Future Fund private assets at all-time high as equity weighting near low

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The key questions, he said, would be the extent of central bank tightening needed to meet inflation targets; how the markets react; and the impact of fiscal policy measures on global financial systems.

“Ongoing geopolitical tensions also continue to pose risks for investors,” he said.

Future Fund Managing Director Raphael Arndt said the fund is repositioning its portfolio to respond to an environment of higher inflation and heightened geopolitical tensions. which he described in a document last year.

We are focused on improving the resilience of the portfolio.

Raphael Arndt, Managing Director of the Future Fund

“We are focused on improving portfolio resilience while increasing our allocation to strategies designed to protect the portfolio against inflationary scenarios,” Dr. Arndt said.

“Furthermore, the risk of a global recession has increased at the same time, further testing investment strategies.”

He said the fund was positioned “moderately below a neutral risk level”.

An analysis of the Future Fund’s asset allocation shows that its cash has been reduced by $4.7 billion to $18.76 billion, its lowest level since March 2020. The Future Fund’s allocations to capital- investment, debt and alternative assets increased by $1.7 billion, $1 billion and $1.1 billion each. .

The developed market equity allocation decreased to 14.8%, the lowest exposure to the asset class since 2009.

Low weighting

The current weighting of stocks listed in Australia, developed and emerging markets stands at 28.6%, close to the lowest allocation since 2009, when the fund deployed its capital significantly.

The Future Fund’s allocation to private assets such as private equity, real estate and infrastructure rose to $66.6 billion, or 35% of assets, its highest weighting ever.

The Future Fund was established in 2006 to offset the unfunded pension liabilities of the Commonwealth Government, which according to tuesday budget is $271 billion and is projected to grow to $298 billion by 2026 and $523 billion by June 2060.

These estimates are calculated using a long-term discount rate of 5%. The Future Fund’s stated return target is 4-5% above the rate of inflation.

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