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Strong markets and strategic bets drive Future Fund growth
The Future Fund posted a $27.4 billion increase in value to $252.3 billion, driven by strong equity markets, resilient private market investments, and strategic portfolio shifts to anticipate changing global trading conditions.
Chair Greg Combet said the team pursued more active returns, regional diversification, and liquidity, with infrastructure, private equity, credit, and alternatives all contributing to the 12.2 per cent return – double its mandated target.
“This very strong result has been achieved amidst significant geopolitical upheaval and market volatility, reflecting the quality of the work performed by the Future Fund team in repositioning our portfolio in anticipation of profound changes in global trading conditions,” Combet said.
The fund also 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.
“We have achieved these returns whilst also making significant investments into the Australian economy consistent with the national priorities in our new investment mandate,” Combet said.
“Whilst this is a particularly pleasing result for the past financial year, our focus remains firmly on the long term, successfully navigating the complexities of the period ahead, and delivering on our purpose to benefit future generations of Australians.”
CEO Raphael Arndt highlighted that repositioning the portfolio under the “New Investment Order” since 2021, including greater exposure to developed market currencies, commodities, and gold, has boosted resilience while enhancing long-term real returns.
“We increased the level of structural risk in the portfolio to improve long-term real returns and continued to develop the resilience of the portfolio to a range of scenarios by increasing and diversifying our exposure to developed market currencies and commodities, including gold,” he elaborated.
“Activity in the portfolio totalled $90 billion and touched on all sectors as we sought more active returns, regional diversification, and enhanced liquidity and flexibility”.
Returns from risk assets were “well rewarded,” Arndt added, with investors adapting to “consequential changes” in trading relationships and market dynamics.
“Equity markets performed strongly over the year and private markets continued to deliver attractive risk-adjusted returns, particularly in infrastructure where we increased our exposure to Australian dollar assets to protect against inflation and currency volatility,” he said.
As at 30 June, the portfolio mix stood at: 10.8 per cent Australian equities, 31.5 per cent global equities, 13.3 per cent private equity, 4.4 per cent property, 11.4 per cent infrastructure and timberland, 8.9 per cent credit, 14.7 per cent alternatives, and 5.1 per cent cash.
The six other funds managed by the Future Fund Board of Guardians also grew, rising to $65.8 billion after providing $3.9 billion to their designated programs.
AUTHOR
Maja Garaca Djurdjevic
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