- Thursday, 24 October 2013 | Tim Stewart
The Future Fund has made a shift towards listed equity, infrastructure and private equity during the 12 months to 30 September, and currently manages $91.7 billion.
The biggest mover in the portfolio was developed market equities, which has risen to 23.9 compared to 17.7 per cent on 30 September 2012.
Emerging market equities moved up 2.9 percentage points to eight per cent of the Future Fund, and Australian equities dropped by 0.4 of a percentage point to 10.3 per cent.
Future Fund chief investment officer David Neal said he recognised that emerging markets look “very attractive” on many measures, although there are cyclical risks to be aware of.
“You need to tread carefully into those lower valuations, but our approach is to steadily take advantage of that and we have been slowly continuing to build our emerging market exposures,” he said
Peripheral Europe also looks “very interesting”, said Mr Neal – although there are no strong signals in global markets at the moment.
The Future Fund’s allocation to infrastructure increased by 2.1 percentage points to eight per cent over the year to 30 September 2013, and private equity edged up 0.9 percentage points to 7.2 per cent.
The fund has returned 8.2 per cent per annum over the five years to 30 September 2013, exceeding its baseline long-term target of 6.8 per cent per annum.
Mr Neal said the fund’s private equity investment in distressed or undercapitalised businesses coming out of the global financial crisis has been particularly successful.
“By employing very strong, bottom-up skills a number of [our] managers were able to identify those strong organisations … and build up exposures to very good companies at very cheap prices,” he said.
But when it comes to the private equity and alternatives section of the portfolio, the Future Fund does not have a "bucket" to fill, said Mr Neal .
“Allocate, don’t allocate dollars to private equity and then tell managers to go and invest it. We think that’s a very good way of ending up with a very average private equity portfolio,” he said.
The alternatives section of the portfolio currently stands at 15.2 per cent - down from 17.7 per cent on 30 September 2012.
Latest from InvestorWeekly
- AMP North adds healthcare trust
- A-REIT conducts $150 million equity raising
- TWUSuper boss steps down
- AMP Capital receives licence for offshore project
- Harbert expands into Australia 'by serendipity’
- CBA opens Beijing branch
- AustralianSuper appoints US property manager
- Qantas Super appoints MLC as insurer
- Australian Unity proposes property fund merger
- MyState prices $322 million RMBS
- Is Asian turbulence a win for China?
- Why Detroit’s honest self-renewal is a lesson for Japan
- Volatility means opportunity for fixed-income investors
- US Fed likely to stick to existing policy
- Asian bonds offer value after Fed-induced sell-off
- Convertible bonds: solid foundations are needed when reaching for the upside
- ING DIRECT urges third parties to prepare for Basel changes
- A straight-forward channel
- Crystal balls and consistent returns
- Shadow banking darkens China policy outlook
- Leveraged Equities appoints head of business performance
- Tyndall AM appoints investment risk manager
- Trust Company expands superannuation team
- Kinetic Super appoints employer representative director
- Wilson HTM appoints non-executive director
- Actuaries Institute names new CEO
- LUCRF Super appoints new head of investments
- Crowe Horwath appoints CEO
- Colonial First State appoints senior analyst
- BLSEM appoints senior portfolio manager