Australia’s sovereign wealth fund has outperformed the benchmark and grown funds under management to $167 billion.
Since 2006 when the Future Fund was established, investment returns have added $105 billion to the original contributions made by the government, which were $60.5 billion at the time of transfer. No contributions have been made to the fund since 2008.
The Future Fund is currently valued at $165.7 billion, delivering a return of 10 per cent per annum over the last 10 years.
“The Future Fund continues to deliver strong risk-adjusted long-term returns. Its overall portfolio positioning and levels of risk are unchanged,” CEO David Neal said.
“We continue to prioritise diversification to help manage risk and flexibility to support our ability to adjust the portfolio dynamically as the investment environment changes."
Only 7.1 per cent of the Future Fund is invested in Australian equities. Global equities account for almost 30 per cent of the asset allocation, while private equity accounts for 15.8 per cent. Alternatives (13.7 per cent), cash (11.4 per cent), debt securities (9 per cent), infrastructure (7.1 per cent) and property (6.7 per cent) make up the rest.
Honourable Peter Costello AC, chair of the Future Fund board of guardians, said the fund’s strong long-term returns have been achieved while carefully and prudently managing risk levels in the portfolio.
“The board remains alert to the uncertain outlook for global growth and the potential for shocks to markets while recognising that accommodative monetary policy continues to support asset prices.
“Looking to the longer term, the global economy remains challenged by factors including demographics and debt levels. Adding to this, prospective long-term returns remain lower than in recent years. The board’s thoughtful and disciplined approach to investing will remain paramount as we navigate this environment.”
Taking the Future Fund together with the five other public asset funds the board is responsible for investing, the board of guardians today invests $210 billion.