Future Fund

Country: Australia

Established: 2006

US$ Billion: 59.1

Origin: Non-commodity

Transparency Rating: 9

Australian Government Future Fund is an independently managed investment fund into which the Australian Government deposits its budget surplus. The Future Fund was established by the Future Fund Act 2006. The purpose of the fund is to meet the government's future liabilities for the payment of superannuation to retired public employees.

Strategies and Objectives:
The stated aim of the fund is to hold AUD $140 billion by 2020; this figure would free up AUD $7 billion in superannuation payments each year from the federal budget.

Future Fund - Asset Allocation 6/30/2009
Asset Class A$ million Percentage of Fund ex-Telstra
Cash 22,262 41.1
Fixed Income 12,489 23.1
Global Equities 9,001 16.6
Australian Equities 4,494 8.3
Alternative Assets 2,694 5.0
Private Equity 1,240 2.3
Infrastructure 1,178 2.2
Property 757 1.4
Total ex-Telstra 54,115 100
Telstra 6,925
Total Future Fund assets 61,040

The Future Fund is controlled by an independent Board of Guardians that is collectively responsible for the investment choices of the fund.

News and Updates

Future Fund says bond exposure grows
Reuters states, "Australia's $50 billion sovereign wealth fund increased its exposure to bonds and alternative assets in the June quarter as it saw opportunities emerge from the market turmoil of the past year. The government-run Future Fund is the nation's largest single investment fund, and was set up in 2006 to cover future public pension liabilities. In its latest portfolio update for the three months to June 30, released on Friday, the fund said its substantial investments in credit markets helped it avoid some of the more extreme declines in equities over the past year."
read more: Thomson Reuters

Future Fund sells 34% of its Telstra holding
Press Release states, "The Future Fund Board of Guardians (the Board) has sold 684.4 million Telstra shares at a price of $3.47 (gross proceeds $2.37 billion) through an underwritten sale to institutional investors. The sell-down is in line with the Board’s previously stated plan to reduce the portfolio’s holding in Telstra in an orderly manner over the medium term and to build a portfolio consistent with its long term mandate and strategy.

The sale reduces the Future Fund portfolio’s holding in Telstra from 16.4% of the company to 10.9%. The sale price represents a discount of 4.9% to the day’s closing price and the volume sold represents approximately 13 days of average trading volume in the stock.

The Board took the view that current market conditions were conducive to a partial sell-down of the holding. The proceeds of the sale will be integrated into the broader portfolio in line with the long term investment allocation currently being implemented."
read more: Future Fund Press Release

Australia's wealth fund hunting for more property bargains
Australia's sovereign wealth fund will increasingly look for bargains in property and infrastructure to help cover future pension payouts, the fund's manager said on Tuesday.
read more: Thomson Reuters

Future Fund to stick with shares
The Australian states, "Australia's $64 billion Future Fund is unlikely to reduce its asset allocation in shares, despite the volatility in global equity markets, and is seeking further investments in the banking sector."
read more: The Australian

The Future Fund (ex Telstra) produced a return of 1.54% ($652 million) for the period 1 July 2007 to 30 June 2008
Portfolio Update at 6/30/2008

Following completion of the audit process for 2007-08, the Future Fund Board of Guardians has issued a portfolio update for the year.

The Future Fund (ex Telstra) produced a return of 1.54% ($652 million) for the period 1 July 2007 to 30 June 2008. The Chair of the Board of Guardians, Mr David Murray AO, said: "The positive result in the current investment environment reflects our decision to slow the purchase of equities in the first half of the year due to concerns about pricing. This allowed us to benefit from a substantial cash component in the portfolio. Our focus moved to taking advantage of changed credit conditions, while developing our capabilities in private markets, including property, private equity and infrastructure. This is part of our program of building our long term target portfolio."
read more: Future Fund


Future Fund Site

1. All figures quoted are from official sources, or, where the institutions concerned do not issue statistics of their holdings, from other publicly available sources.

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