Australia's Future Fund earned a higher investment return of 9.6% in its financial year ended June 30 on the back of a global stock market rally, boosting the sovereign wealth fund’s total assets to A$224.9 billion (US$133.82 billion) from A$206.1 billion a year ago.
The return was up from 6% in the prior year and translates into an average annualised ten-year return of 8.3%, outperforming its target of 6.9% a year, the Future Fund says in a statement on August 30.
As of June, the Future Fund Board of Guardians, which oversees the wealth fund, had A$289.4 billion of assets, a figure that includes four other funds it manages, including the Medical Research Future Fund.
According to Raphael Arndt, chief executive officer of the Future Fund, the wealth fund’s strong result “reflects the work we have done over the past few years”.
“Equity markets rallied strongly over the year, thanks in large part to the strength of the US economy and expectations that US interest rates had peaked and would soon begin to fall,” he says. “Private credit and alternatives also delivered strong returns, as anticipated by our views that inflation and rates would remain higher and risk markets volatile.”
He described the wealth fund’s portfolio as “more robust” now, “with relatively low exposure to fully priced equities, low exposure to interest rates and a range of inflation hedges in place”.