Investing in a time of uncertainty


The 8th annual International Forum of Sovereign Wealth Funds kicked off in New Zealand today. This is an excerpt of the welcome speech by the chief executive of New Zealand Super, and the event host, Adrian Orr.


At the last meeting in Milan, I set out the roadmap for the way ahead – the navigation chart set out in the new strategic plan. The checklist was to:

  • Promote the Santiago Principles through case studies and improved levels of self-reporting;
  • Have more frequent opportunities to share knowledge, both face-to-face and through on-line platforms;
  • Encourage collaborative research with academic institutions;
  • Engage governments and international institutions where we can make a meaningful contribution.

We have made progress on all of these. Case studies are being launched at this meeting. Self-assessments on implementation of the Santiago Principles are more robust.

Knowledge exchange has ramped up this year, with excellent workshops hosted in Azerbaijan in March and another set of workshops held before the start of this meeting. These workshops are substantial and will become the core benefit that IFSWF can deliver to its members.

In research, we have established partnerships with the Bocconi University’s Sovereign Investment Lab, Milan, the Fletcher School at Tufts University, Boston, and the London School of Economics. A joint workshop with Bocconi was held in Milan in June.

We have established relations with the Commonwealth Secretariat and the Hedge Funds Standards Board in the past few months, as well as the relationships we already in place with the International Monetary Fund, World Bank and the OECD.

If this organisation is able to fulfil its potential, just think of what we will be able to achieve:

  • Collaboration on investment opportunities;
  • Increased investment in infrastructure and emerging markets;
  • Deeper knowledge about the characteristics of long-term investment opportunities; and
  • Better understanding of good investment practice – including environmental, social and governance practices.

The single, most fundamental commitment that IFSWF membership entails is commitment to transparency, accountability and good governance, as expressed through the Santiago Principles.

As I said last year, we told the world that the Santiago Principles are a benchmark against which we can be measured. We cannot be surprised if the world measures us against them.

Transparency isn’t easy. Accountability isn’t easy. People ask questions. People criticise what you do, even when you’re trying to do the right thing. Good governance isn’t easy. It’s time-consuming, inconvenient. It requires a lot of thought about what you should be doing and how.

None of it is easy, but it is right. It is the right thing to do because the result will be better understanding of our activities and stronger support for them through both good times and bad. The results will also include more efficient access to opportunities, better performance by each member fund and a stronger financial system overall.

The theme of this year’s Annual Meeting is Investing in a Climate of Uncertainty: The Sovereign Wealth Fund Response

The global economy is in unchartered territory, with negative interest rates becoming a reality and the traditional central bank target and levers being sorely tested.

These uncertainties create some strong head winds: low growth, low yields, and an eroding capital base.

There will be an inevitable shift towards a less carbon-intense economy.

The financial sector is now caught in this tide. Our investment strategies must necessarily address this, either actively – looking at opportunities in carbon-friendly energy – or reactively, in terms of dealing with the consequences, such as failed investments and stranded assets. Relative prices throughout the economic value chain will change.

There are very practical questions around this issue for long-term investors. How do you accurately measure the carbon exposure in a portfolio? Does divestment really work as a strategy? Is it better to engage as a business owner? And what investment opportunities will be the winners in a rapidly changing energy sector?

We will discuss the investment implications of climate policy over the next couple of days.

I remind you all that the spirit of this meeting is to share ideas and knowledge, to encourage the free and open exchange of ideas, and to respect all views.


The International Forum of Sovereign Wealth Funds is a voluntary organisation of sovereign wealth funds. It is committed to working together and strengthening its activities through dialogue, research and self assessment.

IFSWF was formed in 2009 by a group of state-owned international investors from around the world. The forum’s aim is to maintain an open and stable investment climate by setting and following a set of principles and practices, known as the Santiago Principles, which address issues around institutional governance and risk management.

Join the discussion