NEW ZEALAND WEALTH FUND CHIEF WARNS OF US MARKET PULLBACK

Jo Townsend, chief executive of the Guardians of New Zealand Superannuation, said the fund she oversees returned 14.2% in the year to 30 June. She said the New Zealand Superannuation Fund closed the 2026 financial year with a value of NZ$94.4 billion, around $54.4 billion. Townsend said the increase amounted to fund growth of NZ$9.3 billion over the year, though the return came in 0.1 percentage points below the fund's benchmark index. Analytics firm Global SWF ranked the fund the world's best-performing sovereign wealth fund earlier this year. Alongside the results, Townsend warned that US stock markets could be heading for a pullback.

Townsend said returns from US equities over the past couple of years had been close to double the annualised returns recorded over the previous 20 years. She said the fund "would expect there to be some reversion to the mean at some point." Townsend said a concentrated portfolio could produce strong short-term results, but that the fund's mandate was better served by a more diversified approach over the long term. According to the Guardians, the fund has delivered an average annual return of 9.68% over the past two decades. Earlier this year, the Guardians said they had reduced the fund's long-term expected annual return from 7.8% to 7.2%.

Townsend said the lower projection reflects the fund management's view that equity returns are likely to fall. The Guardians said they had also cut the fund's active risk budget. Separate reporting has pointed to weakening investor confidence in European stock markets, with this year's rally described as increasingly concentrated amid a less optimistic economic outlook. The fund's warning adds to wider signs of caution among institutional investors about the durability of recent stock market gains.