Future Fund beats 10-year target, swells to $241b
Australia's sovereign wealth fund has beaten its mandated 10-year target and grown its total funds under management to $307 billion.
The Future Fund itself reached a record value of more than $240 billion by March 31, after securing 7.9 per cent returns for the year.
'This was a strong result that reflects the work we have been doing for the past four years to ensure the portfolio is resilient and flexible to a range of scenarios,' Future Fund chief executive Raphael Arndt said on Tuesday.
By comparison, the S&P/ASX200 rose just over two per cent in the 12 months to April, or almost nine per cent in the 2024 calendar year, when the Future Fund improved by 12.2 per cent.
'Pleasingly returns have also increased the value of the other six funds managed by the Future Fund Board of Guardians by $4.9 billion to $66.8 billion while also providing $985.7 million in payments to support their intended programme priorities in the financial year to date,' Dr Arndt said.
The Future Fund was established in 2006 by former federal Liberal treasurer Peter Costello after the sale of Telstra to strengthen the Commonwealth's financial position and cover the costs of burgeoning public sector pension payments.
The Public Sector Superannuation scheme was closed to new members after June 30, 2005 and so-far, no money has been withdrawn from the Future Fund since its inception.
Today, the fund manages several subsidiary funds including the Medical Research Future Fund, valued at $24 billion, the $10.8 billion Housing Australia Future Fund, the DisabilityCare Australia Fund, worth almost $20 billion and the $4.7 billion Disaster Ready Fund.
Difficult market conditions elevated by recent US trade policy and geopolitical tensions would likely lead to higher bond yields and could stir up inflation.
'We are seeing consequential changes in geopolitical, economic and market environments at the moment and that is causing volatility and uncertainty for investors,' he said.
'These are the conditions for which the portfolio has been built over the past five years, and it has behaved to our expectations in recent months.'
Chief investment officer Ben Samild was pleased by the result amid tough market conditions.
'Over the past 12 months there were particularly strong contributions to performance from the alternatives, credit, and infrastructure and timberland asset classes, highlighting the resilience and diversification of the portfolio,' Mr Samild said.
'Returns also benefited from changes to our currency mix and exposure to commodities, including gold.'
The fund would continue to assess conditions as they changed to keep on track with its investment mandate, Mr Samild said.
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