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Gonski urges Australia to look long-term
Friday, 28 June 2013 11:50am

The Australian financial services industry is too focused on short-term results and must find ways to focus on and promote long-term success for investors, according to David Gonski.

The chair of the Future Fund board of guardians said the investment community, and Australian business more generally, suffers from shortsightedness.

"Australia suffers in all its sectors from a short term perspective. The Future Fund, the financial services sector and indeed, business more broadly, must find a way to keep the focus away from an unhealthy focus on monthly or quarterly numbers," Gonski said.

"Competing on the short term can be detrimental to long-term results and for many of us - and for our investors - it is the long-term that is important."

He added that Australia could learn from other economies, where a different mindset has resulted in robust performance.

He said Australia needed urgently to educate investors and the public of the need to invest in and rate businesses and projects over the long term.

"We need to seek advice from, and listen to experts located all over the globe. I believe that so many in Asia have an advantage over us in that they think, plan and deliver over much more extended periods and this is a strength."

Gonski added that Australian businesses and investors must continue to find ways to better engage with Asia.

"Asia includes emerging markets where wealth and returns can be found but not necessarily and certainly not safely, unless we understand the people, their rules and culture," he said.

The Future Fund is an independently managed investment fund funded by the Australian Government. It was established in 2006 with the purpose to meet the Commonwealth's superannuation liabilities in recognition of the funding problems posed by an ageing population.

The fund's stated return target is 4.5%-5.5% above the Australian rate of inflation and it is prescribed that there be no withdrawals from the fund until at least 2020.

Gonski explained that the long-term mandate of the fund allowed it to take meaningful positions in global mega trends.

He highlighted six themes 'of particular significance': debt and deleveraging, the interaction of policy and politics, demographics in developed and emerging markets, globalization, resource scarcity and inflation.

To best access these themes, the Future Fund has around 90% of its funds under management invested in non-cash assets, including a 40% allocation to equities.

It has also announced plans to increase its exposure to infrastructure, property and private equity.

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