The NZX is finishing the year 3.46% up on last year on the gross index. That's a shock compared to 2017, when it grew 22%.
But it is one of just a handful of countries where markets have stayed out of the red in the year-to-date. Among the others are Norway, Kazakhstan, Brazil, Macedonia and Bucharest.
The ASX 200 is down 8.16%, year-to-date.
Mike Frith, manager, economics, at the NZ Super Fund, said there had been volatility throughout 2018.
The drivers of that volatility remained through to 2019, he said – there was still unease over trade tensions between China and the Untied States and concern about the Federal Reserve increase interest rates.
The NZ Super Fund has a reference portfolio of 80% equities and 20% bonds but can add more risk when it spots opportunities. At the moment the fund’s overall use of active risk was low, he said, reflecting its view that many assets were at best fairly valued.
“We make adjustments when we think we can do better and we can’t, we fall back.
"We don’t see a lot of active investment at the moment, we don’t think there’s much out there, so we let it anchor in the reference portfolio and recognise there’s not a lot of bargains."
It is still finding opportunities, however. In the past six months, it had increased its exposure to equity factors by almost $2 billion and invested US$65 million in cloud-based waste and recycling technology company Rubicon Global.
He said retail investors' traditional move to shift from equities to bonds in a hot market was not as straightforward a process as it might have been in times past because bonds looked expensive, too.
“Most people expect bonds to sell off. It’s quite a challenge.”
The fund returned 3.5% in the past year – a major drop from double-digit returns in recent years. It veered into the red in October when share markets around the world slumped.
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