NZ Super 80/20
New Zealand Superannuation Fund Reference Portfolio (75% global equities, 5% NZ equities, 20% bonds, NZD-hedged)
Where it stands today
Our calculation, 1926-07 – 2026-09
Growth of $10,000
Where it came from
The New Zealand Superannuation Fund was created by the NZ Government to put money aside now so that the future cost of national superannuation (the state pension) can be spread over time and the tax burden smoothed. It began investing in 2003 and is run by the Guardians of New Zealand Superannuation. The mandate is to maximise return without undue risk, using best-practice portfolio management and without damaging New Zealand's reputation as a responsible member of the world community (2015 review). Because it has no direct liabilities and a very long horizon, the Guardians see a greater tolerance for equity risk than a typical investor.
The Reference Portfolio is not the Fund's real portfolio. The 2015 review describes it as a simple, low-cost, passive and static portfolio of traditional asset classes that could be implemented with index exposures. The real portfolio is allowed to differ from it by a wide margin: management decides on deviations within risk limits set by the board, and the Reference Portfolio acts as the benchmark against which those active decisions are judged. The Guardians say they have used this approach since 2010 (2015 review text; a trade-press article dates the launch to 2009, so the exact year is uncertain). Its stated design principles are: simple and low cost, passive, diversified, a risk level appropriate to the Fund's purpose, relevant to a New Zealand investor, and an equilibrium construct.
2010 composition: 70% developed-market global equities, 5% New Zealand equities, 5% global listed property and 20% global fixed interest (about 80% growth assets and 20% income assets). The 2015 review, completed in the first half of 2015, dropped the listed-property sleeve because the starting point became the liquid/listed universe, and split global equities into 65% developed and 10% emerging markets (the emerging share raised by about 3 points above free-float weights to approximate full market capitalisation). It kept 5% NZ equities, because of a ministerial directive to look for ways to increase New Zealand assets and the principle of diversification, and 20% global fixed interest. The expected return rose from NZ Treasury bills plus 2.5% to plus 2.7% a year, and the expected volatility from 13.2% to 13.5%.
2020 review (white paper published 20 January 2021): the 80/20 growth/income split and the 5% NZ equities were kept, developed and emerging equities were merged into a single global equities building block, and the 100% hedge to the New Zealand dollar was kept (modelling put the return-maximising hedge at 100% and the risk-minimising hedge at 90-100%). The Guardians expected a long-term return of 6.8% a year, 2.8 points above the estimated risk-free rate, and a volatility of 13.8%. Inflation-hedging strategies and commodities were considered and rejected. The long-run forecast had been 8.5% in 2010 and fell to 6.8% in 2020.
Latest review: a trade-press report of 20 September 2026 says the Guardians kept the Reference Portfolio settings of 75% global equities, 5% NZ shares and 20% international fixed income after the five-yearly review completed earlier in 2026. I did not find the Guardians' own publication of this review, so the 2025/26 result rests on that single secondary report, though it agrees with every earlier review. In the same article the Fund's provisional return for the 12 months to 30 June 2026 was 14.17% after costs against 14.27% for the Reference Portfolio.
What is in it
| Global equities (developed and emerging, NZD-hedged) | 75% | Reference Portfolio kept after the 2020 and the 2025/26 reviews; in 2015 the split was 65% developed and 10% emerging; in 2020 the two were merged into one block |
| New Zealand equities (NZX 50 Gross index) | 5% | Unchanged since 2010 |
| Global fixed interest (Bloomberg/Barclays Global Aggregate, hedged to NZD) | 20% | Unchanged since 2010; inflation-linked bonds, high yield and EM local-currency debt excluded for cost reasons |
How we model it
| US large companies (S&P 500) | 46% |
| Developed markets outside the US | 24% |
| US bond market (aggregate) | 20% |
| Emerging markets | 10% |
For a euro investor
How to build it with European funds
| Part | Share | Example funds (ISIN) |
|---|---|---|
| US large companies (S&P 500) | 46% | iShares Core S&P 500 UCITS ETF USD (Acc) IE00B5BMR087Vanguard S&P 500 UCITS ETF (USD) Distributing IE00B3XXRP09 |
| Developed markets outside the US (closest match) | 24% | iShares Core MSCI Europe UCITS ETF EUR (Acc) IE00B4K48X80iShares Core MSCI Japan IMI UCITS ETF IE00B4L5YX21 |
| US bond market (aggregate) (closest match) | 20% | iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) IE00BDBRDM35iShares Core Global Aggregate Bond UCITS ETF USD (Dist) IE00B3F81409 |
| Emerging markets | 10% | iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc) IE00BKM4GZ66 |
The idea
A long-horizon fund with no direct liabilities can hold mostly equities, but the Guardians keep 20 percent in bonds for diversification. Global equities carry the main reward for risk, the 5 percent NZ equities respond to a government expectation to look for NZ opportunities, and all foreign currency is hedged to the NZD because the Guardians believe the NZD carries a risk premium (interest-rate differential) that rewards hedging and because hedging reduces risk only slightly. The Reference Portfolio is also a governance device: the board sets a simple benchmark and management is judged on how much value it adds to it.
