New Zealand’s sovereign wealth fund reported a 14.2 percent gain in the year ending June, reinforcing its status as the top-performing fund globally over the past two decades. Despite this strong annual growth, the fund’s management anticipates a moderation in the recent surge in global equity markets.

The New Zealand Superannuation Fund, which supports the country’s retired population, reached NZ$94.4 billion ($54.2 billion) in assets under management. The gain was achieved even though the fund maintained an underweight position in U.S. technology stocks, an area that saw the S&P 500 index rise by over 20 percent during the same period, driven largely by investor interest in artificial intelligence.

Unlike many global equity-focused funds, New Zealand’s sovereign fund has a diversified portfolio that includes timber, real estate, and private investments, alongside equities. Its benchmark reference portfolio is weighted 80 percent toward global equities, a target it slightly underperformed in the latest fiscal year due to its more balanced asset allocation.

Jo Townsend, chief executive of the Guardians of New Zealand Superannuation, which manages the fund, explained that while a concentrated portfolio might have yielded higher short-term returns, a diversified approach better suits the fund’s long-term objectives. Townsend pointed to the recent exceptional performance of U.S. equities—close to double their annualized returns over the past 20 years—as a signal that such gains may not be sustainable. “We would expect there to be some reversion to the mean at some point,” she said.

Reflecting this outlook, the fund lowered its long-term annual return projection from 7.8 percent earlier this year to 7.2 percent, signaling expectations for a slower pace of equity market gains ahead.

Since its establishment in 2001, the New Zealand government has invested NZ$27.4 billion into the fund. Over the last two decades, the Superannuation Fund has outperformed its passive benchmark by NZ$22 billion, confirming its strong performance relative to a traditional equity-heavy strategy. The fund also emerged as the country’s largest taxpayer last year due to its earnings.

In comparison, Australia’s Future Fund, a larger sovereign wealth fund with A$356 billion ($254 billion) in assets, reported a slightly higher return of 14.8 percent for the same period to June. Both funds highlight the growing role of sovereign wealth vehicles in managing public pension assets while navigating shifting global market conditions.