Future Fund had invested 3.5 per cent of its $118 billion corpus into Los Angeles-based Oaktree’s various alternative asset classes, including distressed debt and high yield bonds. However, it cut back its investment in December, taking out nearly $500 million, said a report in The Australian.
Oaktree accounted for nearly half of the $1 billion selldown. Future Fund has scaled back exposure to private equity, which carries the promise of high returns but comes with higher risk than other investment options. In the last few months, the PE sector has been feeling the heat due to concerns about the health of the global economy, visible from the downturn in credit and equity markets.
Earlier, the Future Fund’s managing director David Neal had voiced concerns that fees are too high in the sector, and that it is over-populated with private equity managers. Similar views were expressed by Calpers, the biggest pension fund in the US.