Australia’s Future Fund says its value has reached a record A$237.9 billion (US$149 billion) after earning a return of 12.2% on investments last year as the strong US dollar bolstered the sovereign wealth fund’s alternative and equity investments abroad.
The return was nearly double the annual target of 6.4% and translates into A$26 billion of added value, the Future Fund says in a statement on February 5.
The performance “was driven by the strength of the US economy”, according to Ben Samild, the fund’s chief investment officer.
“Inflation has moderated and economic growth, trade, employment, wages and corporate balance sheets remain in good shape, underpinning another strong year for the US share market,” he says, adding that “market conditions provided opportunities for return generation and the fund benefited from increasing its allocation to international equities”.
He says the fund’s equity and alternative investments abroad made “positive contributions” as the Australian dollar’s weakness against the greenback increased the value of these assets.
Meanwhile, according to Raphael Arndt, the Future Fund’s chief executive officer, the government’s move to delay drawing on the fund until at least 2032-2033 instead of in 2026-2027 “provide the foundation for the fund to become an enduring institution and to continue to invest for the long term”.
The government announced the deferred drawdown in November and also called on the fund to consider national priorities when making investment decisions.
“We continue to evaluate investment opportunities in the Australian economy consistent with the new investment mandate,” Arndt says.
