, I have two other providers...”
    3 days ago by JPHale
  • Partners kills its matrix
    “Partners Life has decided to stop using its COM for advisers as it believes the system may breach the CoFI regulations which...”
    3 days ago by Amused
  • Partners kills its matrix
    “Insurance companies should stick to their lane. They are not advisers and even those that employ advisers should not be crossing...”
    3 days ago by Tash
  • [GRTV] The nitty gritty of Smart’s ETFs
    “Advisors should consider all gateways into investment markets including cheaply priced ETFs to provide access to low priced...”
    4 days ago by Pragmatic
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 4.94 - - -
AIA - Go Home Loans 7.49 ▼5.79 ▼5.49 ▼5.59
ANZ 7.39 6.39 6.19 6.19
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.79 5.59 5.59
ASB Bank 7.39 ▼5.79 ▼5.49 ▼5.59
ASB Better Homes Top Up - - - 1.00
Avanti Finance ▼7.90 - - -
Basecorp Finance ▼8.35 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.54 - - -
BNZ - Rapid Repay 7.54 - - -
BNZ - Std 7.44 ▼5.79 ▼5.59 5.69
BNZ - TotalMoney 7.54 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.69 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 6.95 5.79 5.59 5.69
Co-operative Bank - Standard 6.95 6.29 6.09 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - ▼5.99 ▼5.89 -
First Credit Union Standard ▼7.69 ▼6.69 ▼6.39 -
Heartland Bank - Online 6.99 ▼5.49 ▼5.39 ▼5.45
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.60 6.65 6.40 -
ICBC 7.49 ▼5.79 ▼5.59 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.25 6.89 6.59 6.49
Kiwibank - Offset 7.25 - - -
Kiwibank Special 7.25 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 7.94 ▼5.75 ▼5.99 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.49 6.95 6.29 6.29
SBS Bank Special - 6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 4.94 5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.19 6.49 ▼6.39 ▼6.39
TSB Special 7.39 5.69 ▼5.59 ▼5.59
Unity 7.64 ▼5.79 ▼5.55 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society ▼7.70 ▼5.95 ▼5.75 -
Westpac 7.39 6.39 6.09 6.19
Westpac Choices Everyday 7.49 - - -
Westpac Offset 7.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 5.79 5.49 5.59
Median 7.49 5.97 5.75 5.69

Last updated: 6 December 2024 9:11am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com