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The NZ Superannuation Fund (NZS) year-on-year staff-count went backwards for likely the first time ever during the latest 12-month period to June 30, according to its just-released 2025 annual report. As at the end of June this year, the almost $90 billion sovereign wealth fund reported a total workforce of 228, down from 241 at the same date in 2024. Generally in growth-mode since inception, the NZS staff pool swelled from 163 as at June 30, 2021, to peak in the 2024 period. “Organisational changes that were underway at the end of the financial year contributed to the decrease in employee numbers,” the 2025 annual report says. “The Leadership Team continues to assess organisational needs and is strategically considering the optimal use and timing of the remaining budgeted headcount.” As reported last month, the NZS slashed about a dozen members from the investment team this year as part of a move from an “access-point-focused structure to an asset-class-based one”. Total employee costs rose $5.5 million in the 2024/25 financial period to reach $75.4 million including a more than $1.3 million remuneration package for chief executive officer, Jo Townsend, in her first full year at the helm. However, overall NZS annual costs fell from about $218 million last year to just above $205 million in the 2025 report – excluding an asset impairment charge of about $45 million in 2024 that was largely reversed in the following period. “Total costs, as a percentage of average net assets, decreased from 0.37% in the prior year to 0.26% in the current year (excluding a one-off reversal of impairment losses),” the report says. “This was primarily due to lower performance fees and impairment losses in the prior year.” Performance fees fell from about $30 million in the 2023/24 financial year to just $7.4 million in the latest period while manager fees increased to $58 million (2024: $51.3 million). Other investment costs, bar the impairment charge, remained “broadly consistent” year-on-year to land at $38.8 million in the 2025 report. Meanwhile, other non-investment operating expenses “decreased slightly [to $26 million] from $27.9 million in the prior year, due to lower expenditure on professional fees and international travel”, the report says. But the NZS maintained its strong investment performance record during the 12 months to the end of June this year, returning almost 11.9 per cent after costs (and before tax), about 1 per cent above notional results for the reference portfolio designed to track a passive 80/20 split of equities – including 5 per cent NZ shares – and global fixed income. From inception in 2003, the fund has averaged annual returns of more than 10 per cent to beat the reference portfolio by about 1.4 per cent each year and about 6.5 per cent above the Treasury bills rate (a proxy for the cost of government debt). The NZS scratched six external mandates during the financial year including four closed-ended funds that had “reached the end of their life and been fully distributed” and the removal of Devon Funds from a roughly $200 million active local shares portfolio; a joint venture with Dutch pension giant, APG, started in 2022 to explore infrastructure opportunities also “dissolved” with no investments placed. During the financial year, the fund appointed third-party managers to four mandates covering real estate (in the US and Asia), US “mid-band spectrum licences” and a new allocation to a buyout fund run by local firm, Direct Capital. The NZS array of internal investment mandates added almost 1.4 per cent above reference including the machine-learning automated Keorangi local shares portfolio that “has outperformed passive benchmarks since inception [in 2023]”, the report notes. “Moreover, it is negatively correlated with our inhouse portfolio, further diversifying our investments.” Across all internal and outsourced strategies over the 12-month period, the NZS report cites developed market multi-factor exposures, strategic tilting, tactical credit and catastrophe bonds among the best active outperformers while property, timber, infrastructure and trend-following (momentum) flagged somewhat. The 230-page 2025 annual report also documents the vast range of NZS duties such as its oversight of the Elevate venture capital fund, sustainability plans, internal reviews (with both the reference portfolio and liquidity management under the spotlight) and long-term strategic goals. Townsend says in the report that the “structure and composition of our Leadership Team has been a focus for me this year”. “With a number of long-standing personnel leaving the Guardians, we have had an opportunity to refresh the team.” Footnotes reveal, too, that the NZS is fending off another skirmish with activist groups over its exposure to certain stocks. “During the year, people associated with the Palestine Solidarity Network of Aotearoa applied for a judicial review relating to the Fund’s investments in travel companies Airbnb, Booking.com and Expedia; and telecommunications company Motorola,” the report says. “These companies are part of major listed indices in which the Fund is invested. We are resisting the application; a judgement is expected during the 2025/26 financial year. We remain confident that we are compliant with our Sustainable Investment Framework and obligations under our Act.” In 2021, the NZS won a legal battle with activists seeking to force a judicial review of the fund’s exposure to phosphate-mining in the Western Sahara.
