Future Fund tops $250bn after 12.2% return in FY 2025

The numbers: The Future Fund secured a 12.2% annual return in 2025, and a 10-year return of 8% per annum. This exceeds the long-term mandate of 6.9% per annum and the 6.1% target for this year.

The six other funds managed by the Future Fund Board of Guardians increased to $65.8 billion. That is after taking into account $3.9 billion provided for programs through these funds as intended.

The context: The federal government updated the Future Fund's mandate in November to require it to both hit financial targets but also to consider national priorities, such as housing supply and net zero, when making investment decisions.

At the time, economists were split on whether the shift was a good idea for the broader benefit of Australians or would result in a trade-off in terms of returns. The opposition has long supported the original mandate and warned-off changes that could result in the sovereign wealth fund become a "slush fund" for government plans.

What they said: Combet said the fund “uplifted its investment in CDC, the largest data centre developer and operator nationally, ensuring capital support for the productivity growth that will be driven by AI. It will also drive demand for renewable energy and storage".

“We have also made significant investments in infrastructure and housing – including a 10% stake in Transgrid, which is the largest electricity transmission operator and is critical to the energy transition – plus investments in student housing and land lease developments for people transitioning to retirement,” Combet said in a statement.

“Whilst this is a particularly pleasing result for the past financial year, our focus remains firmly on the long term, successfully navigating the complexities of the period ahead, and delivering on our purpose to benefit future generations of Australians.”

Future Fund CEO Raphael Arndt said the fund had been “thinking about the New Investment Order since 2021”.

“We increased the level of structural risk in the portfolio to improve long-term real returns and continued to develop the resilience of the portfolio to a range of scenarios by increasing and diversifying our exposure to developed market currencies and commodities, including gold,” Arndt said.

“Activity in the portfolio totalled $90 billion and touched on all sectors as we sought more active returns, regional diversification, and enhanced liquidity and flexibility,” he said.

Treasurer Jim Chalmers said in a statement the results were "outstanding" and "encouraging".

"This result is a powerful demonstration of the role the Future Fund is playing investing in national priorities and delivering very strong returns," Chalmers said.

"Strong returns like these will and should always be the highest priority of the Fund but this demonstrates how consistent that can be with investing in Australia’s national economic priorities where that’s responsible and appropriate.

"This vindicates our investment mandate because it shows maximising returns is entirely consistent with modernising our economy for the future."

Finance Minister Katy Gallagher said backing industries and technologies that help power the future economy, including renewables, was helping create "long-term value while securing strong financial returns".

She said the results proved "wrong" those who claimed updating the fund's mandated would jeopardise returns.