GSF Act Requirements

The Act requires the Authority to:

“… invest the Fund on a prudent, commercial basis and, in doing so, must manage and administer the Fund in a manner consistent with –

1. best-practice portfolio management;
2. maximising return without undue risk to the Fund as a whole; and
3. avoiding prejudice to New Zealand’s reputation as a responsible member of the world community.”

The Act also requires that:

1. “The Authority must establish, and adhere to, investment policies, standards, and procedures for the Fund that are consistent with its duty to invest the Fund on a prudent, commercial basis ...;
2. The Authority must review those investment policies, standards, and procedures for the Fund at least annually.”

“The Fund has been invested in a diversified portfolio of fixed interest securities, equities, and listed and unlisted property, both in New Zealand and overseas."

Since its inception, the Authority has implemented an investment strategy and asset allocation which reflects these requirements. The Fund has been invested in a diversified portfolio of fixed interest securities, equities, and listed and unlisted property, both in New Zealand and overseas (see Table 1: Asset Allocation). The aim is to reduce the cost to the government and the taxpayers of New Zealand of the cost of funding the “top up” of the GSF entitlements.

The Board has also established a ‘Statement of Investment Policies, Standards and Procedures’ (“SIPSP”). The SIPSP is an operational document which is subject to amendment as circumstances change, for example a new asset class is added to the strategic asset allocation for the Fund. The SIPSP is reviewed annually to determine whether it remains an appropriate and relevant framework for the Authority’s investment strategy.

The Board appoints investment managers to manage the Fund’s investments in a range of asset classes.