Australia’s A$224.9 billion ($147.3 billion) Future Fund has repositioned its investment portfolio, making more than A$50 billion in changes affecting nearly every asset class, the sovereign wealth fund said. According to the 2024 summary,
Rafael Arndt, CEO of Future Fund Management Agency, said in the report: “We have begun to change direction,” he said.
Future Fund reported a return to active management of listed stocks, especially Japanese stocks, as part of a strategy that “relies more on investor skill (more alpha) than on market risk.” This reflects our belief that this approach will be better rewarded in an environment where rising inflation, interest rates and geopolitical risks reduce market/beta return uncertainty. ”
The fund cites “healthy corporate balance sheets, positive changes in corporate practices, and reasonable valuations” as reasons for focusing on Japanese stocks. That bet seems to have paid off so far, with the Tokyo stock index soaring 41.34% in 2023.
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“Our search for sustainable alpha opportunities in the stock market continued over the past year and led us to Japan,” the report said. “Japan’s stock market has been largely abandoned by foreign investors following decades of weak stock market returns,” the fund said, “due to structural tailwinds created by corporate reform. , the market is attractively valued, reinforcing our case for active engagement.”
The fund delivered a 9.1% return on investments in the year ended June 30, beating the benchmark’s 7.8% return and raising the value of its assets to A$224.9 billion ($147.3 billion). It also reported three-year, five-year, and 10-year annualized returns of 4.5%, 6.7%, and 8.3%, respectively. The three-year and five-year returns were lower than the fund’s benchmark, which rose 9.3% and 7.9%, respectively, over the same period. But over 10 years, the Future Fund reported an annualized return of 8.3%, beating the benchmark’s return of 6.9% by 140 basis points. Since its inception in May 2006, the Future Fund has returned 7.7%, outperforming its benchmark’s return of 7.0%.
“For an 18-year-old institution, the Future Fund is already having a significant impact on Australia’s economic landscape, with the Future Fund having grown from $60.5 billion at its launch to $225 billion as of June 30, without any additional funding from the government. USD,” Future Fund Chairman Greg Combet wrote. Report.
Future Fund also manages six other funds, which have a total value of A$64 billion and generate A$12 billion of income that is distributed or reinvested. Each aim is to fund a specific purpose, such as medical research, drought and disaster resilience, affordable housing, and disability insurance.
The latest fund, the Housing Australia Future Fund, was established by the Australian Government during the last financial year and adds to the Future Fund’s stable of resources. The A$10 billion-seeded Housing Fund aims to fund affordable housing in Australia, with a focus on meeting the housing needs of groups such as Indigenous communities, women, children and veterans. It is the purpose.
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Tags: Australia, Financial Year 2024, Future Fund, Future Fund Management Agency, Greg Combet, Housing Australia Future Fund, Rafael Arndt
