Value of EW investment fund grows by 4.8 per cent

The value of Environment Waikato’s externally managed investment fund has grown by 4.8 per cent or $2.8 million between the end of last financial year and 31 October, according to figures presented to yesterday’s finance and audit committee.

This means the value of the externally managed fund has risen to $61.7 million. When internal EW borrowings against the overall investment fund and other adjustments are taken into account, the total investment fund balance at 31 October was $68.8 million.

The fund – generated by the sale of EW shares in the Ports of Auckland and Tauranga – is invested to generate income for the council. Its value dipped in 2007 and 2008 due to the global economic situation but has shown strong growth over the past 12 months and has now recovered previous losses.

Committee chairman Phillip Legg said the council’s relatively conservative approach to investment had benefited the fund.

“The positive news is the fund is ahead of our own target and industry benchmarks, with bonds returning 12.5 per cent per annum over the past year, well ahead of benchmark,” he said.

But he cautioned that the excess bond returns would drop as interest rates rose, hence the need for a broad mix of different investments.

In equities, three of four funds being used were producing returns ahead of industry benchmarks.

The committee also agreed with the winding up of a relatively small part of the council’s portfolio that had been particularly hard hit during the financial crisis, recovering $2.34 million or more than 80 per cent of the amount invested.

Cr Legg said EW would continue to monitor the performance of the council’s funds and its investment managers very closely.

“We are very pleased to see good growth in the overall value of the fund so far this year.”