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Diverse portfolio yields great returns
28 August 2007
Diverse portfolio yields great returns
A policy of diversification has ensured a highly successful financial year for New Plymouth District Council’s Perpetual Investment Fund (PIF).
Managed by Taranaki Investment Management Limited (TIML), the value of the fund rose from $286.2m to $297.6m between 1 July 06 and 30 June 07. In addition, the PIF also made the agreed four release payments to the council of $5.375 million each.
The increase in fund value plus the release payments reveal a total profit of $32.9m, or 11.6 per cent return.
TIML Chairman John Armstrong says: “The fund has had a very successful year and this is largely down to our widely diversified portfolio, which has stood up extremely well to the recent ups and down of the share and currency markets.”
The PIF achieved all investment benchmarks set by independent assessors and the 12-month period also saw TIML sell the remainder of the SPARCS (high yield securities) inherited by the council following the sale of its $259.4 million shareholding in Powerco in December 2004.
John Armstrong adds: “The PIF began with over $97 million of Sparcs so our strategy was always to reduce this holding and diversify our portfolio. We made a good profit on the SPARCS and have since bought more at a very favourable price.”
Other highlights of the year include a successful investment in the Baring Asia Private Equity Fund, says Mr Armstrong.
At the end of June 2007, the PIF comprised 15.9 per cent in Australian equities, 12.8 per cent in US equities, 21.7 per cent in New Zealand equities, 15.2 per cent in other equities, 11.6 per cent in cash or short-term deposits, 17.2 per cent in fixed interest and 5.6% in alternative assets.
New Plymouth District Council Chief Executive Rodger Kerr-Newell says: “The fund is in a very healthy state and we’re in a good position to achieve our main goal – for the PIF to become a sustainable long-term legacy for the community of New Plymouth District.”
New Plymouth District Council has a AAA credit rating from Standard & Poor's.
TIML is governed by a board consisting of four independent directors. It is authorised to make all investment decisions relating to the fund, and it reports to the council's Investment Subcommittee on a regular basis (at least quarterly).
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