Latest / Early Edition with Ryan Bridge / Brad Olsen: Infometrics Principal Economist on the NZ Superannuation Fund posting a return of 14.17%

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Brad Olsen: Infometrics Principal Economist on the NZ Superannuation Fund posting a return of 14.17% · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Now, look, you want some good news, here's some more
• 0:02
  Speaker 1: good news. Not just the start of the Indian FTA,
• 0:05
  Speaker 1: but the super funds had a great year. They posted
• 0:08
  Speaker 1: a 14.17% increase, a 14% return. Anyone would be happy
• 0:13
  Speaker 1: with that. The fund now sits at $ 94. 35 billion. So
• 0:18
  Speaker 1: the big change, where they've made the money, they've invested
• 0:21
  Speaker 1: in AI. So Brad Olson from Infometrics joins us right now,
• 0:24
  Speaker 1: the principal economist there.
• 0:25
  Speaker 2: G'day, Brad.
• 0:26
  Speaker 1: This is a good thing, isn't it?
• 0:28
  Speaker 2: Oh, it's very much a good thing. I mean, probably
• 0:30
  Speaker 2: the most surprising part was when we were looking through
• 0:33
  Speaker 2: the results for the Superfund... seeing this big increase, was
• 0:37
  Speaker 2: that it actually ever so slightly underperformed the reference investments
• 0:42
  Speaker 2: that it normally looks to to try and get a
• 0:44
  Speaker 2: bit of a benchmark. You know, has it sort of
• 0:45
  Speaker 2: kept up with others that are doing similar sorts of things?
• 0:49
  Speaker 2: And look, it was a very, very minor difference. The
• 0:52
  Speaker 2: Superfund returned a 14.17% return. The benchmark portfolio was 14.27%.
• 0:59
  Speaker 2: So look, within Cooey of each other, but again, very
• 1:03
  Speaker 2: much driven by the increase in We've been seeing coming
• 1:06
  Speaker 2: through from particularly the US market and all of the
• 1:09
  Speaker 2: AI stocks. Also some growth coming out of Asia with
• 1:13
  Speaker 2: a number of different equities there seeing growth because of
• 1:17
  Speaker 2: how they are integrated into the AI supply chain.
• 1:20
  Speaker 1: So just so I can get it right, the benchmark
• 1:22
  Speaker 1: at 14.2, we're at 14.17. Who is the benchmark? Is
• 1:25
  Speaker 1: that a private fund or is that another country's super
• 1:28
  Speaker 1: fund or whatever?
• 1:30
  Speaker 2: So it's a range of other sort of sovereign wealth funds.
• 1:35
  Speaker 2: I believe that they sort of look at, or at
• 1:37
  Speaker 2: least sort of the same composition of sort of what
• 1:39
  Speaker 2: they put together. So for the likes of our super fund,
• 1:42
  Speaker 2: for example, they've got about 57% of their portfolio that
• 1:46
  Speaker 2: are invested in equities and stocks, about 8% in bonds.
• 1:50
  Speaker 2: So you can't sort of compare or you shouldn't compare
• 1:53
  Speaker 2: a fund that was be 100% government bonds with what
• 1:56
  Speaker 2: the super fund might do. So they get a bunch
• 1:58
  Speaker 2: of others that sort of do similar things and go, look,
• 2:01
  Speaker 2: did you sort of stay in the right kiwi? And
• 2:03
  Speaker 2: I think the challenge, though, is that, look, this is
• 2:06
  Speaker 2: a good number, and don't get me wrong, but we've
• 2:08
  Speaker 2: also seen for the last, what, week or so on
• 2:11
  Speaker 2: Wall Street that those AI stocks have also slid back
• 2:13
  Speaker 2: a bit. So there's always going to be a bit
• 2:15
  Speaker 2: of volatility in there. The numbers will look good at
• 2:18
  Speaker 2: year end. They might not look so good if we
• 2:20
  Speaker 2: were to sort of, you know, have a bit of
• 2:22
  Speaker 2: a comparison today. But overall, the fact that the super
• 2:25
  Speaker 2: fund is now getting quite close to $ 100 billion does
• 2:28
  Speaker 2: at least mean that in the future, yes, we're going
• 2:30
  Speaker 2: to have a little bit more support when it comes
• 2:32
  Speaker 2: time to pay that rather.
• 2:33
  Speaker 1: Large super fund. Yeah, but it's not exactly the white
• 2:37
  Speaker 1: knight coming to save the day, is it?
• 2:40
  Speaker 2: Not yet. I mean, it's useful to have. We are still,
• 2:43
  Speaker 2: of course, putting a lot of money in. But expectations
• 2:47
  Speaker 2: and forecasts are for the Superfund, I think they're trying
• 2:50
  Speaker 2: to grow up to $ 200 billion by 2040. So clearly
• 2:54
  Speaker 2: a lot of growth still to come at a time when, yes,
• 2:57
  Speaker 2: the bill is absolutely still growing and we have to
• 2:59
  Speaker 2: pay for that in the short term.
• 3:01
  Speaker 1: Another thing, Brad, inflation figures out tomorrow, expected to be
• 3:03
  Speaker 1: lower but still over the band. So that basic Thursday, sorry.
• 3:08
  Speaker 1: So all that means a hike is coming, right?
• 3:13
  Speaker 2: Well, it seems to at the moment. I mean, it's
• 3:16
  Speaker 2: one of those weird positions where who cares a little
• 3:19
  Speaker 2: bit at the moment what we think that quarter three
• 3:22
  Speaker 2: figure is going to be. It will be a bit
• 3:24
  Speaker 2: lower than where things were in June because fuel prices
• 3:27
  Speaker 2: weren't as intense yesterday. But of course, since then, we've
• 3:29
  Speaker 2: had fuel prices that have jumped up even more. So
• 3:32
  Speaker 2: we know that quarter four figure is going to be
• 3:34
  Speaker 2: more intense. Probably most worryingly, those fuel prices remain high.
• 3:39
  Speaker 2: The New Zealand dollar is still at close to 17-year lows.
• 3:42
  Speaker 2: That makes everything a whole lot more expensive if we're
• 3:44
  Speaker 2: importing it in. And for the Reserve Bank, it means
• 3:47
  Speaker 2: that that potential chance of being able to hit pause
• 3:50
  Speaker 2: in October and then doing a little bit more in December,
• 3:54
  Speaker 2: they might need to sort of hurry up the game
• 3:56
  Speaker 2: a little bit. So, yes, Mark, it's still picking an
• 3:58
  Speaker 2: October hike now and probably followed up with December 2.
• 4:01
  Speaker 2: There we go.
• 4:01
  Speaker 1: That's the first bit of bad news for the half hour, Brad. But,
• 4:04
  Speaker 1: I mean, that is the reality of things. And I
• 4:06
  Speaker 1: thank you so very much indeed.
• 4:08
  Speaker 2: For more from Early Edition with Ryan Bridge, listen live
• 4:11
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• 4:15
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