New Zealand Super Fund warns U.S. equity returns may cool

Investors behind the world's top-performing sovereign wealth fund warned Wednesday that the U.S. equity market could be due a correction.

Jo Townsend, CEO of the Guardians of New Zealand Superannuation — which manages the country's $54 billion wealth fund — warned of a potential downturn as she revealed the fund had grown 14.2% in the year to June 30.

The New Zealand Superannuation Fund, which had a value of 94.4 billion New Zealand dollars ($54.4 billion) at the end of the 2026 financial year, was ranked the world's best-performing sovereign wealth fund earlier this year by analytics firm Global SWF.

The Guardians said Wednesday that the returns posted in the fiscal year represented annual fund growth of NZ$9.3 billion but came in 0.1 percentage points below its benchmark index.

While Townsend said Wednesday that the fund had performed exceptionally well in 2026, she cautioned that the returns enjoyed by stock market investors in recent years are likely to slow.

"Returns for U.S. equities over the past couple of years are close to double annualized returns for the past 20 years, so we would expect there to be some reversion to the mean at some point," she said in a statement alongside the performance update.

"In the short term, a concentrated portfolio can achieve strong results; however, over the long-term, we firmly believe a more diversified portfolio is better suited to our mandate."

The wealth fund has delivered an annual average return of 9.68% over the past two decades.

Earlier this year, the Guardians announced it had lowered the fund's long-term expected annual return from 7.8% to 7.2%, which Townsend said on Wednesday reflected the fund management's view that returns on equities were likely to decrease. The fund has also reduced its active risk budget, she said.

The fund's managers publish data on their portfolio holdings every six months. Its most recent update, reflective of its portfolio at the end of December, showed the fund's most valuable positions were a NZ$3 billion stake in Nvidia, with Apple, Microsoft, Alphabet and Amazon accounting for the remainder of its top five positions by value.

Its total U.S. equity portfolio was worth NZ$31.7 billion at the end of last year.

Established in 2001 in a bid to make pension costs for New Zealand's ageing population more affordable, New Zealand's wealth fund also allocates capital to timber, real estate and private markets, alongside other alternatives.

The first withdrawals from the New Zealand Superannuation Fund are expected in 2054.

Townsend's view on what's in store for stock markets echoes a recent warning to investors from the head of the management team behind Norway's sovereign wealth fund, the world's largest.

Nicolai Tangen, the CEO of Norges Bank Investment Management, told CNBC last month: "We should not be expecting the same kind of returns going forward as we've seen over the last six months."

NBIM manages Norway's $2.3 trillion oil fund, which posted a record first-half profit nearing $185 billion.