It exceeded its passive refence portfolio benchmark, equivalent to a market return, by 2.8% or $766 million during the 2015 calendar year.
It also more than doubled the return on New Zealand Treasury Bills, a measure of the Government’s cost of debt, exceeding it by 3.4% or $934 million.
While the return for the 2015 calendar year was a good one, chief executive Adrian Orr said global equity markets had fallen significantly since then.
“These kind of movements are well within the expected range of outcomes for the Fund,” said Orr. “As a long-term investor, volatile markets provide opportunities for us. We respond to market fluctuations by adding more assets as they become cheaper, and selling those that are becoming more expensive. We remain focused on achieving the best outcomes over the long term.”
The Guardians has previously said that the Fund’s record performances in recent years were the exception, rather than the rule, and warned that future returns would be lower. Over the past three years, the Fund has returned 15.2% p.a.
Orr reiterated that, based on current portfolio settings, the Fund was expected to generate an average return of 8% - 9% p.a. over the long-term. Since inception in 2003 the Fund has returned 9.6% p.a.
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