Investment returns for the Future Fund hit a milestone in September, adding $200 billion in value for the first time ever.
CEO Dr Raphael Arndt said the achievement reflects the work done not only over the fund’s lifetime since inception in 2006, but more recently, as managers worked to understand changes to investment markets and adjusted portfolios accordingly.
“Investment returns reached a significant milestone in the September quarter, with the value added to the Future Fund since its inception passing $200 billion for the first time.”
“What began in 2006 with an initial endowment of $60.5 billion has been carefully managed to now be worth $261 billion,” Arndt said.
“The joined-up whole portfolio approach to investing that was adopted from day one has been a significant contributor to these returns and helps us to build resilience and flexibility into the portfolio.”
The fund was last valued at $252.3 billion in June and has delivered an average annual return of 8 per cent since 2006 against a mandate target of 7 per cent. The 12-month return of 13.7 per cent per annum exceeded the mandate target of 7.3 per cent.
Arndt said over the past 12 months, investment markets performed strongly and there were positive contributions from listed equities, alternatives and infrastructure and timberland.
“Recent developments show we are continuing to move to a more multipolar world marked by geostrategic competition, national capability building and technological ambition. This is consistent with our New Investment Order thinking since 2021 and reflects the changes we have made to the portfolio as a result,” he added.
Arndt said these conditions suggest higher nominal growth and inflation, but with investment returns dispersed by geography and industry and with the potential for longer-term productivity gains from developments in AI.
“We continue to focus on building resilience against a range of scenarios into the portfolio – not just diversification – as we strive to meet the long-term mandate return target,” Arndt said.
Last quarter, the fund increased exposure to Australian infrastructure and housing, including stakes in Transgrid, CDC data centres, student housing and retirement land lease developments, aligning with national priorities such as the energy transition and AI-driven productivity.
Its largest weighting is 26.7 per cent to developed market equities followed by 14.6 per cent to alternatives and 12.7 per cent to private equity.
The Medical Research Future Fund returned 2.4 per cent for the quarter, with a one year return rate of 9.6 per cent.
The Aboriginal and Torres Strait Island Land and Sea Future Fund returned 2.6 per cent for the September quarter, as did the Future Drought Fund – and both have an annual return rate of 11 per cent.
