The Future Fund has achieved rolling 3 year returns of about 9.5% pa, putting the de facto sovereign wealth fund on par with workplace super funds when the Future Fund's tax-free and member-free status is taken into account.
The $98 billion Future Fund has just released its March 2014 portfolio update and advised that so far this financial year it has earned 9.8% and that it is opening up a big gap over CPI+4.5% performance benchmark.
Preliminary super fund performance results from Rainmaker's March 2014 SelectingSuper survey shows super fund workplace default investment options to be returning 8.4% pa, indicating the Future Fund's is on par with these leading institutional investors after allowing for tax and fee differences.
The long term impact of the Future Fund's performance is that it has added almost $40 billion to the $61 billion it has received as cumulative government cash deposits.
David Neal, chief investment officer of the Future Fund, said that the portfolio remained well diversified, striking an appropriate balance between the long-term return and risk requirements of their mandate from the Commonwealth government.
"The portfolio has benefited as markets have continued to respond to policy efforts to lift economic activity. Markets are relatively buoyant and valuations across most sectors are now looking fairly full," he said.
Fuelling the Future Fund's returns during the past year has been a reweighting of the portfolio into international equities and alternatives away from debt securities and cash.
According to the Future Fund's latest portfolio report its international equity exposure jumped almost one and half times from 24% to 33% over the past 12 months while private equity and infrastructure exposure increased from 13% to 16%.
Exposure to Australian equities, property securities, fixed and cash in contrast all fell as did exposure to absolute return funds that reduced from 13% to 11%.
With an 8-14% per annum return objective over the long term, the Pengana PanAgora Absolute Return Global Equities Fund is clearly managed by a team with investment acumen and a well thought out process.
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