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Strategy

The Fund’s primary purpose is to preserve and maximise superannuation benefits of its Members, through prudent investment management. The Fund’s investment strategy (Investment Strategy) guides the investment decisions of the Fund, with the guidance of KFM, as the Licenced Investment Manager (LIM) for the Fund.

The Fund’s objective is to provide an after-tax return of at least +2% per annum, above CPI, with no more than one (1) negative return, in five (5) years. 

The Fund’s Investment Strategy is defined by the Strategic Asset Allocation (SAA), and is subject to regular review, to ensure it remains consistent with the cash flow position and liability profile of the Fund, which are constantly evolving. Generally, the focus of the SAA is to diversify risks to ensure an acceptable, but not excessive level of volatility, while adding to risk-adjusted performance, and preserving the capital base of the Fund.

Diversification is the key risk management tool of the Fund, and is underpinned by the SAA. Diversification means, among other things, that the assets of the fund are not overly exposed to any single investment factor. Over the long term, diversification reduces the volatility of return for the Fund, all else being equal. 

Investment Portfolio Performance

The Fund’s investment portfolio, including the RSA and reserves, increased to approximately K8.12 billion, as at 31 December 2020, which represents a substantial increase from the prior year.

The increase in the portfolio was mainly due to investment income and was partially offset by net withdrawals from the Fund. The investment income is primarily attributable to dividend, rents, interest income, and variations in the value of international investments.

 

Composition of Investment as at 31 December 2020

% HOLDINGS
Asset Class 31-Dec-2019 31-Dec-2020
Domestic Cash 1.2 2.3
Domestic Bonds – Short Term 23.2 24.7
Domestic Bonds – LongTerm 22.8 24.4
Domestic Equities 10.4 9.9
Domestic Unlisted Equities 11.7 9.2
Domestic Properties 15.2 13.7
International Cash 3.8 0.8
International Bonds 2.1
International Listed Equities 11.7 12.9
Total Portfolio 100.0 100.0

 

NSL’s Asset Weightings as at 31 December 2020

 

Domestic CashDomestic Bonds – Short Ter,Domestic Bonds – Long Ter,Domestic Listed EquitiesDomestic Unlisted EquitiesDomestic PropertiesInternational CashInternational Listed Equities23.2%22.8%11.7%15.2%11.7%10.4%

Task Hours per Day
Domestic Cash 1.2
Domestic Bonds – Short Ter, 23.2
Domestic Bonds – Long Ter, 22.8
Domestic Listed Equities 10.4
Domestic Unlisted Equities 11.7
Domestic Properties 15.2
International Cash 3.8
International Listed Equities 11.7

 

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