As Economic Regimes Change Directions, So Does the Future Fund

Posted on 04/27/2023

Australia’s Future Fund is betting more on active management and is looking for high-performing small cap equity managers – a sharp change from the factor-based models years ago. In addition, the sovereign investor cut exposure to cash and private equity and venture capital funds and grew exposure to Australia and global equities in the quarter for March 2023.

As of March 31, 2023, the Future Fund has US$ 135,838,775,226 in assets. 10.59% was allocated to cash at March 31, 2023 versus 15.08% at March 31, 2022 and 18.59% at March 31, 2021. The Future Fund has experienced issues with their emerging market debt allocation, while they’ve historically preferred corporate debt over government debt.

The Future Fund has grown its staff size from 144 people in June 2017 to 220 people as of June 2022. The employee turnover rate for the 2021-2022 reached a high of 17.4% versus a lower turnover rate for the 2017-2018 year at 5.2%.

Future Fund’s Geographic Asset Allocation

Fiscal Year – June 30 United States Australia Europe Ex-UK United Kingdom Japan Developed Other Emerging Markets
2022 39% 25% 9% 3% 5% 8% 10%
2021 37% 24% 6% 4% 8% 8% 13%
2020 37% 25% 7% 4% 9% 4% 15%
2019 37% 20% 9% 5% 9% 4% 16%

The Future Fund also in 2022 cut exposure in retail and offices in favor of industrials and logistics. Future Fund chopped off its allocation to zero percent in timberland.

The Future Fund has pivoted its investment portfolio toward the U.S. over the years. In addition, the Future Fund has increased geographic exposure to developed other markets at the expense of emerging markets.

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