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Investment fund returns $1.3 million better than expected

Waikato Regional Council’s investment fund return has come in more than $1.3 million better than expected for the last financial year.

“It’s very satisfying to see the fund producing steady results which are not just meeting our expectations but exceeding them,” said finance committee chair Jane Hennebry.

As a result, we'll be able to apply the $1.347 million surplus to our investment equalisation reserve which acts as an insurance policy against years when returns might be less than budgeted for.

After excluding interest on internal loans, the return for the year on the now $100.897 million fund was $6.499 million compared to a budgeted return of $5.152 million.

Returns from the fund – derived from the sale of shares in the Ports of Auckland and Tauranga in the 1990s – are used to subsidise rates revenue and to build up the council’s regional development fund, which now has reserves of around $3.5 million and is designed to allow the council to contribute to significant projects that benefit the region’s economy.

A report to the finance committee meeting earlier this month said the fund bounced back from earlier in the year to generate a strong financial return.

It was also noted the fund’s long term investment objective was a return of 4 per cent after inflation and fees, and that over 10 years the council’s return (after inflation and estimated fees) had been 5.6 per cent.

Advisers told the committee investment markets were continuing to follow a similar trend, with further gains in equity markets and subdued bond returns. However, uncertainty remains and this will continue to influence market sentiment.

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