Strong Year for NPDCs Perpetual Investment Fund

New Plymouth District Council’s Perpetual Investment Fund (PIF) has recorded another very strong investment performance, despite a difficult international economic and financial environment.

Managed by Taranaki Investment Management Limited (TIML), the PIF earned $50.2 million for the year, an IRR (internal rate of return) of 19.0 per cent from which it made nett payments to its shareholder (NPDC) of $21.5 million (plus all associated expenses).

The total value of the fund increased to $327 million as at 30 June 2008.

In comparison to the PIF 19.0 per cent return, over the same period the NZX50 index was down -24.6 per cent, the MSCI -14.9 per cent, and ASX200 -13.4 per cent.

TIML’s chairman John Armstrong says: “The fund has had another successful year and this has been due to our asset allocation, management of a widely diversified portfolio, and the efforts of a highly capable board and management team’.

TIML added a significant weighting in real assets this year with the acquisition of a 74.3 per cent stake in Tasman Farms Ltd (TFL).

John Armstrong says: “Our increased weighting into alternative assets such as TFL and Barings Private Equity, has been a significant factor in the fund’s out-performance of benchmarks. The low correlation between the alternative assets sector and listed markets has provided additional stability and gains to the fund over what was an extremely volatile year for markets.’

At the end of June 2008, the PIF comprised 12.0 per cent in Australian equities, 6.6 per cent in US equities, 16.8 per cent in New Zealand equities, 6.4 per cent in other equities, 3.6 per cent in cash or short-term deposits, 13.3 per cent in fixed interest and 41.3 per cent in alternative assets. TIML has no collateralised debt obligation instruments (CDOs) in its portfolio.

TIML is governed by a board consisting of five 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).

New Plymouth District Council has a AAA credit rating from Standard & Poor’s.