Australia’s sovereign wealth fund, the Future Fund, released its 2015/16 annual report on Thursday, a 188-page behemoth detailing what it got up to last financial year, overall performance, and its views on the outlook for asset markets.
This nifty infographic from the fund shows how it performed, and performance over time compared to its set mandate, along with the asset allocation mix at June 30.
Over the year, it returned 4.8% or $5.6 billion, leaving the total value of the fund at $122.8 billion.
It began in 2006 with funds of just over $60 billion.
The fund’s mandate is to deliver returns of CPI plus 4.5 to 5.5% per annum over the long term “with an acceptable but not excessive level of risk”.
The annual return was down on the 7.7% average seen since its inception, thanks due to weakness in stocks.
During the year, the fund decided to reduce the overall level of risk in its portfolio mix, reflecting its outlook on the global economy and markets.
“Our view is that we are facing an investment environment in which expected returns are declining. At the same time, the underlying economic and financial risks are increasing. This means that the prospective reward for taking risk is becoming less attractive,” it said.
At 22%, cash currently has the largest allocation within the fund, reflecting the shift away from riskier investments.
The fund, chaired by former Australian treasurer Peter Costello, was created to strengthen the Australian government’s long term financial position by making provision for unfunded Commonwealth superannuation liabilities — essentially retirement funding for public service workers.
As shown in the infographic, no funds have been withdrawn from the Future Fund, with government drawdowns scheduled to begin from 2020.
For those who want to access the annual report – and it is a good read – it’s here.