Yahoo Finance Inside Australia's $245 billion treasure chest
Australia’s sovereign wealth fund, the Future Fund, is responsible for investing to benefit future generations of Australians and is the Government's largest financial asset.
Established in 2006, the Future Fund is separate from the Government, but helps manage the Government’s money through six public asset funds.
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This means the Future Fund invests in six specific funds which each have their own purposes.
The six funds are:
Future Fund
Medical Research Future Fund
DisabilityCare Australia Fund
Aboriginal and Torres Strait Islander Land and Sea Future Fund
Future Drought Fund
Emergency Response Fund
“We operate independently from Government and tailor the management of each fund to its unique investment mandate,” the Future Fund said on its website.
The official name for the board which overlooks The Future Fund is the ‘Future Fund Board of Guardians’, which is chaired by former Australian Treasurer Peter Costello.
Why does the Future Fund exist?
As its name suggests, the Future Fund is a means for the Australian Government to invest for the future. All the money made through investments is put back into funding what each specific fund's purpose is.
For example, profits made from the Disability Care Australia Fund will go into funding for Disability Care.
It also helps strengthen the Australian Government's long-term financial position, because it will hopefully be growing the financial pool the Government can call on in times of need.
How has the Future Fund performed?
Pretty well actually. The Future Fund is extremely transparent around its investment model and how well it has performed by giving an update four times a year.
As at June 30 2021, Future Fund (the smaller fund within the broader Future Fund) made $35.7 billion for the year, growing to $196.8 billion.
This was an annual return of 22.2 per cent and was the strongest performance in the fund’s history.
“This year has encompassed both the health and economic disruption of the COVID pandemic. The financial recovery has been driven by the deployment of vaccines, recovering confidence, and supportive monetary and fiscal policy,” Costello said.
“The Board remains focused on its mandate and obligation to maximise risk-adjusted returns over the long-term while taking acceptable but not excessive levels of risk.”
The Future Fund Board of Guardians now invests over $245 billion for the Commonwealth Government.
Can you invest in the Future Fund?
Technically, no. An individual cannot invest in the Future Fund, as its purpose is just to invest Government assets.
However, the fund does disclose substantial information about its portfolio through its annual reports and gives regular portfolio updates.
The Future Fund also published its top 100 listed equity holdings, so it is possible to copy its investments if you have the time to keep up to date with potential changes.
Should the Future Fund invest our superannuation?
Santor Andrew Bragg is one politician who is very outspoken on wanting the Future Fund to act as Australian’s default superannuation fund.
This would mean that every Australian would be defaulted into the Future Fund instead of their employer’s chosen fund unless they choose to opt out.
Bragg believes this will force super funds to cut down on fees to attract new members, creating a more competitive market.
Australia’s superannuation sector is worth around $3.1 trillion, making it worth around double Australia’s entire GDP.
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