The head of investments sacked by the New Zealand Superannuation Fund in March has resurfaced as chief economic adviser to NZ’s Minister of Finance, whose party wants the Fund to nearly double its New Zealand exposure.
It is understood that the former NZSF investment chief, Paul Dyer, is an old friend of the new Minister, Bill English, who is also NZ’s deputy Prime Minister following the triumph of John Key’s National Party in the recent election.
While a spokesperson for English’s office said Dyer’s role had not yet been fully defined, it is understood Dyer would have some influence over his former employer as the NZSF reports to the Minister of Finance.
According to the NZSF guidelines, the Minister of Finance “may give directions to the Guardians regarding the Government’s expectations as to the Fund’s performance, but must not give any direction that is inconsistent with the duty to invest the Fund on a prudent, commercial basis”.
In its election campaign the National Party said it would require the NZSF to invest 40 per cent of the fund into New Zealand, about double its current allocation which includes 6.8 per cent in domestic shares and the balance spread between bonds, property, forestry and cash.
The NZSF is also due to undergo a five-yearly review sometime in 2009.
The latest performance figures showed the NZSF had lost more than NZ$2 billion in value since this August, with assets under management totaling just over NZ$12 billion as at the end of October 2008.
According to the NZSF data, the fund lost 13.51% in October alone and is down 20.21 per cent for the 2008/9 financial year to date. The NZS returns since inception have now slumped to 4.86% – 2 per cent below the ‘risk-free rate of return’ over the period.
Dyer was most recently serving in an advisory role with the Accident Compensation Commission (ACC) investment team under Nicholas Bagnall. He joined the ACC in the middle of 2008 after being sacked by NZS as chief investment officer following a restructure.
The ACC fund lost 0.8 per cent in the year to the end of June 2008, according to its annual report, against a benchmark return for the period of -1.7 per cent. The loss, its first ever, equated to a decline in value of the ACC portfolio of about $1.6 million versus budgeted returns of NZ$766 million.
However, the ACC fund grew from NZ$9.2 billion to NZ$9.6 billion after direct transfers from surplus levies. While a spokesperson for English’s office said the role had not yet been fully defined it is understood Dyer would have some influence over his former employer as the NZSF reports to the Minister of Finance.