The New Zealand Superannuation Fund returned 13.89 percent last year and is now worth $27.5 billion.
The Fund exceeded a 12.4 percent return for its passive benchmark and a 3.08 percent return for Treasury Bills - a measure of the cost to the Government of contributing to the fund instead of paying debt.
However, the fund's chief executive Adrian Orr did not believe the high returns would last for much longer.
Mr Orr credited the heavy weighting to global equities and a decline in the New Zealand dollar for last year's success.
"While we are confident that the fund will exceed its benchmarks over time, the very high returns of the last few years are unlikely to be repeated - they are the exception, not the rule," he said.
The fund returned 19.6 per cent per annum over the last three years.
Over the long-term, Mr Orr said it was expected to generate average returns of eight to nine percent a year, based on current portfolio settings.
Mr Orr said the fund has been pulling back from risk recently because he did not believe rewards would be as high as the last three to five years.
"Many asset classes are nearing full value, economic growth remains patchy globally, and it is becoming harder to find good investment opportunities," he said.
Regardless, Mr Orr said, the fund was able to take more risk than many other funds because no payments were forecast until 2029-2030.
"We are positioning the fund for the long term. There may be times when the fund's performance lags the market," he said.
"We are prepared to weather this, sometimes for an extended period, in order to get the best long-term outcome."
Mr Orr said the fund may have changes of several hundred million dollars in value on a daily basis over short periods because of the volatility in global markets.
"It's important to retain perspective and understand that these market fluctuations can work to the advantage of long-term investors such as the fund."
