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Future Fund hit with new disclosure obligations

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The rules governing the disclosure obligations of the country’s sovereign wealth fund will soon align to those imposed on super funds.

On Wednesday, Minister for Finance Katy Gallagher unveiled new rules which will force the board of the Future Fund to disclose how the $256 billion held by the sovereign wealth fund is invested.

Under the rules, the Future Fund’s board will be required to publicly release information on the amounts of cash held in financial institutions, the amount and value of shares invested in companies, and the level of investments in properties and infrastructure.

“The Albanese Labor government is committed to transparency and accountability and these new rules will ensure there is more information in the public domain in relation to the investments of the Future Fund,” Ms Gallagher said.

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“The new reporting regime will ensure that additional information will be available to the public about the investments of the funds managed by the Future Fund board of guardians.”

The Future Fund currently manages the main $206.1 billion Future Fund as well as the $21.9 billion Medical Research Future Fund and the $16.9 billion DisabilityCare Fund.

It also manages the $4.6 billion Future Drought Fund, the $4.4 billion Disaster Ready Fund, and the $2.1 billion Aboriginal and Torres Strait Islander Land and Sea Future Fund, and is soon set to assume management of the newly legislated Housing Australia Future Fund (HAFF).

Ms Gallagher said the new disclosure rules for the Future Fund are “broadly consistent” with the portfolio holdings disclosure regime that applies to superannuation funds.

Under these rules, the Future Fund will be obligated to by end-March next year to publish its first report covering the investments held by or on behalf of the board as at 31 December 2023. Disclosures will then take place every six months, as is the case with super funds.

At present, the Future Fund board publicly discloses the Future Fund’s asset allocation and investment returns in portfolio updates released each quarter and provides more details regarding asset class exposures in its annual report each year.

The sovereign wealth fund has previously been subject to criticism for investments not disclosed publicly but revealed under freedom of information laws, including its equity holdings in several companies with alleged links to the Myanmar military.

The Future Fund later confirmed that it had divested $5 million from five subsidiaries of Chinese arms conglomerate Aviation Industry Corporation of China (AVIC), a supplier of extensive equipment to the Myanmar military over the past decade.

In its latest quarterly portfolio update, the Future Fund reported that 8.6 per cent of its portfolio, or around $17.6 billion, was allocated to Australian equities.

In global equities, 15.9 per cent of the fund ($32.8 billion) was allocated to developed markets while 5.9 per cent ($12.1 billion) was allocated to emerging markets. The single largest allocation was to alternatives, which make up 17 per cent ($35.1 billion) of the Future Fund.

Calls for the Future Fund to be liquidated have ramped up recently, with proposals suggesting that the proceeds be used to pay down Australia’s debt or be put towards renewable energy and public housing, among other issues.

However, Future Fund chair Peter Costello has responded by stressing that the “once-in-a-century asset” can only be spent once.

Future Fund hit with new disclosure obligations

The rules governing the disclosure obligations of the country’s sovereign wealth fund will soon align to those imposed on super funds.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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