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
, as well as being wary of regulatory risk in areas such as utilities.
“As an investor that creates opportunities but you have to ensure your portfolio can withstand really big swings.” “Think about how you construct your portfolio because that whatever rules you thought existed in the world to help inform you when you went to finance school or business school may not exist any more.”
Dr Arndt said the Future Fund had reduced its investments in China because the risk-versus-reward trade-off had become far less compelling, but he said it could not be ignored.“There’s an emerging middle class that wants to be wealthy and that wants to consume, and there’s a lot of opportunity to do with that.”
In venture capital, Dr Arndt said the Future Fund’s approach was to either allocate to the very best funds, or not to invest at all. It was avoiding sectors such as regulated utilities as “bill shock to consumers” could expose them to regulatory risk.“The best example of that is the UK Labour Party before the election threatening to nationalise the water industry,” he said.
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