The world's top sovereign wealth fund achieves an annual return of 14.2% while warning that high returns in U.S. stocks are unlikely to be sustained.

New Zealand’s sovereign wealth fund claimed the top spot among similar global funds with an annual return of 14.2%, but its management team issued a concurrent warning: the era of high returns in US stocks may be nearing its end.

Jo Townsend, CEO of the Guardians of New Zealand Superannuation, which manages the fund, said during Wednesday’s performance announcement that the high returns equity investors have enjoyed in recent years are likely to moderate. This assessment echoes recent warnings from the managers of Norway’s sovereign wealth fund.

Annual return of 14.2%, highest among global peers

As of June 30, 2026, the New Zealand Superannuation Fund’s size reached NZ$94 billion (around US$54.4 billion), growing NZ$9.3 billion over the year, with an annual return of 14.2%.

Research agency Global SWF earlier this year ranked it as the world’s best-performing sovereign wealth fund.

However, Jo Townsend also pointed out that this fiscal year’s return trailed the benchmark index by 0.1 percentage points.

Warning for US stocks: Rising pressure for mean reversion

Beyond its stellar results, Jo Townsend’s tone was notably cautious.

In her performance statement, she noted: “The return on US stocks over the past few years has been nearly twice the annualized return seen in the past 20 years, so we anticipate there will be a mean reversion at some point.”

She also emphasized: “In the short term, concentrated positions can yield strong returns; but in the long term, we firmly believe a more diversified portfolio aligns better with our mission.”

The fund’s average annual return over the past 20 years stands at 9.68%.

Lowering long-term return expectations, cutting active risk

This warning has already been reflected in the fund’s operations.

Earlier this year, the managing institution announced a reduction in the fund’s long-term expected annual return from 7.8% to 7.2%. Jo Townsend stated on Wednesday that this adjustment reflects management’s view that equity returns are likely to decline. At the same time, the fund has also cut its active risk budget.

The fund discloses its portfolio holdings every six months. The latest data (as of last December) show its largest single position is Nvidia, with holdings valued at about NZ$3 billion. Apple, Microsoft, Alphabet, and Amazon round out the top five.

Total US equity holdings reach NZ$31.7 billion.

Beyond equities, the fund is also allocated to timber, real estate, private markets, and other alternative assets. The fund was established in 2001 to provide financial security for New Zealand’s aging population’s pension payments, with the first withdrawals expected in 2054.

Norwegian sovereign fund gives similar warning

Jo Townsend’s view is not an isolated one.

Last month, Nicolai Tangen, CEO of Norges Bank Investment Management (NBIM), which manages Norway’s sovereign wealth fund, told CNBC: “We should not expect the same returns going forward as we have seen over the past six months.”

NBIM manages Norway’s Petroleum Fund, which has reached US$2.3 trillion. In the first half of this year, the fund made a record profit approaching US$185 billion.