Australia’s Future Fund says it has repositioned its $200 billion portfolio for a world of higher inflation and increased volatility, lifting its exposure to select commodities including gold, and lowering its proportion to equities
The Future Fund is also investing in real estate and infrastructure but only if the assets are sufficiently resilient to higher inflation, as it revealed that it now owns a 3 per cent stake in Sydney Airport.David Rowe, said the paradigm of falling interest rates and central bank rescues had likely come to an end, which would challenge equities and bond valuations.
The Future Fund has also warned Australian domiciled investors not to rely on foreign currency exposures to provide an insurance buffer in periods where risk assets are falling. “Finance is not physics. The so-called rules are just observations of human behaviour in market over time.”new post-pandemic world order
“There’s some really amazing venture capital opportunities in China, so hopefully we are on a more constructive path.”While the Future Fund says equity risk remains the main driver of returns, it has dramatically cut back its exposure to listed equities, preferring instead to take equity-like risk in its private equity and venture capital portfolio.
“Our research before we went into venture capital, was 86 per cent of venture capital managers do not return their capital. And only 6 per cent makes the expected returns historically.” Among its recent infrastructure investments are Telstra Towers, CDC data centres, Tilt Renewables, and a 3 per cent stake in Sydney Airport, which was recently bought out by a private equity consortium led byThe Future Fund is already an investor in Melbourne Airport and the Port of Melbourne.
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