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Goal 3 - Investment excellence

WE INVEST FUNDS TRANSPARENTLY TO PRESERVE EMPLOYEE ENTITLEMENTS
Achieve investment performance objectives and maintain a fund surplus.

RESULTS

Performance criterion 1 – Fund surplus: 115% (+/-5% tolerance)

Criterion source
2018–19 Corporate Plan (Performance section, page 22)

Results against performance criterion
The fund remains in a strong position with the estimated surplus exceeding the target level of 115% (+/-5% tolerance).

Performance criterion 2 – Investment portfolio return: CPI + 3% over rolling 8-year period

Criterion source
2018–19 Corporate Plan (Performance section, page 22)

Results against performance criterion
We achieved our performance target as the investment portfolio generated a net return of 7.4% for the year.

The fund has generated an average annual return of 8.4% for the eight years ended 30 June 2019. The CPI+3% target over the same period averaged 4.9%, resulting in an average annual excess performance of 3.5%.

ANALYSIS OF PERFORMANCE

Although we achieved our investment objectives, it was a year of two halves. The year started strongly with good returns in July and August then equity market values reduced significantly in the December quarter 2018 but recovered during the March and June quarters 2019. Over the full year, investment return was driven by strong performances from equities, bonds and unlisted assets such as property and infrastructure.