NZSuperFund was set up to reduce the tax burden on future taxpayers, regarding the cost of New Zealand superannuation. It invests Government contributions into investment opportunities to further grow the amount of money in the fund. In doing so, it takes into account three potential value-adding strategies.
Strategic Tilting
As a value-adding strategy, strategic tilting is where NZSuperFund periodically changes (or “tilts”) their market exposures away from the Reference Portfolio. This is done with the expectation that the Fund’s performance will improve.
They are made by increasing or decreasing the fund’s exposure to asset classes or currencies as based on the Fund’s assessment of fundamental market value.
Capture Active Returns
Capture active returns refers to the broad class of activities that are undertaken in the belief that (over the long term) they will produce better returns than what is possible from the Reference Portfolio. This may involve investing in asset classes that are not in the Reference Portfolio or investing in asset classes that are in the Reference Portfolio but doing so actively, rather than passively.
Portfolio Completion
‘Completing’ the portfolio refers to the Fund’s activities in getting cost-effective access to investments and managing them efficiently when they have been made.
