MacroScope

Australia SWF update

September 4, 2009

Australia’s Future Fund, the country’s sovereign wealth fund, is billed by some as the most transparent state-owned investment fund in the world (perhaps after Norway).

According to the latest update on its portfolio, sent by email to subscribers (you can subscribe here easily), the Fund returned 5.1 percent in the April-June quarter, giving a loss for the financial year of minus 4.2 percent.

Its mandate – also spelled out here — is to give 4.5-5.5 percent annual excess returns over the consumer price index in the long term. Since July 1, 2007, the annualised return (ex Telstra holdings) of the Fund is minus 1.3 percent.

“Through the first eight months of the last financial year, we saw unprecedented volatility in
credit and equity markets as the financial crisis extended to have a broader global economic
impact,” David Murray, chair of the Future Fund Board of Guardians, says in the update.

“Over recent months we have seen confidence and indicators improve which has boosted
returns over the final quarter. While the current positive momentum is encouraging,
significant issues still need to be worked through across global markets. This presents both
challenges and opportunities for investors and we will maintain our prudent approach to
building the portfolio.”

The Fund, which has assets over A$61 billion, currently has a combined 24 percent in Australian and other equities, 2.3 percent in private equity, 23.1 percent in debt securities and 41.1 percent in cash.

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