The New Zealand Superannuation Fund returned 14.2% in the year through June, powered by a global equity rally despite being underweight tech stocks. About half the portfolio is in equities while underweight US stocks, said Jo Townsend, chief executive of Guardians of New Zealand Superannuation, which oversees the fund. "For us, it's about the valuations," Townsend said, adding that US stocks look expensive. Instead, she said the fund has "found other investment opportunities that we believe will add diversification and return benefits to the portfolio over the longer term."

NZ Super takes a total portfolio approach, with around 40% in private markets investments such as property, timberland and private equity. The fund has also been buying bonds while they are cheaper, although it doesn't amount to a significant asset allocation change, she said. Townsend was speaking after NZ Super posted its pre-tax return after costs, with funds under management rising NZ$9.3 billion ($5.4 billion) to NZ$94.4 billion.

The fund is still on track to double in size every 10 years, Townsend said, adding that as it gets bigger, investing becomes a "more challenging" task. "That's occupying our mind," she said. "How do we use AI to improve capability and manage risk in the organization?" She cited "getting ready to manage scale and manage risk in an increasingly volatile environment," as a key challenge. Over the 10 years from 2015, the fund's average annual pre-tax return after costs is 10.3%, making it one of the top-ranked funds tracked by consulting firm Global SWF.