Brash supports GSF investments - in principle

Politicians may be getting up in arms about the offshore investment strategy of the $2.4 billion Government Superannuation Fund (GSF) but you are unlikely to hear criticism from the National Party.

Since it was revealed that the GSF had made losses on its international share investments a number of politicians have criticised the decision to shift the fund's asset allocation from a conservative, Government Bond focussed strategy to a more diversified one.

Leading the charge has been Green Party co-leader Rod Donald, who opposes offshore investment and considers investing in shares as no more than "gambling on the international casino economy."

Act finance spokesman Rodney Hide has also criticised the move.

However, National's finance spokesman Don Brash says there is nothing wrong in principle with the fund investing offshore.

His concerns are about the timing of the move from Government Bonds to international shares.

While he acknowledges it is easy to criticise the move in retrospect, he believes there were plenty of warning signs that the international markets had become too toppy particularly because price/earnings ratios were at historically high levels.

Brash also points to the low dollar at the time being a warning signal.

As the dollar was considered to also be at historically low levels, and undervalued, there was every likelihood that once it started rising investors with money offshore would be hit with currency losses.

Brash says, personally, he had been concerned about this situation for some time and took his own money out of the United States market in 1996.

The criticism levelled at the GSF is likely to be targeted at the New Zealand Superannuation Fund once it begins its investment programme later this year.

The National Party opposes the establishment of the fund, but Brash said if it did go ahead it was appropriate that it invested into international shares.

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