More risk yielded more reward for Australia’s Future Fund which reported a 12.2 per cent return on its investments last year, and lifted its total funds to more than $250 billion.
Future Fund chair Greg Combet said the very strong result was “achieved amidst significant geopolitical upheaval and market volatility”. He said the investment team had made $90 billion worth of changes to its investment portfolio “in anticipation of profound changes in global trading conditions”.
Future Fund chair Greg Combet.Credit: Dominic Lorrimer
The fund’s chief executive Raphael Arndt, said part of its success was the 2021 decision to increase its risk appetite to chase returns in a tougher investing environment.
All sectors performed well, including investments triggered by government guidance to consider assets related to infrastructure, energy transition and housing.
“The infrastructure portfolio performed exceptionally well,” Arndt said.
“And gold, of course, had a cracker of the year, increasing by more than 40 per cent for the year.”
Combet underlined the success was not at the expense of the new government investment guidance to consider sectors important for Australia’s future.
Returns soared on gold.Credit: Bloomberg
“We have achieved these returns whilst also making significant investments into the Australian economy consistent with the national priorities in our new investment mandate,” 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.”
The fund was established in 2006 with seed money totalling $60.5 billion, and has returned 8 per cent a year over the last decade. Its return this year was equivalent to the interest bill on the federal government’s debt.
The government has agreed not to draw down on the fund until at least 2032-33.
“We are confident of a position that we will be able to meet the original purpose of the Future Fund, and that is to fund unfunded Commonwealth superannuation liabilities, but as well, remain an enduring sovereign wealth fund for the country,” Combet said.
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