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Future Fund goes Passive

The largest pool of investments in the country – the Future Fund – has announced it is going to go passive with its listed Australian Equities portfolio.

The $149 Billion fund announced this week that it has decided to move to more index based investing for its Australian based share market investments, which are only 6.5% of the portfolio but still amounted to investments of $9.7 billion.

The annual report signed off by the Chairman Peter Costello said that the switch away from active investments reflected an assessment that for asset classes where “manager skill is less evident (such as listed equities)”.  Effectively the fund has been moving towards a cheaper more passive method.

That said the report also said : “we remain willing to support active management where we are confident that a manager can reliably add value net of fees”.

The Future Fund returns since inception in 2006 have come in at 7.9% per annum above its forecast and last year it returned  9.3%.

Future Fund Asset Allocation at 30 Sept 2018

Asset Class$m%of Fund 
Australian Equities 9,7026.5
Global Equities Developed MarketsEmerging Markets  26,78410,888 18.07.3
Private Equity 21,99614.8
Property 10,4727.0
Infrastructure and Timberland 12,2768.2
Debt Securities13,0898.8
Alternative Assets 22,25315.0
Cash 21,38314.4
TOTAL 148,844100.0

Source: Future Fund portfolio update at 30 September 2018

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