Future Fund expects inflation, bond yields to remain high as it delivers 7.9% return
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The news: The Future Fund has warned that continued geopolitical uncertainty and market volatility mean inflation and bond yields will likely remain high "for an extended period".
The numbers: The sovereign wealth fund also gave an update on its portfolio, reporting a record value of $240.8 billion after delivering a 7.9% investment return in the year 31 March, exceeding its target of 6.9%.
However, this was a drop from the 12.2% annual return recorded at the end of the previous quarter.
The context: The fund's chief investment officer Ben Samild said in a statement that its latest results were pleasing "given the increasingly difficult market conditions". He cited a strong performance from the alternatives, credit, and infrastructure and timberland asset classes, as well as benefits from changes to the fund's currency mix and exposure to commodities including gold.
CEO Raphael Arndt said work undertaken over the past four years to ensure the fund's resilience and flexibility was paying off.
“We are seeing consequential changes in geopolitical, economic and market environments at the moment and that is causing volatility and uncertainty for investors,” he said.
“Our expectation is that these conditions will lead to higher inflation and bond yields for an extended period.
“These are the conditions for which the portfolio has been built over the past five years, and it has behaved to our expectations in recent months.”
The source: Future Fund statement
