Sovereign Wealth Fund Institute

Mr Paul Costello, General Manager of the Future Fund Management Agency has informed the Board of his intention to leave the organisation.  The Chair of the Future Fund Board of Guardians, Mr David Murray, expressed his gratitude to Mr Costello for his role in guiding the Future Fund during its early development.

“Paul has played a critical role in building the Agency and recruiting a skilled team to develop and implement the investment program. These foundations have been laid while navigating the additional challenges of an unprecedented period of volatility in financial markets.”

Mr Costello said, “I am proud to have led the Agency through its start-up phase and to have brought together the people, capabilities and infrastructure for its future. As the organisation moves into a new phase the time is right for new leadership.”

Mr Costello joined the Agency as its first employee in November 2006. From holding an initial $18 billion in a cash account, the organisation today manages more than $87 billion of investments through partnerships with more than 60 investment managers globally. Mr Costello will remain in his role until around the end of the year to facilitate a smooth transition to the new leadership of the Agency. The Board of Guardians is conducting a search for a new General Manager, seeking expressions of interest from Australia and overseas.

Source: Australia Future Fund

According to the Australian, “Future Fund boss Paul Costello has performed well in his three years at the helm but still seems blissfully unaware of the fund’s impact on the stockmarket. In a luncheon address at the Melbourne Financial Services Symposium, Costello noted some of the recent weakness in Telstra’s stock price was sheeted back to the fact that the fund is now free to sell more its 11 per cent stake in the company.

He added: “I frankly doubt that.”

Granted he wouldn’t be the only reason with uncertainty over federal government regulation and the fact the company has gone ex-growth being more to the point, but one assumes the Future Fund holding would add to the negative pall hanging over the stock. Then there was last year’s disclosure that the fund was considering joining Canadian Pension Plan and Ontario Teachers proposed bid for Transurban.

Costello confided he made the disclosure because there was media comment he might join a rival bid and wanted to set the record straight but added any further comment remained the responsibility of either Transurban or the Canadians. Having broken his silence in a situation which would compel few other companies to speak up, one might think Costello could explain where he sits now especially after Transurban couldn’t find the Fund’s name on its share register given it is behind an HSBC nominee.

That aside the fund is travelling well with financial year-to-date returns of 9 per cent, well ahead of its mandate to achieve CPI plus 4.5 per cent.

Costello also flagged a move into timber investments and said it would release some time soon a guide to just how it voted its Australian shares now it has taken corporate governance issues in house. Separately, amid concern expressed by Lend Lease chair David Crawford that some funds were outsourcing their voting obligations by using advice from Risk Metrics et al, Costello said the funds took advice from various parties on its voting.”

read more: The Australian