Future Fund boss Raphael Arndt, money man Ben | Australian Markets
The Future Fund bosses say they’re able to experience financial market turmoil after unveiling a 1.2 per cent return for a testing March quarter.
With main share markets down 3 per cent within the first quarter of 2025, the fund was buffered by a numerous portfolio additionally that includes non-public equity, debt and various investments.
Seemingly unphased by US President Donald Trump’s tariff turmoil and jitters on Wall Street, Future Fund chief govt Raphael Arndt mentioned the fund’s portfolio had “behaved to our expectation in recent months”.
Dr Arndt mentioned adjustments in geopolitical, financial and market environments had been inflicting volatility and uncertainty for traders.
“Our expectation is that these conditions will lead to higher inflation and bond yields for an extended period,” he mentioned.
“These are the conditions for which the portfolio has been built over the past five years.”
Set up by then-treasurer Peter Costello in 2006, the Future Fund has more than $240 billion below management to cowl the Federal Government’s unfunded superannuation liabilities.
It has a mandate to post returns of 4 per cent to five per cent a yr above inflation by investing with what it describes as an acceptable, however not extreme degree of risk. It’s goal return was cut from inflation plus 4.5 per cent to five.5 per cent in 2017.
The fund’s return for the ten years to March 31 was an average 7.8 per cent a yr, in contrast with a goal 7.5 per cent for that period.
But it carried out beneath its goal return of 8.3 per cent goal return for the three years to March 31, posting a 6.4 per cent average annual gain.
The fund was smashed in 2022 by falling share and bond markets and surging inflation, struggling an investment loss of 3.7 per cent.
It mentioned on Tuesday its return for the 12 months to March 31 was 7.9 per cent, above the goal 6.4 per cent.
Chief investment officer Ben Samild mentioned various investments, credit, infrastructure and forestry had been notably robust performers over the previous yr.
Mr Samild mentioned the returns had been helped by adjustments to the fund’s present combine and publicity to commodities, together with gold.
“We continue to assess conditions and adjust the portfolio to manage risk and deliver attractive long-term returns in line with our investment mandate,” he mentioned.
Dr Arndt mentioned this was a pleasing consequence that mirrored work over the “past four years to ensure the portfolio is resilient and flexible to a range of scenarios”
Having been caught out by the inflation spike of 2022, the Future Fund had decreased its money holdings from virtually 15 per cent of its portfolio three years in the past to three.1 per cent at March 31.
It had drastically elevated its investments in share markets in developed international locations — from round 16.3 per cent of its portfolio in March 2022 to round 27 per cent, or $65.1b, on the finish of March 2025.
Private equity holdings comprised 13.8 per cent of the fund’s portfolio at March 31, down 2 share factors over three years. Debt securities holdings made of 9.3 per cent of the portfolio, up from 7.4 per cent in early 2022.
Alternative investments had been regular round 15 per cent of the portfolio. The property holdings have shrunk from more than 6 per cent of the portfolio to $4.8 per cent as the overall real estate investment worth shrunk by $1b to $11.6b.
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