Jo Townsend: New Zealand Super Fund CEO on the fund generating returns of nearly 12% in the past year

The New Zealand Super Fund has bucked economic trends. 

It's generated returns of nearly 12% over the past year, growing to $85 billion, and it’s suggested it will reach $100 billion by 2028. 

CEO Jo Townsend told Mike Hosking that despite the ever-increasing amount of uncertainty in the world, markets have been incredibly strong over the last five years. 

She says it goes to show it’s almost impossible to pick what the market is going to do over the short term – be it one year or five. 

Their job, Townsend says, is to build a portfolio that’s resilient enough to cope when markets are doing well, and when they’re not. 

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Episode Transcript

Speaker 1 (00:00):
Some good economic news in the form of the New
Zealand Superfund, which continues to provide excellent returns for the
country and in doing so somewhat offsets that great superannuation
to bake. The returns came in at almost twelve percent
over the past year, so the fund has ground to
eighty five billion dollar suggestions now it'll crack one hundred
billion by twenty twenty eight. Joe Townsend is the super
Fund CEO. Joe morning, Good morning, mine, and well done.

(00:23):
You must be pleased with us. The activity, intensity of
activity versus riding the markets? How active are you?

Speaker 2 (00:30):
So the result of eleven point eighty four percent was
surely reflective of very strong global equity markets after over
the past year. However, through our active investment strategies, we
did manage to add almost an additional one percent, which
you know might not seem like it's at all for
a lot, but it's the equivalent of about seven hundred

(00:51):
and forty five million dollars over the past year.

Speaker 1 (00:54):
What do you make at the markets at the moment?
Because people who don't follow this, excuse me, we're all
in a cost of libining crisis year. The markets are
through the roof.

Speaker 2 (01:02):
Yeah, well, it's interesting, right because I look at the
numbers over the past five years, and they've been incredibly
strong despite what seems to be an ever increasing amount
of uncertainty in the world. So it just goes to
show that, you know, it's almost impossible to pick what
the market's going to do over the short term, whether
it be one year or five years. You know, our

(01:22):
job is to build a portfolio that is resilient enough
that we can cope with markets when they're going up,
which they've been doing for quite a long time now,
but also to cope with markets when they're not so good,
and you know, we saw an episode of that earlier
this year with the announcement of the tariffs. You know,
for a long term investor like us, we try really
hard not to get caught up in the day to

(01:44):
day noise as markets, and so when markets are falling
during periods like that, you know, that's very much It
can be a good buying opportunity for us to go
into different markets and pick up assets that are cheaper
than what they were previously.

Speaker 1 (02:00):
How unusual is what we're seeing at the moment in
terms of the tariffs and the presidency and the global
trade situation and all that. How wacky is it? Oh?

Speaker 2 (02:08):
Look, it's really difficult to do scenario testing for environments
like we're in at the moment because the outcomes can
be quite binary and it's really difficult to forecast where
market's going to go. And so, you know, we do
a lot of scenario testing. But again, our job is
to make sure that we've got the most robust portfolio

(02:28):
that we can build for all all different market environments.

Speaker 1 (02:32):
Is it robust with blue chip you know safety or
are you you know, in the corner they're doing a
little bit of risk? Oh?

Speaker 2 (02:40):
Well, the thing about investing is that you have to
be prepared to take some risk to earn additional returns.
And so we spend an awful lot of time thinking
about risk and assessing where we believe we understand risk
and it's a worthwhile investment to make. But our starting
position is that we have an eighty percent allocation to equity,

(03:03):
and that is a reasonably growth oriented, risky starting position,
and so we believe that that's an appropriate setting for
a fund life the New Zealand Superfund. Because we are
a very long term investor, This fund will not peak
in terms of its importance to Zealand in terms of
its GDP for another fifty odgs. Well, and so at

(03:27):
context where you believe that risk will be rewarded if
you take risk, well, we think it's an appropriate setting
for the fund to have.

Speaker 1 (03:35):
Nice and I appreciate Joe Joe Townshend, and I mean,
you can't argue twelve percent over the past year. And
as I've seen if you followed the fund over the
years when alls running it, they've always In fact, it's
one of the in terms of returns, it's one of
the most successful funds in the world, which is good
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(03:57):
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