The New Zealand Superannuation Fund has appointed eSecLending as third-party lending agent to manage its securities lending programme.
The fund says it decided last July to implement a securities lending programme to capture additional revenue by lending its securities to approved borrowers.
The appointment of eSecLending to manage the programme follows a comprehensive selection process that concluded the eSecLending auction model offered the best combinagtion of risk and return.
eSecLending has subsequently conducted a lending auction in global equity and fixed income assets on behalf of the fund. The securities portfolios were awarded for a one-year term, after which the lending rights to the securities will be re-auctioned.
The New Zealand Superannuation Fund, which started investing at the end of September 2003, is designed to partially provide for the future cost of New Zealand superannuation. The government is allocating on average $2 billion a year to the fund over the next 20 years while the cost of superannuation is relatively low. In the meantime, the fund will invest the money on a prudent but commercial basis.
As the cost of superannuation escalates, the government will progressively draw on the fund to help smooth the impact on its finances. As at 31 January 2007 the value of the fund was $12.2 billion, but it is expected to grow to around $109 billion by 2025.