Australian Future Fund Posts 15.4% in 2012-2013

futurefundAccording to a news release issued September 2, 2013, Australia’s Future Fund posted a 15.4% gain for financial year 2012/2013 ending June 30th. The return includes a 4.4% gain last quarter.

The gain brings the Future Fund to A$ 88.9 billion (US$ 80.4 billion), realizing a return of 6.2% per annum since its inception in May of 2006.

Mark Burgess, managing director of the Future Fund, notes the performance was, in part, “a result of improved conditions and confidence and the significant degree of policy stimulus being applied across many global markets.” Mr. Burgess and his team also adjusted the Future Fund’s exposure to equities.

In addition, Mark Burgess will be leaving the Future Fund. Informing the board of guardians, Burgess will stay onboard to help facilitate a smooth transition.

In a September 4th press release, Mark Burgess stated, “I appreciate the support I have received from the Board and my colleagues in the Agency and the areas that we have been able to develop in my time with the Fund. With recent strong performance and the Fund now fully invested, I have decided to return to the private sector to bring my experience to that field.”

The infographic below reveals the change in strategy the Future Fund took from from 2012 – present.

Portfolio at 30 June 2012 Target Allocation at 30 June 2013 Actual Portfolio at 30 June 2013
Listed Equity 32.90% 33% 40.60%
Private Equity 6.40% 8% 7.30%
Tangible Assets 12.80% 16.50% 14.10%
Alternative Assets 19% 17.50% 15.60%
Debt 18.30% 17.50% 16.60%
Cash 10.60% 7.50% 5.80%

Data may not sum due to rounding

The Future Fund’s mandate is to return CPI + 4.5%-5.5% over the long term per annum. It has beaten that benchmark on a rolling three year basis since September of 2011. The success contrasts financial years 2007/2008 and 2008/2009 when the fund severely underperformed its benchmark. CPI for those years was 4.5% and 1.5% respectively and the nominal return for those years was 1.5% and -4.2% respectively.

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