Future Fund climbs sovereign league tables
Friday, 18 March 2011 12:50pm

Australia's Future Fund is now the 13th largest sovereign wealth fund in the world, moving up from 15th place according to new figures from alternative investment research firm Preqin.

The report compares the world's sovereign wealth funds in US dollar terms and valued the Future Fund at US$71 billion this year, putting it just outside the top 10 funds on the global league table.

The Future Fund grew by US$11.4 billion from US$59.6 billion last year, raising it from 15th place, Preqin said.

In the 2011 Sovereign Wealth Fund Review, the research house estimated the largest sovereign fund to be the Abu Dhabi Investment Authority though it has never released information on its assets under management. It was listed as having total assets of US$625 billion, funded by the export of hydrocarbons since 1976.

Second largest was Norway's Government Pension Fund - Global, with US$530.6 billion followed by China's SAFE Investment Company with US$347.1 billion.

Globally, sovereign wealth funds have grown their assets under management by 11 per cent to nearly US$4 trillion this year, up from US$3.59 trillion in 2010, the report said.

The Australian Government's Future Fund, set up in 2006 with US$18 billion in seed capital, must return between 4.5 per cent and 5.5 per cent returns above the Consumer Price Index over the long term to meet its investment mandate.

The report said the Future Fund's equities allocation fell from 44 per cent of total assets in 2009 to 36 per cent in 2010. It's Australian equities component fell from 18.5 per cent to 11 per cent of its total assets.

It owns large holdings in the big four banks, BHP Billiton and Rio Tinto, QBE Insurance, Suncorp-Metway, Wesfarmers and CSL.

In February this year, the Future Fund trimmed its Telstra stake, and holds about 6.75 of the telecommunications firm, the report said. The fund says its holding is worth A$2.6 billion.

In its private equity allocation, the Future Fund followed a trend among global firms to greater interest in distressed and turnaround strategies. The Future Fund's distressed investments were as high as 45 per cent of its total private equity commitments in 2010, the report said.

It also had 14.6 per cent of total assets invested in hedge funds with a preference for Australasia, Asia and Europe.

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