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Super Fund gains $250m in January despite Portugese scandal

Under-fire fund reports.

Duncan Bridgeman
Fri, 20 Feb 2015

The New Zealand Superannuation Fund, under fire for its $US150 million exposure to a collapsed Portuguese bank, returned 1.17% or $240 million in January.

The fund ended the month at $27.78 billion, its record high, the guardians reported today.

This puts some perspective around the revelation last night that the fund has written down a $US150 million loan to Banco Espirito Santo to zero while it takes legal action against the Bank of Portugal.

The fund invested in Banco Espirito Santo through a special purpose vehicle called Oak Finance set up by investment bank Goldman Sachs.

Super Fund chief executive Adrian Orr says the writedown is the result of the Bank of Portugual decision to keep the loan in a bad bank of toxic assets.

This has the effect of nullifying the Super Fund’s credit insurance on the loan.

In releasing today’s performance update, Mr Orr says he’s pleased to report a $250 million gain despite the “challenges we face with the Bank of Portugal.”

For the financial year to date, the Fund has returned 7.88% or $1.82 billion.

The Portuguese write down has been factored into the Fund’s December and January results.

“This money is not lost,” Mr Orr says. “We know exactly where it is.”

“We intend to get our money back through legal action we are taking against the Bank of Portugal due to its unprecedented and illegal actions of recent weeks.  We are very confident of our position.”

“The 18.78% a year return we have averaged over the past three years and 9.98% we have averaged since inception [September 2003], remains ahead of our performance expectations. The fund has returned  $11.6 billion more than Treasury Bill return."

Tune in to NBR Radio for an expert panel discussion on the at risk Super Fund’s $US150m Loan:

Duncan Bridgeman
Fri, 20 Feb 2015
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Super Fund gains $250m in January despite Portugese scandal