How people buy it
The Guardians implement the Reference Portfolio with physical and synthetic index exposure inside their own fund; it is not a product for sale. For a private investor in NZD the nearest copy would be a global equity index fund (for example MSCI World IMI and EM funds), a small NZ equity index fund and a currency-hedged global aggregate bond fund, with currency forwards for hedging.
Rebalancing as published
The Reference Portfolio is static: weights stay fixed until the next review, which the Guardians do at least every five years (2015, 2020, 2025/26). The 2015 review gives no rebalancing frequency within the benchmark; the actual portfolio is allowed to deviate substantially from it.
Variants
- 2010 Reference Portfolio: 70% developed-market global equities, 5% NZ equities, 5% global listed property, 20% global fixed interest (2015 review table).
- 2015 Reference Portfolio: 65% developed, 10% emerging, 5% NZ equities, 20% global fixed interest.
- 2020/2026 form: 75% single global equity block, 5% NZ, 20% fixed interest; fully hedged to NZD.
- Similar sovereign benchmarks: m_gic (Singapore Reference Portfolio, 65/35), m_cpp (Canada reference portfolio), m_norway.
Criticism
- The Reference Portfolio is only a benchmark; the real Fund holds a large share of active, unlisted and NZ assets, so its results differ (2015 review).
- Full NZD hedging is a bet on a currency risk premium; the hedge returns fell over time and the NZD became more correlated with global equities (reported in the 2021 coverage of the 2020 review).
- Only nominal bonds: no inflation-linked bonds, because NZ linkers are illiquid and global linkers hedge NZ inflation badly (2015 review).
- The 5% home-country equity weight is political rather than market-based (the 2015 review links it to a ministerial directive).
- The expected return fell from 8.5% (2010) to 6.8% (2020), so earlier forecasts were too high.
Through the eras
| Era | Dates | Total | Per year | Worst drop | S&P 500 |
|---|---|---|---|---|---|
| Roaring Twenties boom | 1926-07 – 1929-08 | +118.9 % | +28.1 % | −4.7 % | +153.7 % |
| Wall Street crash and Great Contraction | 1929-09 – 1932-07 | −68.3 % | −32.6 % | −74.4 % | −78.2 % |
| New Deal recovery | 1932-08 – 1937-02 | +202.3 % | +27.3 % | −23.1 % | +268.7 % |
| Recession within the Depression | 1937-03 – 1938-03 | −40.3 % | −37.8 % | −40.3 % | −49.5 % |
| Rearmament and World War II | 1938-04 – 1945-09 | +157.4 % | +13.4 % | −22.6 % | +205.8 % |
| Postwar expansion | 1945-10 – 1965-12 | +807.2 % | +11.5 % | −19.7 % | +1212.9 % |
| Golden age of the 1950s | 1950-01 – 1959-12 | +308.5 % | +15.1 % | −11.2 % | +438.8 % |
| Go-go years and nifty-fifty | 1966-01 – 1968-12 | +28.5 % | +8.7 % | −12.4 % | +34.0 % |
| The Great Inflation (stagflation) | 1969-01 – 1982-07 | +94.3 % | +5.0 % | −38.0 % | +84.6 % |
| 1973-74 oil shock and bear market | 1973-01 – 1974-12 | −33.0 % | −18.2 % | −38.0 % | −41.7 % |
| Second oil shock and the Volcker disinflation | 1979-01 – 1982-08 | +53.2 % | +12.3 % | −11.7 % | +59.2 % |
| Great bull market in stocks and bonds | 1982-08 – 1999-12 | +1271.6 % | +16.2 % | −25.0 % | +2060.4 % |
| Black Monday | 1987-08 – 1987-12 | −17.9 % | — | −25.0 % | −21.8 % |
| Savings-and-loan crisis and 1990 recession | 1990-07 – 1991-03 | +3.3 % | — | −14.7 % | +7.4 % |
| 1994 bond market massacre | 1994-02 – 1994-12 | −3.3 % | — | −5.8 % | −3.2 % |
| Asian and Russian financial crises | 1997-07 – 1998-10 | +7.4 % | +5.5 % | −13.7 % | +22.4 % |
| Dot-com bubble and crash | 2000-03 – 2002-10 | −28.0 % | −11.6 % | −33.6 % | −37.2 % |
| Recovery and housing boom | 2002-11 – 2007-09 | +122.6 % | +17.7 % | −5.8 % | +97.0 % |
| Global financial crisis | 2007-10 – 2009-03 | −37.0 % | −26.5 % | −43.1 % | −44.7 % |
| The decade after the crisis | 2009-04 – 2019-12 | +239.9 % | +12.1 % | −15.3 % | +411.2 % |
| Fourth-quarter 2018 sell-off | 2018-09 – 2018-12 | −10.3 % | — | −10.4 % | −14.4 % |
| Covid crash and stimulus boom | 2020-02 – 2021-12 | +33.8 % | +16.4 % | −16.2 % | +53.6 % |
| Inflation shock and rate hikes | 2022-01 – 2022-12 | −17.2 % | −17.2 % | −23.3 % | −19.9 % |
Calendar years
Any N-year period
| Any N-year period | Worst | 10 % worse than | Median | 10 % better than | Best |
|---|---|---|---|---|---|
