Future Fund returns above target despite tough year
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The news: The Future Fund, Australia's sovereign wealth fund, has posted an annual return of 6.3% to the September quarter, as global uncertainty takes a toll on investment markets.
The numbers: Over the ten years to the current period it achieved average annual returns of 8.4%, well above its target return of 6.9%. In the four previous quarters annual fund returns were 6.0%, 1.1% and -3.7% and -3.0%. The Future Fund currently stands at $205.2 billion, with $255.1 billion in total funds under management.
The context: Future Fund board of guardians chair Peter Costello said investment markets were going through a challenging period, with lower equity prices and bond investors pricing in higher long-term interest rates. He said key issues moving forward were the potential of further monetary tightening and the possibility of a broader regional conflict in the Middle East. Costello will step down from the role when his current tenure ends in February.
What they said: "The Board continues to take a prudent approach to positioning the portfolio," Costello said in a statement.
"We expect that real returns will continue to be lower than in recent decades.”
The source: Future Fund Media Release
