Class of 2012 | Chief Investment Officer

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Sovereign Wealth Fund New Zealand Superannuation FundAuckland, New Zealand

In the Sovereign Wealth Fund (SWF) category, the New Zealand Superannuation Fund wouldn't win for Assets Under Management—that would go to Norway's Pension Fund–Global, with its US$650 billion pocketbook. It's also not the most established fund either, having been set up in 2003—more than 22 years after Singapore's Government Investment Corporation opened for business. Even in the (unfortunately fictional) "SWF CIO We'd Most Like to Go to the Pub With" category, it would be a draw between NZ Super's Adrian Orr and his Aussie counterpart, David Neal. But these are the Industry Innovation Awards, and NZ Super is pushing further and faster than any of its competitors. (How do we know? Even if we hadn't spoken with them, everything about them is available online. Asset allocations, full lists of investments, personnel flowcharts, even handsome headshots of most senior staff—this place is transparent.)

The fund is in the process of instituting a highly detailed target operating model intended to simplify the investment process, better measure progress and cost-effectiveness, and help to forecast future liabilities. This involves tossing out asset buckets completely—no more "Real Estate Analysts," for example—and reorganizing staff by access point (synthetic, direct, external manager etc.). Orr works closely with a senior team of general managers, including Stewart Brooks (Finance), Mark Fennell (Portfolio Completion), Matt Whineray (Investments), as well as Chief Investment Advisor Neil Williams. But the reorganization has largely flattened the decision-making hierarchy at NZ Super. Without investment analysis restricted to bucket specialists, the team now reaches decisions for the fund through consensus. "By the time an investment is ready to go, everyone's touched it," says Orr. This simplified, broadened process will—NZ Super hopes—make investment opportunities easy to rank and compare. Orr says it's working so far, with timberland purchases and IPOs alike being compared to a reference portfolio instead of other possible investments in their asset class.

The reference portfolio is another key element of the detailed target operating model. It's deliberately passive and notional, comprised of 70% global equities, 20% fixed income, and 5% each NZ equities and property. Any active investment must convince the team it will outperform this portfolio, which serves as the benchmark for all active investments. Orr calls the active investments a "we-can-do-better portfolio," and it has done a little better, so far. As of September 30, 2012, NZ Super's whole portfolio had returned 0.57% above the reference. Although the fund has gained a very respectable 7.57% annualized since its inception, NZ Super's brief lifespan means returns aren't yet the most relevant way to gauge its performance. What is, then? We'd say innovation—which they seem to be doing pretty well at. —LO

"We don't have anyone with an asset class on their business card, because if you give a man a hammer, then everything looks like a nail."Adrian Orr, CEO
SOVEREIGN WEALTH FUND NOMINEES2011 Winner: Alberta Investment Management Corporation
  • Australian Future Fund (Runner-up)
  • Government Investment Corporation
  • Norges Bank Investment Management
  • State Oil Fund of Azerbaijan