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Future Fund battles challenging markets

Future Fund's investment holdings slipped 1.5% over the three months ended March 31, now sitting just shy of $201 billion.

In its latest portfolio update, Future Fund saw a return of 11.8% for the 12 months to March 31, exceeding its target of 9.1%. It's funds under management have reached about $201 billion; in February it reported having hit $203.6 billion as at January end.

Total funds under management for the Future Fund now stands at $249 billion when considering all funds.

"Over the March quarter, global equity markets turned down sharply, and the Australian market was flat," Future Fund Board of Guardians chair Peter Costello said.

"A large part of this was due to rising inflation which will lead to higher interest rates around the world and in Australia."

In addition, Costello said the Russian invasion of Ukraine has added to risk for international investors.

"Following Russia's invasion of Ukraine, the fund moved to sell down all holdings in companies listed on the Russian stock exchange...We will wind down the holdings as market conditions allow," Costello said.

He added that the Future Fund performed well in a very challenging environment, delivering a 10-year return of 10.0% pa against a target of 6.4% per annum.

"We have delivered positive returns despite market volatility over the last year and the Fund has exceeded its target returns across all long-term time horizons," he said.

Future Fund chief executive Raphael Arndt said the fund's portfolio is positioned to navigate a challenging investment environment.

"Our alternatives strategies are designed to perform in all market environments, and we have added to those," he said, warning that returns will be harder to come by going forward.

He added: "We continue our work to identify opportunities to access value from less liquid and more skill based investments and working our relationships with our partners to identify more focused opportunities both to secure returns and to manage risk."

Read more: Future FundPeter CostelloRaphael Arndt