The Future Fund has moved almost one-fifth of its portfolio into cash to reflect the fact that there is "not much fuel left in the global monetary tank".
In a portfolio update yesterday Future Fund revealed it returned 15.4 per cent for the 12 months to 30 June 2015, generating investment returns of $15.6 billion and bringing the fund to $117.2 billion.
Discussing the results, Future Fund managing director David Neal said the key theme in the market is that "interest rates are very low and asset prices are very high".
"It's difficult to see that there’s much fuel left in the global monetary policy tank," Mr Neal said.
"With high asset classes that generally means lower prospective returns with more vulnerability that generally means higher levels of risk – it’s perhaps not surprising that we’ve been taking a little risk out of the portfolio, moderating the total risk profile."
As at 30 June 2015 the Future Fund had 6.8 per cent in Australian equities (down from 8.2 per cent as at 31 March 2015).
The fund has also "taken advantage of strong markets to reduce [its] listed equities exposure" in global equities.
Developed market equities now constitute 17.6 per cent of the fund (down from 20.8 per cent) and emerging market [equities] are steady at 9.4 per cent (9.5 per cent as at 31 March 2015).
Cash, on the other hand, has moved up to 19.5 per cent of the portfolio – up from 15.2 per cent as at 31 March 2015.
Future Fund chair Peter Costello said "prudent, patient investing" has been the key to navigating markets since the fund was created in 2006.
"Enormous stimulatory policy measures pursued by central banks in recent years have helped to drive strong rises in asset prices and the portfolio has been structured and actively managed to capture these gains," Mr Costello said.
"However, stimulatory policy settings cannot be sustained indefinitely and it seems likely that generally returns in the future will be lower than in recent years."
New research has found the consequences that fees can have on an investment and how higher fees do not necessarily correlate with performanc...
A new fund based on a long-running strategy from asset manager Insight Investment has been added to the Macquarie Wrap platform. ...
The Australian ETF industry continued its strong growth trajectory, reaching a record high of $42.29 billion in FUM in September, according ...