Australia’s Future Fund posts lower quarterly return, warns of uncertain outlook

Sydney Opera House, Sydney, Australia. Photo by Frans on Unsplash

Australia’s A$165.7 billion sovereign wealth fund on Monday said its return for the three months to September fell 3.4 percentage points to 1.9%, its lowest quarterly gains since December, as it warned of a subdued long-term investment outlook.

The Future Fund said its annual return of 11.3% was also slightly lower than the 11.5% it reported the previous quarter, but it still beat its self-imposed return target of 5.6%.

“The board remains alert to the uncertain outlook for global growth and the potential for shocks to markets while recognising that accommodative monetary policy continues to support asset prices,” Chairman Peter Costello said in a quarterly statement.

“The global economy remains challenged by factors including demographics and debt levels. Adding to this, prospective long-term returns remain lower than in recent years.”

Its 10% return over the past 10 years had fallen just 40 basis points during the quarter, but it had continued to beat its 6.5% target and was 1.2 percentage points higher than a year earlier, the statement shows.

The fund showed it had shifted cash out of infrastructure investments and into Australian and developed shares. It trimmed its cash holdings by 3.1% to A$18.9 billion as of Sept. 30.

The fund, established in 2006 to cover escalating pension liabilities for public servants, raised its allocation to global developed equities by 1.8 percentage points to 26.3% during the year.

The Future Fund was set up with contributions of A$60.5 billion from government surpluses and proceeds of the privatisation of telecommunications operator Telstra Corp Ltd .

It aims for returns of 4% to 5% above inflation.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.