Australia's Future Fund just grew 10.7% but says the investment environment is 'uncertain'

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  • The Future Fund has grown to $148.8 billion.
  • Its 10-year return of 9.2% a year exceeds benchmark target of 6.5%.
  • But the current investment environment is uncertain.

The Future Fund grew 10.7% to $148.8 billion for the the year to September but the outlook for returns is “uncertain,” according to Australia’s sovereign fund.

By comparison the ASX200 has barely moved in the last 12 months, with recent falls putting the index just 0.18% higher.

The latest Future Fund update puts its 10-year return at 9.2% a year, well ahead of its own benchmark target of 6.5%.

Since the Future Fund was established in 2006, with capital contributions of $60.5 billion, it has earned $88.3 billion for the federal government.

Chief Executive Officer David Neal says the portfolio continues to operate as intended, delivering good returns without excessive risk.

“As we have said for some time, we are operating in an uncertain investment environment and prospective long-term returns are lower relative to history,” he says.

“In this environment, we are dynamically managing the portfolio, so that it is, as far as possible, robust to a range of possible scenarios. Our portfolio construction continues to emphasise diversification and flexibility.”

The cash component of the fund is 14.4%, as this table shows:

Future Fund

Peter Costello, a former federal treasurer and current Chair of the Future Fund Board of Guardians, says global economic growth remains steady across most major economies.

“Inflationary pressures are gradually building in the US and markets continue to respond to rising interest rates,” he says.

“While the short-term economic outlook remains reasonably positive, we remain cautious about the longer term outlook, the impact of geopolitical and trade tensions and the potential for shocks to markets.

“The Board of Guardians maintains its disciplined approach to balancing its return and risk objective as it invests for the benefit of future generations of Australians.”

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