The Guardians of New Zealand Superannuation, manager of the country's top-performing sovereign wealth fund, warned that U.S. equity returns are likely to slow after a period of outsized gains. The fund posted a 14.2% return for the year to June 30, but its CEO says a reversion to the mean is due. The warning echoes a similar call from Norway's much larger oil fund.
Jo Townsend, CEO of the Guardians of New Zealand Superannuation, warned Wednesday that the U.S. equity market could be due a correction, even as she revealed the fund had grown 14.2% in the year to June 30. The fund she manages was ranked the world's best-performing sovereign wealth fund earlier this year by analytics firm Global SWF.
Fund grows despite trailing its benchmark
The New Zealand Superannuation Fund returned 14.2% in the year to June 30. That growth pushed its total value to NZ$94.4 billion, or $54.4 billion. The gain amounted to NZ$9.3 billion over the fiscal year. The result still came in 0.1 percentage points below its benchmark index. Townsend said the fund performed exceptionally well in 2026, but she cautioned that the pace of gains enjoyed by stock market investors in recent years is likely to slow.
According to CNBC: "close to double annualized returns for the past 20 years", so the fund expects some reversion to the mean at some point. She added that while a concentrated portfolio can achieve strong short-term results, the fund believes a more diversified approach is better suited to its long-term mandate.
Fund trims its return expectations
The wealth fund has delivered an annual average return of 9.68% over the past two decades. Earlier this year, though, the Guardians lowered the fund's long-term expected annual return from 7.8% to 7.2%, a change Townsend said reflects the fund management's view that equity returns are likely to decrease. The fund has also reduced its active risk budget as part of that shift.
Its most valuable position remains a NZ$3 billion stake in Nvidia, with Apple, Microsoft, Alphabet and Amazon rounding out its top five holdings by value. Its total U.S. equity portfolio was worth NZ$31.7 billion at the end of last year.
A second sovereign fund sounds the same alarm
Townsend's caution echoes a warning from Nicolai Tangen, CEO of Norges Bank Investment Management, which runs Norway's sovereign wealth fund. Tangen told CNBC last month that markets should not expect the same returns going forward as seen over the last six months. Norway's fund is the world's largest sovereign wealth fund, managing $2.3 trillion in assets. It recently posted a record first-half profit nearing $185 billion.
Source: CNBC
Trading involves risk.
Risk Disclaimer
