ASIA - Australia's AUD74.6bn (€56bn) Future Fund is looking to bolster its investment in private equity, property and infrastructure, according to IPE sister publication IPA.
The fund's current asset allocation has it heavily invested in hedge funds, with AUD12bn (16.3%) in alternative assets - which excludes its infrastructure (AUD3.5bn), property (AUD4.45bn) or private equity (AUD2.5bn) investments.
Almost 23% of the Future Fund portfolio is invested in global developed market equities and 4.6% in emerging market equities.
The fund still has AUD8bn in cash (11% of the portfolio), as well as AUD14.3bn (19.5%) in debt securities. The fund's AUD1.6bn holding in Telstra is slowly being sold down, further freeing up capital.
The Board of Guardians says it believes the level of diversity across the fund's portfolio positions it well to "accrue strong returns in positive market environments while offering some protection should markets weaken".
The fund recently appointed a new general manager Mark Burgess of the ASX-listed Treasury Group. Chief investment officer David Neal will remain acting general manager until Burgess starts mid-year.
The Future Fund returned 11.7% for the nine months to 31 March. The fund's focus was still on performance over rolling 10-year periods.
These return figures are considerably better than the wider superannuation fund return environment in Australia, with the latest Rainmaker data showing rolling 12-month returns fell to 5% for the 12 months to 31 March.
The Australian dollar's rise against the US dollar and the resulting hit to international equity returns and to Australian profits earned overseas are key factors for the performance hit.
Australian shares returned just 3.8% for the past 12 months.
Rainmaker director of research Alex Dunnin said: "Given this asset class holds one-third of all superannuation, it's bound to slow down the entire superannuation savings pool."
International shares, which make up another 22% of all superannuation savings, returned less than 1% for the past 12 months, a factor further holding back returns.
Fixed interest returns of 8% were better news, but would suffer if Australian interest rates moved higher as inflation returned to the Australian economy.
Rainmaker also pointed to the gap in investment performance between the not-for-profit funds (averaging 5.7%) and the retail master trusts (3.3%), which was likely a result of the higher allocation to equities by the retail sector.
