Under our whole-of-portfolio approach to managing the Fund, any new active investment (i.e. outside our passive Reference Portfolio) needs to measure up against all other global investment opportunities.

We also need to have a high level of confidence that the new investment will deliver a better risk-adjusted return for the Fund than we would be able to get from a passive, listed alternative.

While we believe the Fund has a competitive advantage when investing domestically, in a global context, New Zealand is a very small investment market.

For our New Zealand investments we therefore also require a return that will compensate us sufficiently for the risk of concentrating too much of the Fund’s portfolio here.

Before making an investment in New Zealand, we ask ourselves:

• Would it be possible to generate better returns for future New Zealanders by investing somewhere else?
• What would the local and broader economic impact be if we make, manage, and ultimately exit a New Zealand investment?

As one of only a few investors of scale in the country, we also maintain a high level of price discipline.