Private equity – including venture capital – has retained its position as the Future Fund’s second largest sector of investment behind listed equities.
At the end of September, private equity represented 17.3% of the fund ($34.5 billion), down marginally from 17.5% at the end of June.
Listed equities – split into Australian equities (8.1%), other developed market equities (16.6%) and emerging markets equites (8.3%) – represented 33% ($65.744 billion).
The next largest allocation after private equity was to cash (15%), then alternatives – primarily hedge funds – (13.4%) and infrastructure & timberland (8.1%).
The Future Fund grew to a total of $199 billion over the third quarter of 2021.
Chief executive Dr Raphael Arndt said: “Listed equity markets fell during September while our exposure to infrastructure increased with the financial close of our investments in Telstra’s network of mobile [phone] tower sites and Tilt Renewables’ Australian portfolio via the Powering Australian Renewables partnership.
“More broadly, we continue our work to position the investment program, and our organisation, for the long-term. COVID-19 had accelerated and catalysed changes in the investment environment including in the way households, businesses and markets operate and how countries and economies interact. We are working hard to incorporate our assessment of these paradigm shifts into our decision-making over the long-term.”
Chair of the fund’s board of guardians Peter Costello AC said global economic recovery from the COVID-19 pandemic had continued through the September quarter but the re-opening dividend was beginning to fade.
“While supply chains are a headwind, global economic activity is supported by strong consumer demand and the continuation of supportive fiscal and monetary policy settings,” he said.
“In Australia, the lockdown in New South Wales and Victoria during the September quarter is likely to have detracted from growth and Australia is lagging other developed economies in COVID recovery.
“Global uncertainties around inflation, the adjustment of fiscal and monetary policy and geopolitical tensions remain and despite some weakening in markets during September, asset prices remain elevated.
“Given this environment, the board has taken a prudent approach to positioning the portfolio with risk levels at a neutral setting around the middle of the range we would normally expect.”
Image: Future Fund chief executive Raphael Arndt.