The New Zealand Super Fund continues to outperform Australian MySuper funds, posting its a best-ever return of 29.6%.
The 2020-21 financial year saw the fund reach new heights of NZD$59.8 billion, an increase of NZD$15 billion year on year.
It also beat the New Zealand treasury bill return by $13.02 billion (29.4%), as well as its benchmark by $757 million (1.73%).
Australian super funds' default strategies delivered a median return of 18.1% p.a. while the Future Fund achieved 22.2% p.a. over the same period.
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NZ Super Fund chief executive Matt Whineray said: "This past year demonstrates the importance of sticking to our long-term investment strategies, which are designed to play out through market cycles. The fund has a portfolio mix that was well positioned to capture strong returns from rising asset values over the year."
The fund is allocated across global equities (63%), bonds (16%), NZ equities (4%), rural land and timber (5%), alternatives (6%), private equity (4%), infrastructure (1%) and property (1%).
The fund's New Zealand investments include stakes in Kaingaroa Timberlands, Kiwibank, Datacom, LabTests, Fidelity Life, and farmland and small-medium size growth companies.
Whineray acknowledged the fact that strong performance of global listed equity markets over the year helped boost returns.
"With markets continuing to perform strongly and economies rebounding, supported by accommodative fiscal and monetary policy around the world, we're possibly looking at a period of increasing inflation and rising interest rates. That combination should weigh on company returns and creates a challenging investment environment. We do not expect the outperformance of recent times to continue forever," he said.
In the last 18 years, the fund has returned 10.6% p.a. (after costs and before tax).
It has exceeded 90-day treasury bill returns by 7.14% p.a. and its benchmark by 1.24% p.a.