Auckland, New Zealand
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Investors in the world’s best-performing sovereign wealth fund warned on Wednesday that the U.S. stock market could be heading into a correction.
Joe Townsend, CEO of Guardians of New Zealand Superannuation, which manages the country’s $54 billion wealth fund, said the fund had grown 14.2 per cent in the year to June 30 and warned of a potential recession.
The New Zealand Superannuation Fund was worth NZ$94.4 billion ($54.4 billion) at the end of the 2026 financial year and was ranked the world’s best-performing sovereign wealth fund by analytics firm Global SWF earlier this year.
The Guardian newspaper said on Wednesday that the profits recorded in the financial year represented an annual increase for the fund of NZ$9.3 billion, but were 0.1 percentage points below the benchmark index.
New Zealand super fund warns US stock returns could cool
Mr Townsend said on Wednesday that the fund’s performance in 2026 had been very strong, but warned that the gains enjoyed by stock market investors in recent years were likely to slow.
“U.S. stock returns over the past several years have been nearly double the annualized returns over the past 20 years, so we would expect some reversion to the mean at some point,” he said in a statement accompanying the earnings update.
“In the short term, a concentrated portfolio can achieve superior results, but in the long term we believe a more diversified portfolio is better suited to our mission.”
This wealth fund has delivered an average annual return of 9.68% over the past 20 years.
Earlier this year, Guardians announced it had lowered the fund’s expected long-term annual return from 7.8% to 7.2%, and Mr Townsend said on Wednesday that this reflected fund management’s view that stock returns were likely to decline. The fund said it had also reduced its active risk budget.
How the fund’s diversification strategy drove growth
The fund’s manager publishes data on its portfolio holdings semi-annually. The latest update, reflecting the portfolio at the end of December, showed the fund’s most valuable position was in equities worth NZ$3 billion. Nvidiaand apple, microsoft, alphabet and Amazon They make up the rest of the top five in terms of value.
Its total US stock portfolio was worth NZ$31.7 billion at the end of last year.
Established in 2001 with the aim of making pension costs more affordable for New Zealand’s aging population, the New Zealand Wealth Fund also allocates funds to timber, property, private and other markets.
The first withdrawals from the New Zealand Pension Fund are scheduled for 2054.
Mr. Townsend’s view of what lies ahead for the stock market echoes what the head of the management team at the world’s largest Norwegian sovereign wealth fund recently warned investors.
“We shouldn’t expect returns like we’ve seen over the past six months going forward,” Nicolai Tangen, CEO of Norges Bank Investment Management, told CNBC last month.
NBIM manages Norway’s $2.3 trillion oil fund and posted a record first-half profit of nearly $185 billion.
