The Authority is required to invest the Fund on a prudent commercial basis. In doing so, it must manage and administer the Fund in a manner consistent with best practice portfolio management, maximising returns without undue risk to the Fund as a whole.

Investment Objective

The Authority's objective is to maximise the Fund's returns over and above New Zealand Government bonds (before New Zealand tax), while limiting the chance of under-performing New Zealand Government bonds over rolling ten year periods.

Reference Portfolio

The Authority has adopted a Reference Portfolio for accountability and performance measurement purposes.  The Reference Portfolio is a simple notional portfolio that could be managed at low cost and return more than New Zealand Government bonds while meeting the Fund's risk objectives.  The long term expected excess return of the Reference Portfolio varies somewhat over time.  The Reference Portfolio also provides a benchmark to measure the Authority's performance in generating value-added returns. 

The composition of the Reference Portfolio is set out in the table below.