MacroScope

Australia’s Future Fund reveals that the fund’s mixed asset portfolio (excluding Telstra holding) returned 5.6 percent in the third quarter.

The fund has just over 10 percent in Australian equities, 22.8 percent in global equities. Safer instruments dominate, with debt holdings at 24 percent and cash at 31 percent.

The mixed-asset fund significantly underperforms an equity-only portfolio. For example, the MSCI world equity index has risen more than 17 percent in the Q3 alone.

The Future Fund is a rare SWF which reports results quarterly, like a public-listed firm. The underperformance might outrage the public though — so is this worth it?

Recall remarks last month by David Murray, the fund’s chairman of the board of guardians , which highlighted some downsides in reporting quarter after quarter.

Sovereign wealth funds may have turned the tables on the rest of the world.

Wrapping up their inaugural meeting in the capital of Azerbaijan, 20 leading sovereign wealth funds urged host countries to make their investment regimes more transparent and discriminatory and keep investment borders and flows as open as possible. (For the story click here).

This comes after years of host countries — the West — asking them to open their books.

Much of the two-day meeting which ended on Friday was held behind closed doors, but the organisers — Azerbaijan’s state oil fund — let media in with cameras and video recorders to film the final 5 minutes of the meeting.

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.