| 1 y (1192) | −54.8 % | −9.0 % | +12.1 % | +28.8 % | +113.6 % |
| 3 y (1168) | −34.2 % | −1.9 % | +10.0 % | +18.6 % | +36.2 % |
| 5 y (1144) | −13.9 % | +1.9 % | +9.6 % | +16.0 % | +28.4 % |
| 10 y (1084) | −2.7 % | +4.3 % | +9.0 % | +14.3 % | +17.4 % |
| 15 y (1024) | +1.0 % | +5.9 % | +9.3 % | +13.8 % | +16.5 % |
| 20 y (964) | +2.6 % | +6.7 % | +9.8 % | +12.9 % | +15.4 % |
| 30 y (844) | +7.0 % | +8.4 % | +9.9 % | +11.4 % | +12.6 % |
How it behaved in history
- 2003-2010 before the Reference Portfolio. The Fund started investing in 2003 with a high but not total allocation to growth assets (80/20 in spirit); the 2015 review says the Guardians' boards always favoured about 80 percent growth assets since 2003. The explicit passive Reference Portfolio benchmark came around 2009-2010. www.nzsuperfund.nz
- 2008-2009 financial crisis. No published return for the Reference Portfolio in the crisis year was found. The numbers should come from this site's own backtest of the 80/20 mix. www.nzsuperfund.nz
- 2010 and 2015 reviews. Listed property was dropped, emerging markets were added as a separate 10% block, and the expected return above cash rose from 2.5% to 2.7%. www.nzsuperfund.nz
- 2020 review. Developed and emerging equities merged into one global block; forecast long-run return cut to 6.8%; full hedge kept. ioandc.com
- 2026 review. Settings of 75% global equities, 5% NZ equities and 20% fixed income retained. investmentnews.co.nz
Published results (by others)
- Guardians' long-run expectation of the Reference Portfolio: return above the risk-free rate, volatility (2020 review): 6.8% a year nominal (2.8 points above the estimated risk-free rate); volatility 13.8% (13.2% in 2010, 13.5% in 2015) nzsuperfund.nz
- 2015 expectation: Treasury bills plus 2.7% a year, volatility 13.5% (2015 review): T-bills + 2.7%; volatility 13.5% www.nzsuperfund.nz
- The real Fund against its Reference Portfolio over a recent year (provisional) (12 months to 30 Jun 2026): Fund 14.17% after costs vs Reference Portfolio 14.27% investmentnews.co.nz
- The real Fund since inception (not the Reference Portfolio itself): average return after costs and before tax, and value added above the Reference Portfolio (2003 to about Dec 2020): about 10.1% a year; NZ$8.5 billion above the Reference Portfolio ioandc.com
What we could not verify
- The weights after the 2020 and 2025/26 reviews (75/5/20) come from news reports (Investment News NZ, Investor Strategy News) and the Guardians' short news item; I did not find the full 2020 or 2025/26 white paper text, only the 2015 review in full. The 2015 review PDF was read in text form.
- The year the Reference Portfolio was introduced: 2010 (Guardians' 2015 review) vs 2009 (one trade-press report).
- The developed/emerging split after 2020 (merged into one block) is not published in what I read; my em = 10% uses the 2015 split.
- The US share of developed-market equity (about 70 percent) is my own estimate and is not from NZ documents.
- The Reference Portfolio is hedged to NZD while our series are unhedged USD, so our backtest is only a rough approximation.
- No published annual returns of the Reference Portfolio itself were found for crisis years (2008-09, 2022); only the Fund's own results and a single 2026 comparison.
- The Guardians' own site was partly unreachable (the 'fallback' mirror gave an HTTP 400 error); the main-site pages and the PDF were used instead.
Sources
- www.nzsuperfund.nz
https://www.nzsuperfund.nz/assets/documents-sys/2015-Reference-Portfolio-Review.pdf - nzsuperfund.nz
https://nzsuperfund.nz/news-and-media/guardians-publishes-white-paper-on-the-2020-reference-portfolio-review/ - ioandc.com
https://ioandc.com/?p=23340 - investmentnews.co.nz
https://investmentnews.co.nz/investment-news/nz-super-shrugs-off-10bps-reference-miss-preps-for-different-times/ - fallback.nzsuperfund.nz
https://fallback.nzsuperfund.nz/how-we-invest/reference-portfolio - www.interest.co.nz
https://www.interest.co.nz/personal-finance/76863/review-leaves-nz-super-funds-reference-portfolio-heavily-weighted-equities
Calculated on historical data. Past results do not predict the future. Models before the 1990s use stand-ins for classes that had no index yet; fees, taxes and fund costs are not included. This is mathematics, not an investment recommendation.