Groupthink

A little fund on a rocky island in the largest ocean has big friends in high places. 

New Zealand Superannuation partners on Chinese infrastructure with Temasek, co-owns a forest with Canada’s Public Sector Pension (PSP), and collaborates on asset allocation with GIC and the Canada Pension Plan Investment Board (CPPIB). 

All that with a mere NZ$30 billion (US$20 billion). 

“We don’t bring the biggest checks,” says Fiona Mackenzie, head of investments and peer relationships. “But we do bring a unique perspective. For example, we have an onshore timber expert in New Zealand, and I think that was a large part of what made PSP comfortable investing in Kaingaroa Timberlands.” This massive North Island plantation is NZ Super’s largest investment. Trust matters. 

“You can look at openness on two metrics,” Mackenzie suggests: Transparency and knowledge sharing. Both are core values of NZ Super, but not necessarily for their partners. The Abu Dhabi Investment Authority (ADIA), like its fellow Middle Eastern sovereign funds, refuses to disclose even its assets under management. 

Anyone with internet can find out that NZ Super CEO Adrian Orr spent US$260.32 on dinner with a potential co-investor on January 8, 2014. Yet the two funds enjoy a close and trusted relationship. “We’re clearly big believers in transparency,” Mackenzie explains. “If others have a very different view, we’d far rather have them around the table, engaging with them, that not involved at all.” 

Of course, to collaborate well, an asset owner has to want to engage in the first place. And that’s far from universal. “Some feel like they’re in competition for assets,” Mackenzie says. “Not all peer relationships will be a great fit.” She’s committed to finding and maintaining ones that are. This might mean co-investing, swapping legal best practices, or having “sometimes very heated debates” on investment philosophy.

“We’re constantly trying to solve for being a relatively small team on a small island on the other side of the world,” she says. “It gives us the freedom to think, away from the noise, but to stay connected to the world, our peers are incredibly important.” The little Auckland fund collaborates not in spite of its remoteness, but because of it.