Alternative assets on NZSF agenda

The New Zealand Superannuation Fund is poised to move into alternative asset classes such as infrastructure.

Friday, February 11th 2005, 7:13AM

by Rob Hosking

Executives from the Guardians of the Superannuation Fund told a Parliamentary select committee yesterday that asset classes such as private equity, infrastructure, forestry, commodities and hedge funds are on the fund’s agenda.

“We’re currently finalising policies and we expect in a relatively short time to be opening for business in that area,” chief executive Paul Costello told Parliament’s commerce committee yesterday.

The Guardians have been evaluating alternative asset classes for some time and are particularly interested in infrastructure assets, Costello says.

“There have been people who wanted us to move along more quickly but we need to take our time. The nature of these sorts of assets is you are committed to them for a very long time.”

Last financial year the Guardians asked for extra funding to carry out research into alternative asset classes but that bid was knocked back by Finance Minister Michael Cullen, on the advice of the Treasury, until the review of the Guardians was completed.

That review was carried out by Jonathan Eriksen last year. Chairman David May told MPs that the Guardians had received enough funding to research alternative asset classes and “we are very happy with the budget we have for that.”

Asked by Labour MP Damien O’Connor whether the fund should invest more into New Zealand equities, May said the local market could not take much more than the current 7.5%. “we think we’ve got it about right. You get much higher and you start having an adverse effect.”

However, if the New Zealand capital market grows substantially in size over the next five years the allocation could be reviewed, he told MPs.

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

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